▶ 0:00:00I like to thank Chairman Atkins for being here today and for his leadership at the SEC. Established in 1934, the Securities and Exchange Commission is a primary funding primary federal regulatory agency responsible for enforcing US security laws. The Commission has three-part mission: protect investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
▶ 0:00:23The SEC has played a critical role in helping American capital markets become the most robust and attractive of any in the entire world. If our capital markets were are to remain the envy of the world, we need to encourage capital formation and ease regulatory burdens that make it too difficult for businesses to grow. Too often, past leadership at the SEC has implemented sweeping regulations without considering public feedback or carefully weighing the costs and benefits.
▶ 0:00:51I'm glad to see the Commission has already taken steps to roll back some of these regulations that would have made American companies less competitive in an ever-changing global economy. In addition, advancements in blockchain technologies and digital assets also present an incredible opportunity for American entrepreneurs, businesses, and our economy. If we don't take the lead in making the United States a hub for digital asset innovation, our global competitors will.
▶ 0:01:15Markets thrive the most when they can rely on regulatory fairness and Regulation by enforcement is not just unfair, it is counterproductive. It also ignores Congress and the legal limits it places on regulatory bodies. As lawmakers continue bipartisan conversations around the market structure frameworks and digital assets more broadly, the SEC and other regulators should work to provide as much clarity to market participants as soon as possible.
▶ 0:01:41To that end, the newly created crypto task force at the SEC has provided a forum for regulators, innovators, and market participants to collaborate and provide recommendations on the regulatory framework for the digital asset ecosystem. I'm looking forward to hearing more about the task force progress so far as and how we appropriators can support their continued work. Chairman Atkins, thank you for your willingness to serve. Your decades of experience both at the SEC and the private sector make you the right person to lead the SEC at this important time.
▶ 0:02:11I look forward to hearing from you about your vision for the SEC and the commission's budget priorities as we look forward to FY 2026. I now recognize the ranking member, Mr. Hoyer, for his opening statement. Thank you very much, Mr. Chairman, and Mr. Atkins, Commissioner Atkins, to the hearing. And thank you very much for taking the time to stop by my office.
▶ 0:02:35Subsequent to our conversation, I talked Gary Gensler, whom you know and and um who had high remarks for you. That did not mean, obviously, as you well know, that he agreed with your propositions any more than you agreed with his propositions, but he he believes that uh I asked him what he thought. His father was a good friend of mine. He's from Maryland. I've known him for a long period of time.
▶ 0:03:02Uh so, I thank you for being here, and I thank you for, as uh the chairman did, for agreeing to pursue, even though we may disagree, the fact that you're highly perceived by your colleagues is I think important. Today's hearing on the Securities and Exchange Commission comes amid circumstances somewhat reminiscent of uh the time of the agency's founding.
▶ 0:03:26Uh though not as dire as the Great Depression, there's a significant volatility and lack of confidence in our markets right now. The Trump administration's tariffs shocked the stock market and rattled US Uh the value of the dollar is down around the world. Could be good or could bad in some instances. Past quarter, our economy shrank for the first time since the COVID-19 crisis.
▶ 0:03:52In April, consumer sentiment slid to its second lowest reading on record with Americans rightfully fearing what rising costs from tariffs will mean for their finances and their families. Trump's trade agenda paired with Republicans efforts to explode the national debt by passing massive tax cuts for the wealthiest among us that America lose its last perfect credit rating just last weekend.
▶ 0:04:19There are also growing concerns of market manipulation and insider trading related to Trump's tariff pause announcement when he said it was a good time to buy. It turned out to be a good time to buy as he announced just hours later he was going to change his trade policy. Today's circumstances may be similar as the SEC's funding, but I fear the agency's response may not be.
▶ 0:04:45The SEC ought to address the current mistrust and fraud in our markets by better protecting investors and enforcement. I I had the opportunity to read your testimony and I thought it was comprehensive and good. On page three, you said policy making will be done through notice and comment rule making not through regulation by enforcement.
▶ 0:05:10I think I understand what you mean by that but I also am concerned as to the reduction that we have seen in enforcement money. So, I'm going to I'll ask you questions about that. The SEC in my view ought to address the mistrust and fraud in markets by better protecting investors and improving enforcement not reducing it.
▶ 0:05:34I'm concerned by the reports that the SEC has lost between 15% and 19% of its including large reductions to its legal affairs, investment management, and trading and market divisions because of DOJ purge. Those cuts don't save the taxpayer any since SEC is entirely fee funded.
▶ 0:05:57Although as I understand your testimony, you may clarify that we're now down to zero per million because the budget is already paid for in the first five months. Is that what I read correctly in your statement? These reductions will however make it harder for the SEC to enforce laws and regulations that keep our markets fair, orderly and efficient. An absolutely essential part of uh your work.
▶ 0:06:24Since Trump took office, the SEC has sought to dismiss numerous enforcement actions including many with direct or indirect implications for Trump's families or his own best financial interests. Chairman Atkins, I understand that many of these changes were put into motion before you started your role a few weeks ago.
