We’re approaching the Atkins era.
Paul Atkins, the incoming Securities and Exchange Commission chair selected by President Donald Trump in December, is likely going to usher in a business-friendly, deregulatory era at the agency when his appointment gets Senate confirmation.
We wrote a primer about what to expect from Atkins’ tenure, which, spoiler, was all about the hands-off approach to regulation securities experts anticipate he’ll take.
Believe it or not, though, the world doesn’t begin and end with the SEC building. There’s life outside the building, and the reverberations of Atkins’ tenure could have fairly sweeping effects on the US economy, in the eyes of some experts.
For CFOs, it’ll mean a new era of corporate strategy, too. How to navigate it? You’ve come to the right article.
Foot off the pedal. In previous speeches, Atkins has made clear his distrust of regulation, calling Wall Street the “scapegoat” for the economic decline in the US that followed the 1929 stock market crash.
Atkins’ return to the SEC (he formerly served as SEC commissioner under President George W. Bush until 2008), coupled with the stances of SEC commissioner Hester Peirce and the overall Trump 2.0 economic agenda, will likely usher in a return to a hands-off stance on corporations and their public responsibility, Lisa Bragança, a former SEC branch chief who now leads a securities defense law firm, told CFO Brew.
“My expectation is that there probably will be a foot taken off the pedal,” she said.
In Bragança’s eyes, Atkins' term could take us back to the more libertarian vision of corporations that “should only be responsible for maximizing profits and nothing else, and it doesn’t matter what the consequences of that are,” she explained, noting “that created problems in the ‘80s and ‘90s, and we had a very large crash in 2008.”
Deregulation isn’t without its benefits. For some, the potential trouble with Atkins’ stated views is the degree to which he likely wants to give corporations free reign, thus relaxing corporate accountability and transparency, Ben Schiffrin, director of securities policy at Better Markets, a nonprofit that advocates for Wall Street regulation, told CFO Brew.
“The problem with so much deregulation is that it lets people think that they can get away with more and more risky behavior,” he said. “That’s what we saw leading up to the financial crisis [in 2008]. You had risk-taking that was unfettered by the regulation that should have been in place.”
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“If everybody's pursuing their interest, sometimes there's just a gigantic snafu,” Bragança added, citing the 2008 crash. “We’re still experiencing the repercussions from that. My concern is that there will be too great a swing in that direction, and then we will start gearing up now for when will the next crash happen? These things do go in cycles.”
How CFOs can steer the ship. It’s that last point—things go in cycles, this era isn’t permanent—that Bragança thinks CFOs should keep in mind as they get ready to deal with the SEC under Atkins.
“Don't treat this as [if] all bets are off and you'll do whatever your CEO tells you to do, because you know nothing will happen,” she cautioned. In recent years, CFOs have been able to point to government regulation as the reason they have to draw the line. That might be ending, but just because the SEC might not crack down on something today doesn’t mean it won’t happen in the future, Bragança noted.
“[CFOs] need to now figure out, how do you push back to protect yourself?” she added. If nothing else, think about your own career.
“There’s a statute of limitations, but it’s pretty long for fraud,” Bragança noted. “Are you willing to bet your career” on Atkins’ tenure? Knowing you might only get a slap on the wrist in the next five or so years “doesn’t mean you should do it, or not disclose something,” she stressed.
“People go into these jobs, CFO or CEO, with good intentions. And sometimes they will fudge around the edges, not with evil intent, but [assuming] it will get corrected in the next quarter—but then it doesn’t," she explained. “They have every reason to believe that it’ll get corrected in the next quarter [again], but then it doesn’t."
“Fraud tends to be a slippery slope,” she added. “People give in a little bit to the CEO, and then they give in a little bit more, and then they give in a little bit more, and now they’re in a pickle.”