The SEC and the Vacancies on the Commission

The WSJ hasreported that the Administration is searching for replacements for Commissioner Atkins who is expected to leave the SEC this summer.  Names under consideration?  Douglas Cox, Steven Guynn and Stuart Kaswell, as well as Troy Paredes.  Paredes is a law professor at Washington University in St. Louis.  Cox and Guynn work at Gibson Dunn, Kaswell at Dechert. 

The effort provides a possible basis for a bargain with the Democrats in the Senate.  Currently, two nominees submitted by the Democrats for the Commission are sitting in limbo.  A deal could be struck that would package the two Democratic nominees with the Republican one, all nominated by the President and all given fast track Senate approval.  It would be a good deal from the Administration's point of view.  The Senate Democrats will eventually get its two positions.  If there is regime change in November 2008, it might be difficult for the Republicans in the Senate to retain control over what will be the two Republican slots (one currently occupied by Commissioner Casey) since they do not control the chamber and are in fact likely to lose ground.  Obtaining confirmation of a replacement for Atkins will ensure that the seat stays in the hands of a real Republican.

The issue is whether the Democrats will accept such a deal.  Without Commissioner Atkins, the Commission will have only two commissioners, both Republicans.  Moreover, Chairman Cox can be expected to step down sometime before the November elections.  A Commission with only one or two commissioners can still conduct business (see 17 CFR 200.40, providing that anytime the number of commissioners falls below three, a quorum will be the total number of commissioners).  Nonetheless, it would be unlikely that a rump Commission would be tempted to make important or controversial decisions, essentially leaving policy issues on hold until after November.  Thus, by not horse trading at this point, the Democrats largely ensure that the Commission is inactive until after the elections, when they will have a three person majority.

The main problem, besides pressing issues that require resolution?  Enforcement actions.  To the extent that Atkins leaves in the summer and Cox steps down before November, it will leave Casey with unilateral authority over all enforcement proceedings.  She does not have a particularly pro-enforcement reputation.