▶ 0:06:46Although you were complimentary of those efforts in your Many Americans share my concern that this overhaul weakens the SEC by extension our markets. We need to ensure, as you have said you want to do and as I believe you do want to do, SEC can do the job it was created to do to restore confidence in our markets, to go after insider trading and corruption, and to protect American investors.
▶ 0:07:11I look forward to working together with you to accomplish those objectives on behalf of the American people and our economy. Thank you, Mr. Chairman. Thank you, Mr. Hoyer. Today we welcome the testimony of the honorable Paul Atkins, chairman of the United States Securities and Exchange Commission. Chairman Atkins, without objection your full written testimony will be entered into the record. With that in mind, we ask you to summarize your opening statement in five minutes. All right.
▶ 0:07:37Well, thank you very much, Chairman Joyce, ranking uh Hoyer, and members of the committee, the subcommittee. Thank you very much for inviting me uh to testify today. So, this testimony I have to hasten to say reflects my individual views as chairman of the commission and do not necessarily reflect reflect the views of the commission or my fellow commissioners. Yeah, yeah.
▶ 0:08:02Uh I'm grateful for the opportunity to discuss SEC, including our important mission on behalf of our fellow citizens, investors, and taxpayers, and to speak to some of my priorities as As I testify before you, this is my 20th working day uh as chairman back at the SEC. So, first and foremost, I want to say that it is a new day at the SEC. I'm determined that we return to our core mission that Congress set for us more than 90 years ago.
▶ 0:08:31The SEC's three-part mission, as the chairman uh stated earlier, was enunciated by Congress in Exchange Act, and that's investor protection, which is vital to our mission, holding accountable those who lie, cheat, and steal. Capital formation is also at the root of what we do, fostering a direct economical route for investors' capital to find its way to entrepreneurs and industry to create products and services.
▶ 0:08:57And the third core part of our mission is maintaining fair, orderly, and efficient markets. Congress calls on the commission to ensure that our regulations balance costs and benefits, that they do not become too burdensome by adding needless friction to the marketplace, thereby undermining the capital formation that yields so much benefit. My time in public service and in the private sector has allowed me to see firsthand how regulations affect markets and investors.
▶ 0:09:25They can stoke facilitate investment goals, and create opportunities or burdens on businesses' ability to compete and to serve their How we implement regulations at the SEC is crucial. It's one thing to write a regulation, quite another for it to achieve its intended goal. Regulation should be smart, effective, and appropriately tailored within the confines of our statutory authority.
▶ 0:09:54A key priority of my chairmanship will be to develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road for the issuance, custody, and trading of crypto assets, while continuing to discourage bad actors from violating the law. Clear rules of the road are necessary for investor protection against fraud. Policy making will be done through notice and comment rule making, not through regulation by enforcement.
▶ 0:10:24The Commission will utilize its existing authorities to set fit-for-purpose standards for market participants. The Commission's enforcement approach will return to Congress's original intent, which is to police violations of these established obligations, particularly as they relate to fraud and manipulation. The SEC is returning to rule making to is returning rule making to regular order.
▶ 0:10:50Our comment periods will not be artificially short, and the public will have ample time to provide feedback. The SEC will also be sure to take into consideration how rules overlap and how regulatory burdens build, in keeping with our obligation to consider their costs and their benefits. There will be targeted, common-sense reorganizations to come at the SEC.
▶ 0:11:14To start, I'm seeking approval from Congress to disband what's known as Its innovation should be ingrained into the culture SEC-wide and not limited to a relatively small office. We've begun a process to review our technology infrastructure and our contractual obligations.
▶ 0:11:34So, to close, we will work with our colleagues in the administration, especially other financial services regulators, and with Congress to bolster the economy and build on US leadership of the global markets. This SEC will take every effort to ensure that the United States is the best and the most secure place in the world to invest and do business. So, thank you all very Thank you, Chairman Atkins. I now recognize myself for questions.
▶ 0:12:04Chairman Atkins, for the past several years the SEC has prioritized a more partisan rulemaking agenda rather than fulfilling the Commission's primary Are there any rules that former Chair Gensler proposed or finalized that you are focused on rescinding? And are there any rules that Congress should defund? Uh well, thank you, uh Chairman Joyce. Well, I've again being at the SEC now, this is my 20th day, so it's been like drinking from a fire hose uh to get up to speed.
▶ 0:12:33So, uh you know, we're reviewing what went on. Obviously, things happened before I was there uh between inauguration and then the 21st of April when I got to the SEC. So, um uh you know, I'm reviewing what's going on and then obviously will be talking to my colleagues about uh and the staff about uh you know, working forward on Not trying to put you on the spot, sir. I appreciate the fact. Uh do you intend to take a different approach to rulemaking than your predecessor did and if how so?
▶ 0:13:05Well, as I mentioned, uh you know, I do think that the notice and comment process called for by the Administrative Procedure Act is really essential. Um that's is a way for a regulator to make informed decisions and even getting feedback from other agencies of the government um to make sure that we're not uh traipsing, you know, beyond our remit and affecting what other agencies and uh departments are trying to do. So, that's a vital aspect of it and that I take seriously.
