December 13, 2016 / 11:01 PM / 3 years ago

UPDATE 1-Key Republican lawmaker criticizes SEC chair on 'midnight rulemaking' plans

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By Sarah N. Lynch

WASHINGTON, Dec 13 (Reuters) - The top Republican on the U.S. House Financial Services Committee criticized Securities and Exchange Commission Chair Mary Jo White on Tuesday, after she told lawmakers she intends to try to complete new rules before Donald Trump becomes president.

“Such midnight rulemaking is neither conducive to sound policy nor consistent with the principles of democratic accountability,” Chairman Jeb Hensarling said in a statement.

“As the clock runs down on the Obama administration, Chair White and all other regulators who may be tempted to hastily impose another pile of complicated regulations on our economy should know that Congress will scrutinize their actions and - if appropriate - overturn them.”

In a letter sent to senior lawmakers on the Senate Banking Committee on Monday, White said she was declining requests by Republicans to stop working on rules until President-elect Trump takes office because the SEC is an independent agency that is required to perform its duties “without fear or favor.”

In her letter, White cited a number of rules that she said were ready for a vote, including a controversial measure that would limit how mutual funds and exchange-traded funds use derivatives. The rules she cited have all been on the SEC’s agenda for months.

Her desire to adopt final regulations, however, could be foiled by the SEC’s quorum rules. Those rules require a quorum of commissioners to hold an open meeting - something that SEC Republican Commissioner Mike Piwowar could potentially thwart by declining to show up.

Even if White asked each commissioner to cast a vote on the rule behind closed doors, he could decline to participate.

Piwowar did not immediately respond to a request for comment about whether he would support adopting at least some of the rules on White’s list.

In October, however, he said he did not believe the SEC would approve the controversial rule to restrict fund managers’ use of derivatives.

The asset management industry has been critical of the SEC’s proposal, amid fears it could curtail their ability to manage risks.

Disclosure: Two units of Thomson Reuters Corp, the parent company of Reuters, raised similar concerns about the rule in an April 8 letter to the SEC that is available on the agency's website, saying it could harm their foreign currency business. Reporting by Sarah N. Lynch; Editing by Linda Stern and Lisa Shumaker

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