| WASHINGTON, June 17
WASHINGTON, June 17 The U.S. Securities and
Exchange Commission recently removed language from an agency
policy on granting regulatory waivers after an SEC official
raised concerns it implied some companies are "too big to fail."
In an interview with Reuters, SEC Republican Commissioner
Michael Piwowar said he convinced the agency to alter the
language in April after he threatened to vote against approving
a waiver for the Royal Bank of Scotland Group Plc.
The bank had requested the waiver to retain certain
regulatory privileges, some of which make it easier for
companies to raise capital, after one of its units struck a
criminal plea deal in connection with the Libor bench mark
interest rate manipulation case.
But Piwowar said he feared voting to approve it without
first changing the policy language could lead the market to
believe the bank was too big to fail.
That is because the policy originally called for the SEC to
consider a company's "significance to the markets and its
connectedness to other market participants" as a factor when
deciding whether to deny a waiver.
The SEC quietly made the change he requested on April 24.
Afterwards, commissioners voted to approve the RBS waiver in
a split 3-2 vote, with Democrats Kara Stein and Luis Aguilar
voting against it.
"The policy removed 'too big to fail' as an explicit
factor," Piwowar said in an interview late on Monday. "I am not
comfortable having 'too big to fail' entrenched in a commission
policy to grant waivers to anyone."
Lawmakers and multiple regulatory agencies have taken steps
to minimize the perception that some companies are "too big to
fail" after taxpayers were forced to bail out mega banks during
the 2007-2009 financial crisis.
The interconnectedness language is only one part of the
SEC's regulatory waiver policy that has come under fire in
Most of the controversy has been focused on questions raised
in April by Stein, who issued a scathing dissent on the RBS
Stein said she felt granting a waiver to RBS following a
severe criminal violation was creating a "too big to bar" policy
that rewards banks with regulatory privileges despite their bad
The main type of waiver at the heart of the debate is known
as a "well-known seasoned issuer" or "WKSI" waiver.
A WKSI is a coveted tag that lets companies raise money
immediately through securities offerings without having to wait
for SEC approval. Companies that break criminal laws or civil
anti-fraud laws can lose the status, unless they apply for a
waiver from the SEC.
Stein's comments have since touched a nerve among Democratic
lawmakers and some of her fellow SEC commissioners with
differing views on the subject.
Some of Stein's concerns were addressed in one other change
made to the agency's internal policy on April 24 after language
was added requiring companies with criminal or civil fraud
violations to show "good cause" for why they should get a
(Reporting by Sarah N. Lynch. Editing by Andre Grenon)