▶ 0:13:36Um and so, we will definitely work towards that. And then, uh with respect to um you know, regulation through enforcement, I think that's one thing that uh we we need to have clear rules and to try to do it in kind of a scattershot way is is not the way to be done, I think. You said that one of your top priorities is develop a rational regulatory framework for crypto asset markets that establishes clear rules of the road. What does a regulatory framework look like to you?
▶ 0:14:05And what type of clarity is needed for market participants? Well, that's a very good question and that could I could answer that uh take a long time to do it, but uh but let's suffice it to say to the same rules, so you've got 2 minutes and 40 seconds. Okay. Yes. Well, suffice it to say that um uh you know, the the I think the problem is right now that there's a lot of uh uncertainty in the marketplace as to what's a security, what's not. And so, that affects innovation.
▶ 0:14:33And so, it goes beyond crypto assets, it goes to the blockchain and the potential um uh ramifications of for uh efficiency uh and safety in the marketplaces that uh blockchain distributed ledger technology can do.
▶ 0:14:49But if lawyers cannot even write uh opinions for their um clients as to uh you know, what's a security and what's not, which is, you know, the situation right now, that just inhibits everything cuz capital doesn't flow to where it's it might be needed and and be um you know, soundly um fostered uh for uh capital formation and new products. Uh it just inhibits everything. So, that's what I mean by trying to get uh you know, a rational framework.
▶ 0:15:18I think we have the authority at the SEC under the various securities acts and I intend to work with Congress and with my colleagues in that vein. Thank you. What tools do the SEC currently have to develop a regulatory framework for digital assets and what additional resources do you believe might be needed from this committee? Well, we have the biggest tool.
▶ 0:15:40We have a lot of good smart folks at the SEC and many of the offices and divisions and so that's you know, we'll definitely use that number one resource. We'll also be through round tables and and as I mentioned as we do concept releases and and proposals, we'll be taking in comments from those outside of the SEC.
▶ 0:16:04So those are the main tools, the exchange act and the securities act and the 240 acts give us a pretty broad exemptive authority and authority within the public interest to make changes to our forms and to to to to accommodate this new technology which the SEC has done in the past not for crypto but for other aspects. Thank you, sir. The chair now recognizes the ranking member, Mr. Hoyer for any questions he may have.
▶ 0:16:34Thank you very much, Mr. Chairman. Let me let me return to what what there's been some discussion here. I am very concerned about the fact that we are reducing enforcement in many in yours and particularly in the IRS where where my opinion enforcement is being devastated.
▶ 0:16:57We know as human beings that if we don't think there's a cop on the beat, we may go 55 miles an hour rather than 50 miles an hour. That's human nature. We all experience it. so I'm very concerned about the fact the reductions in personnel at your agency prior to your beginning this iteration of your career there. were pretty substantial.
▶ 0:17:27Most of the reductions were in your enforcement areas. Am I correct that since you left the first time when you said there were 3,600 folks there and in the FTEs, and I forget how many I think 2,000 on the contract side.
▶ 0:17:47very substantial increase in your Uh well, so I I should I should you know, first of all say that in our enforcement division, um the head count's down 15% and that is not as high as for example in the general counsel's office or investment management or or in trading and markets.
▶ 0:18:10So the enforcement division is at you know, the the average of of the overall decrease in head as you answer that? Were those DOJ inspired or internally? In other words, did the SEC or and or commissioners make that determination or did DOJ implement those reductions?
▶ 0:18:31No, that actually the employees themselves made it because these are all voluntary retirements and some people took the buyouts and whatnot and a number of my friends, you know, that I've known for years were the ones who took some of these retirements and obviously we'll we'll miss their expertise and and their participation, but you know, they some of them wanted to move away, some of them took you know, decided that this now's the time to retire cuz they live farther or when whatever the decisions
▶ 0:19:02might be. So I think all that's good, but Because our time is limited, let me follow up on that question. So these were made by the employees themselves, not a management decision as to what was needed and what was not. Exactly. These are all voluntary. concerns me. Uh because, of course, 2 million people were sent the opportunity to uh retire. 2 million all of our people. Had they all walked off, government would have stopped.
▶ 0:19:31And the American people would have noticed it within 24 so, I'm very concerned about the fact this These opportunities were given, in my view, without a rationale articulated, at least, that I've been able to see of why X, Y, and Z employees were no longer needed to accomplish the objectives Congress had set forth.
▶ 0:19:56Um would that be an accurate No, I actually I look at it another way. I mean, these are free people who are deciding that they want to retire, and that leaves room for We have a lot of very competent people who are younger, and as they uh this gives them room to grow, and uh so, part of what I would like to accomplish is to help break down silos at the SEC because too often young people come in full of vim and vigor, but then are kind of stopped in their
▶ 0:20:27progress as professionals to uh develop and to move around the agency. So, I view this is as a normal thing. There are 600 and some odd people who left out of uh uh so, that's the 15%. So, I think uh you know, we miss uh obviously their expertise, but I think that we can we have plenty of good expertise there at the commission, and I intend to tap into Okay. Let me go back to my question.
▶ 0:20:52Has your workload increased since you uh Uh well, so I I don't know the precise answer to that, but uh we're getting the job done. Uh the requests that I've been making to the staff have been answered with alacrity, and so I I feel confident that we're able to handle it and so you know I I definitely I share your concern to make sure that you know we fill the spots that are needed but I think it's good to
▶ 0:21:22every once in a while have a house cleaning and to have a reorganization and to look at what's going My last 9 seconds. Uh prior to rules do you have to discuss them with either the secretary or the administration? Prior to Prior to your issuing rules or enforcement actions or some actions do you have to check with the secretary of the treasury or the White House?
▶ 0:21:48No we we we file with Lyra which is part of Office of Management Budget and that's SEC has done that in the past and so that's that's part of the process. Thank you. Thank you. The chair now recognizes the gentleman from Wisconsin Mr. Pocan for 5 minutes for questions. Thank you. Thank you Mr. Chairman and thank you Mr. Atkins for being here. Let me just do one follow up from what Steny asked because I just want to make sure I understand. So there were no staff reductions at all by firings they're only were by people leaving early out of the SEC?
▶ 0:22:19From what I understand this is all voluntary retirement so people that took through various programs you know deferred resignation and those sorts of Okay. I just wanted to clarification for myself more than anything. Um so I appreciated how you talked about one of the three priorities is investor Excuse me going after those who lie cheat and steal. I think that's really important for the market so people have confidence in it.
▶ 0:22:49One of the concerns I have is that you know since COVID you know the market has been doing really well until very recently with some of the talk about tariffs being on again and off again on again off again. The market's had some real volatility, particularly um on April 9th when at 9:37 in the morning uh the president put out on his social media, "This is a great time to buy." and initialed it. So, that minute came from him.
▶ 0:23:16And then later that day uh the announcement of tariff pauses came about 4 hours later at 1:18. Since then um there was uh just today Secretary Duffy supposedly that morning traded in 34 companies including uh companies affected by tariffs uh like John Deere and Shopify. Uh Attorney General Bondi also uh did some trading that morning. Marjorie Taylor Greene. And those are just the ones we know of right now.
▶ 0:23:43So, clearly, you know, this would be of concern if someone had a huge signal releasing information uh public information ahead of time about something that could affect stock trades. So, I guess my question is specifically, what are you doing to to look into this particular incident that happened um you know where the signal sort of was given and how are you looking to see who might have unfairly taken advantage of this. I know there was another trader too who 10 minutes before the post put out a massive call option and stood to benefit greatly on this.
▶ 0:24:12So, this is the kind of manipulation of the market I think that hurts the confidence that you're trying to restore uh to the market. So, what specifically are you doing around this? Uh well, Congressman, I can't really talk about any, you know, investigations current or potential or past uh because How about philosophically? Uh if someone did what happened, philosophically, is this market manipulation?
▶ 0:24:37Well, around that particular incident I, you obviously can't speak to it, but um but in general, you know, the the rules around, you know, trading and and whatnot have to do with material non-public information and uh and a and a duty. And so, you know, all those elements um need to be matched. material non-public information? Because I'm one of the people who thinks members of of Congress shouldn't be able to trade stock cuz I think we get a lot of inside information.
▶ 0:25:03So, for that material non-public information, if someone indicates something prior to something significant happening that's going to affect the market, would that be in the category of manipulation? In your philosophical sense? Yeah, I I think it all depends on the facts and I and you know, I I think if once once it's public, it's you know, open to everybody to obviously see the the facts.
▶ 0:25:28So, once an announcement's made, so I think you know, it all depends on the circumstances and uh So, philosophically, if I know a company in my district is about to get approved by CMS to for Medicare, that means their stock's likely going to go up. If I put that information up before anything was announced, would that be in your philosophical view market manipulation? Yeah, I it just depends.
▶ 0:25:53I mean, I I think it you know, if the person isn't trading himself, I don't really see that as manipulation. I just I think it just depends on you know, what the circumstances are.
▶ 0:26:05my husband and my brother and my neighbors all traded at that point, not Would that be market manipulation potentially under your philosophical Well, the problem with with this whole, you know, area is that it's all very very circumstantial, you know, built on circumstantial circumstantial evidence.
▶ 0:26:27So, but you know, the the I share concern about any kind of untoward activity in the marketplace you know, goes against the law and SEC rules. And so, I assure you that you know, we will investigate in the 23 seconds I have left, do you think my example I just gave, would that be worthy of looking closer We have a lot of smart people and very ambitious people in our enforcement division who
▶ 0:26:57read the papers and and look at things and they are quick to go to plant their flag to to launch investigations. So, you know, I I have confidence in in our guys being able to I'll yield back. Thank you. Thank you very much. The chair now recognizes the gentleman from Maryland, Mr. Ivy for 5 minutes. Thank you, Mr. Chairman, and good morning, Mr. Chairman, and welcome. Just to follow up on Mr. Pocan's last question.
▶ 0:27:26So, in this hypothetical, this would be something that would be if it were to be investigated, it would be investigated by the enforcement This meaning the insider trading scenarios you guys just walked through. Yeah, and usually someone's, you know, enforcement lawyers would identify something potential that they would pick up from the tip. We have a very robust tip line that comes in.
▶ 0:27:53We have that and and all of that situation. Got a separate line for you. And this involves Justin Sun, who is um had a case the SEC brought charges against him in March of 2023. The charges were fraud and other securities law violations. The case moved forward and was continuing to move forward.
▶ 0:28:17President Trump was elected in November And as you may know, the the Trump family has begun meme coin investments of some kind. The DWFLI coin in particular, Mr. Sun bought $30 in that coin on November 25th, 2024. On January 17th, 2025, Mr. Trump posts a tweet and launches the Trump coin.
▶ 0:28:44That's the dollar sign with Trump after it all in quotes or Then Jan- in January 19th, Sun bought another 45 million of the WLFI coin. And just so we're clear, the WLFI piece is sort of, I guess, the umbrella group, and he's got these other meme coins underneath it, Trump, Melanian, and the like.
▶ 0:29:08January 20th, which is inauguration day, after he's sworn in, and after he does the parade, he then does a tweet retweeting the January 17th post that launches the Trump coin. on February 26th, the FEC filed a a stay. It's a joint stay motion. It was joint between the the plaintiffs and the defendants. But SEC joined in this to stay the case as it gets Mr.
▶ 0:29:38Sun's You assumed office after all of this happened, so that's April 21st. April 23rd, Mr. Trump announces a dinner for top investors in the Trump coin. And then WLF on May 1 announces a new coin, USDI 1, which the Trump family also benefits from. And this is being used by an Abu Dhabi investment firm for its $2 billion investment in crypto exchange with Binance. I'll skip ahead.
▶ 0:30:08I'm running out of time. May 20th, Mr. Sun tweets that he's the top holder in the in the Trump coin. So, in the bidding process, he ends up coming out on top. And this I guess it's this morning he announced this on Twitter. And then um the dinner that they're going to have with for the highest bidders is 2 days from now. So, from my perspective, you know, these are concerning things.
▶ 0:30:36I didn't really get to the the 320 million in trading fees that the Trump family has accrued since he launched these these meme coins in Along the lines of what Mr. Pocan was asking, cuz this frankly to me smells very bad.
▶ 0:30:56And my hope would be that the SEC would be investigating that piece, but it's especially problematic here because it's intertwined apparently, at least chronologically, with the decision that the SEC made jointly with the defendants to pause that civil case. So, I was wondering if you could share any information with us about the status of that decision and where things are going from your perspective with respect to the SEC. Okay, well, thank you, Congressman.
▶ 0:31:27Well, first of all, I don't know anything about that case, so I I can't speak to it. And obviously, it's an active case anyway. But but as far as you know, the the more general proposition of these meme coins and whatnot, they are collectibles. Before I got to the SEC, the staff of Corporation Finance came out with a with guidance and basically saying that meme coins are collectibles and and not securities.
▶ 0:31:56So Well, two quick points. One is you've got a letter pending Warren and Representative Waters. This was sent to your your predecessor, the the acting chair, but it it goes to these issues. And it's got information it requests for you all to respond to that it would address these issues. So, if you're not aware of the issues, I hope you'll take a look and send a response.
▶ 0:32:25There's another letter that goes to the insider trading piece that Mr. Pocan was referencing. That's dated April 10th, and it goes directly to you. So, I appreciate the the chair, but I would ask that these letters be made part of the record and we look forward to hearing from you in response to both of those letters. Yes, sir. Thank you. Without objection, the chair now recognizes the gentleman from Georgia, Mr. Bishop for 5 minutes of questions. Thank you very much, Mr. Chairman. Welcome, Chairman Atkins.
▶ 0:32:54Investor Advocacy Legal Clinics assist predominantly elderly investors who've been wronged by their broker or their uh often involving their um retirement And those clinics also provide investor education and fraud awareness by meeting with investors in our local communities uh to um advance financial literacy and ensure that the investors understand
▶ 0:33:25what their rights are. Unfortunately, today there are only 10 investor protection clinics across the and most of them are concentrated in the New York area. That's down from 24 clinics uh that were operating uh a decade ago. I understand this is because the funds that subsidize those clinics, for example, from FINRA and state regulators have been exhausted.
▶ 0:33:52What can the SEC do to prevent or discourage the closure of additional clinics and how are you promoting these and other resources uh to at-risk Well, thank you, uh Mr. Congressman. Um that's uh uh very interesting and that it's uh down the road of what I really want to achieve while I'm chairman.
▶ 0:34:17Uh back in the uh mid-90s, I was uh a counselor to Arthur Levitt who was uh chairman of the SEC and so he had me set up uh what we called the Consumer uh Advisory Committee. Um uh Consumer Investor Advisory Committee, I believe was so called. And then Arthur went out on the road to do town halls around the country for senior citizens and and elsewhere. So, I intend to rejuvenate that effort.
▶ 0:34:44I didn't realize those those that data that you just talked about, but I do intend to focus on you know, senior fraud on military folks. When I was a commissioner, I went around the country as well to uh military bases and to universities and old folks homes and and things like that to talk to people about about these issues. So, I think Arthur Levitt had a great idea that he set up back then.
▶ 0:35:13It's kind of fallen away over the years, but I intend to rejuvenate that and I'll look into these um uh these clinics um that you've mentioned. With reductions in staff, uh that's going to uh make it a little bit challenging for you. So, I was wondering how you were going to uh to navigate that challenges. Well, I'll definitely look at that. And obviously, you mentioned FINRA and and other industry groups.
▶ 0:35:40I know SIFMA, the securities um industry and financial markets association also sponsors things for uh for schools, uh you know, the stock market game and things like that to try to teach about investing and savings. So, those are all issues that I think are very good. We have uh an investor advisory committee at the SEC plus also investor education committee headed by Lori Schock who whom I've known for decades.
▶ 0:36:08So, I you know, look forward to working with them on that. Thank you. I I've watched with interest uh Mr. Chairman, the evolving lambs landscape of cryptocurrency. I understand that you're interested in loosening restrictions on crypto and the exchanges through the rule making What do you see as SEC's role in regulating cryptocurrency?
▶ 0:36:33And what aspects of cryptocurrency do you think are the most important to address to cut down on the prevalence of fraud and what are effectively useless and valueless coins? Well, I share your concern about fraud in any market. And but you know, we have a lot of fraud in the traditional financial markets as well.
▶ 0:36:54And I think in many respects you know, on the digital assets side and the blockchain side it's there's more transparency frankly than for example over cash and and other sorts of things. So so that's one important thing. Innovation is another that you know, we need to foster. But the real rub right now is that there really are no rules that are tailored for this this part of the market which has grown and and burgeoned.
▶ 0:37:23And if we don't have firm rules that invites fraud because investors can't tell the wheat from the as as things go. So what I think we have to have is firm rules that give people direction and and lanes to stay in and outlines our jurisdiction as well. And that then we can you know, take action against fraudsters and others who are trying to scam people. So I I share that concern and I want to address it.
▶ 0:37:54Thank you. My time has expired. Thank you, sir. The chair now recognizes the gentlewoman from Washington, Ms. Thank you, Chairman. And thank you, Chairman Atkins for being here today. Just following up on what my colleague Mr. Ivy was saying. So I heard you say that meme coins are essentially collectibles. So would you would you say it's the opinion of the SEC that these meme coins are equivalent to like beanie babies?
▶ 0:38:26That's essentially what the corporation finance staff came out with as in their guidance back in I believe January. So and I and so you know collectibles come in all sorts of things. I mean meme coins are not aimed at being sort of like Bitcoin or something like that.
▶ 0:38:47And so people collect all sorts of things and you know it's it's it's a new obviously collectible type of genre but you know you know it's if it doesn't have the attributes of the securities as our staff has outlined.
▶ 0:39:03So that's one thing that you know I want to explore as we go you know with respect to trying to carve out you know clear as I talked about clear rules of the road that will help guide this and govern this digital assets space. So I'm working with the CFTC for example where they might have jurisdiction over digital assets that are commodities and not securities.
▶ 0:39:28So it's it's this whole welter of you know potential rules and uncertainty out there between the what people as they try to parse Supreme Court rulings like the Howey test and others that are not really tailored to the 20th century 21st century. And so we need to I think that's what we can do at the SEC to provide certainty. Thank you.
▶ 0:39:59and perhaps troubling. Um I I want to ask you another issue that is um close to home for us. I represent Southwest Washington in Congress a lot of timberland. Most of my family's worked in timber loggers And um we're seeing a shift in the way that property is being held from local towards real estate investment trusts and often with that shift we're losing public access places watering hole like we used to go
▶ 0:40:29to places that recreate we're we're losing that and I I wanted to ask could you tell me about what kind of this publicly traded timber REIT should disclose the SEC and and how that information helps your commission determine whether this is a fair and orderly process. That's a great question and I so I have say I'll have to look into that.
▶ 0:40:54I'm not I'm not a former REIT lawyer or whatnot so that area is not part of my expertise but I know there are a lot of people at the SEC who have obviously focus on REITs and we've had over the past you know three decades rules that have come out to focus on you know those sorts of asset-backed securities that are that are listed.
▶ 0:41:19So happy to look into that and discuss further and put you into contact with our staff. Do you do you have a perspective as to whether or not people who are considering buying shares of REIT should have information regarding foreign ownership of that land farmland timberland whatever it is. I'd have to really look into you know what's already required and and then you know but it's all of all those sorts of things I I can you know put you in touch with people who know about that.
▶ 0:41:49Okay. Thank you so much. I yield back. Thank you very much. Second round of questions. It's unfair me fighting all of you. I'll do I give it my best shot. Chairman Akens the crypto task force has created earlier this year to provide a regulatory clarity and develop potential frameworks to regulate digital assets. Would you describe the task force work up-to-date and the lessons learned if any? Is the task force working with the CFTC?
▶ 0:42:21And if not, do you anticipate them working with them in the future? Oh, well, thank you for that question. after inauguration, acting chairman Ueta named Commissioner Peirce to be head of that crypto task force. I think she's, you know, super qualified to do that.
▶ 0:42:42And so, she's formed a team and they have gone after this to, you explore and and prepare for, you know, potential rule-making in this area. And so, they've done a lot of work. I'm I'm not completely familiar with it just now. 20 days worth. Yeah, right. 20 days worth.
▶ 0:43:03But, I've been seeing their handiwork that they've produced and I think, you know, they're group of smart people and I think that's I think it's very valuable what they're And so, I look forward to working with the task force for the roundtables that they've done so far. I think that's produced a lot of good testimony from from people, you know, outside of the building.
▶ 0:43:28We definitely will work with the CFTC and I'm looking forward to Brian Quintenz's becoming chairman if the Senate confirms him. And so, I think he's very qualified for the job and I've known him for a while. So, I think we can work really well together.
▶ 0:43:45And so, it's good to have the SEC and the CFTC kind of working cheek to jowl with respect to these issues so that nothing falls through the cracks as far as whatever the framework that we come up with to make sure that spot market is looked at and the security side and commodity side. Cheek to jowl, that's a new one for me. Do you plan to create a new division or office within the SEC dedicated specifically to digital assets?
▶ 0:44:16Uh well, I at this time, no. I um I think that uh you know, digital assets are another part of the financial marketplace and this so they should fit in uh you know, with uh the current divisions that we have and uh that's one reason when I mentioned about FinHub. Uh you know, this the focus on innovation and new technologies should be dispersed throughout the agency. So, every part of the agency is focused on things.
▶ 0:44:45Um you know, the agency is uh organized pretty much by statute now, which is is a bit antiquated because in the old days brokers were brokers and investment advisers were investment advisers and and whatnot. Uh now, there's a lot of fluidity between that just the way the market has um evolved. So, uh uh when uh you know, the questions come up about you know, potential reorganization, who knows? But I think we I I look forward to working with my colleagues.
▶ 0:45:15I want to optimize the um the efficiency and the focus of the agency so we can catch criminals and and uh and deal with them and uh make referrals to uh the um the Department of Justice where necessary and to the states and then to uh to have good, efficient rules that provide people certainty about how they can run their business and and develop new products.
▶ 0:45:44In preparation for today, have you given any thought to what resources would be required to fund the crypto task force for 2026? Uh not uh not in specifics. Uh so, we uh you know, we still the 2026 budget is uh is under uh you know study and in development I guess at the administration and so looking forward to working with them and discussing you know with them what our needs are.
▶ 0:46:14It's tough to fund what we don't know. we just want to make sure that we give you the adequate resources so you can properly do your job, sir. Chair now recognizes the ranking member for his round of questions. Now I'm on. I may be off but on. Mr. Chairman, let me say something You've indicated you've only been there 20 days.
▶ 0:46:46Rarely has somebody gone on the SEC with the kind of experience and inside information about how the SEC works than yourself with all due respect. You're not a new person on the block to this Let me I want to go to one of the chairman's questions. You're organized by statute. Do you believe you can affect a reorganization on your own and would you have to come to Congress to do that?
▶ 0:47:14Well, I I we're for example with FinHub we're coming to Congress to ask for of you know of our allocations and our budget. So I it depends. I you know I have to learn the ins and outs of the budget process as a commissioner. You know that was this that's the budget process is vested in the chairman and so I really didn't have any insight to that. And the budget experience I have goes all the way back to the early 90s.
▶ 0:47:44So I'm sure that things have changed here. And so with respect to the SEC, you know it the 15 years that you know since I was last there Dodd-Frank came out and so huge amounts of um processes within the walls of SEC have changed. The whistleblower system, you know, is very robust. And so, that's completely new to me.
▶ 0:48:07So, there are a lot of aspects to the job that you know, is fascinating and I'm having fun diving into it. But, Well, I appreciate you recognizing that the Congress of the United States has the authority under Article 1 to set up agencies, approve their reorganizations, and either by rescission any cuts that might be made to the budget that is passed by the Congress.
▶ 0:48:36The budget is after all an advisory instrument. It is a mandatory instrument for the agency. So, let me while you're in my office, I thank you again for visiting with my office. You mentioned you're conducting a staffing review. I asked you something about staffing at the beginning. What levels of staffing the SEC needs to do in its missions? As I implied in my question, I don't think DOJ had any idea what you needed.
▶ 0:49:05I think they had an idea they wanted to X numbers from the federal government just as Musk wanted to cut $2 trillion, which of course he didn't. And I understand from my colleague that he has now decided he's going to return to the private sector and not even contribute money to campaigns anymore. I think he's been burned by what he did. But, I don't want the American people burned by what he did.
▶ 0:49:29So, how long do you think it will take for you to do the study as to what is needed to accomplish your current objectives? Well, we're working on it. Starting and so, I I don't have any idea, but it's I don't I think here in the next few months as the the budget process rolls out, we will be prepared to do it.
▶ 0:49:53Um, you know, they I think of the from what I understand from our uh major divisions that you know, they have uh the people necessary to do what you know, to accomplish what they need to do. And so, but um you know, I intend to look into that. Mr. Atkins, I think I recall in in reading your testimony that you indicated part of that is to decide whether or not people were let go whose services you needed and either to hire them back or to hire somebody to do those services.
▶ 0:50:23Is that accurate? Or promote people from within cuz there's a lot of uh a lot of good people at the SEC and um and for them to be promoted and to be recognized for their expertise, I think is is great. It's a great way of of uh you know, rejuvenating an agency.
▶ 0:50:42So, I think it's In your study, uh I would appreciate if you include whether or not people were removed who in retrospect should not have been removed because their services were critically important. And when you say with all due respect, Mr. Chairman, I don't think much of this was voluntary. I have 77,000 federal employees who work uh for the federal government who live in my district, the largest in the country.
▶ 0:51:13The overwhelming majority of them thought that was they had no options. They were either going to take uh the Vera uh they were going to get riffed or they were going to get fired. And that kind of alternative to perceive that as voluntary, I think frankly is uh somewhat Pollyannish with all due Uh and I think your your employees and the employees of the federal government have been treated very very poorly.
▶ 0:51:42Very Uh causing great trauma. Which by the way, Mr. Vote said he wanted to do. He is quoted as saying, "I want to Mr. Chairman, if you just give me a little We had a second round of 5 minutes. You know, this isn't a question. This is sort of a lecture on a poor man who's been there for 20 years with all due respect to my dear friend. continuing for just a minute.
▶ 0:52:09I hope you will bring to leadership as chairman a sensitivity which Mr. Musk and his minions did not bring to their They fired people to get numbers, not to get efficiency. No, thank you. Thank you, Mr. Ranking Member.
▶ 0:52:27I I You know, I I share your concern about you know, the motivations and the the the staff working all the value that they do add and we can't run the place without them. And so, I among the 600 people who left the SEC as I mentioned, I know you know, many of them and not not a huge percentage, obviously, but the ones I know took a voluntary they didn't feel coerced into doing it.
▶ 0:52:55But anyway, I'm sure there there are other tales as well. Thank you. Thank you very much. The chair now recognizes the gentleman from Wisconsin, Mr. Pocan for his any questions he may Yeah, thank you, Mr. Chairman. You have 5 minutes. So, I just want to do a clarification cuz I I think I'm a little confused. So, none of the positions at SEC were let go. They all were voluntary by taking early retirement. Is that correct? That's what I understand that Do you want to look behind you and check cuz I know you said you were only there 20 days. Okay, just just verifying. Okay.
▶ 0:53:25Did DoJ meet with your agency at Um well, I've met with a couple of people not over the phone and in person. They're focused on investment technology. And and so, they've uh they've been looking our contracts as I mentioned thousands we had like 2,000 contractors on top of 5,100 at the end of last year.
▶ 0:53:53And so you know, I would have had to hire contractors to look at what contractors are doing to make sure that's what they're doing. So through this process we've we've been able to rationalize some of the contracting so far to the tune of 90 million dollars. So I think that's not chicken feed and I think that's really valuable to to have a look like that. The good news is you don't got to hire people back that got fired, right? That's like looking at the silver lining, right?
▶ 0:54:22With Doj not coming in and directly firing people. You don't have to worry about bringing people back like almost every other agency. So that's good. Clarification also you said you couldn't talk directly about this tweet that said this is a great time to buy. Does that mean there is a currently an investigation going on? No, I I have no clue actually if there is there's not. I mean but I don't know and I Well, I I don't know and I couldn't really say.
▶ 0:54:50I'll turn around and ask cuz I know 20 days I'm not trying to hold you anything. Is there an investigation going on right now? I you know the the I can't really I cannot confirm or deny. I mean under the the rules of you know FOIA and the Exchange Act and all of that. So So as I said there are a lot of very smart and ambitious folks in the enforcement division. get initiated if there is or is not one? How would one get initiated again to so I understand that process?
▶ 0:55:20Well, there's a process of where it's an automated process at least it was back 15 years ago and I understand it's still basically the same way where somebody enter what's called a matter under investigation to to initiate that and Somebody on staff?
▶ 0:55:40Somebody on the staff or in the regions headquarters in the regions and then you know then that starts the process you know putting people on that particular investigation and seeing if there's anything that is worthwhile looking at. If it develops more then they could come to the commission to ask for a formal order of investigation for subpoenas and all of that. Right. Thank you. Just one last question. Um just this is more your philosophy again.
▶ 0:56:08You've previously been opposed at the SEC to increasing penalties on large corporations. You even co-authored a law article with the Attorney General's brother Brad Bondi saying that these penalties don't deter wrongdoing and suggesting that individuals should be held responsible. I'm intrigued by that what that means exactly.
▶ 0:56:25Are you suggesting that rather than lobbying hefty fines at corporations who lie, cheat, or steal that you would go directly after members of of corporations and criminal and prosecute them criminally or what is your philosophy on this? Well, first I'd refer you to there was a unanimous statement by the commission back in 2006 when I was a commissioner regarding corporate penalties.
▶ 0:56:55Basically what we were looking at is often times penalties that are assessed against corporations are because of issues that basically harmed the shareholders themselves. So whether that resulted in say financial fraud or something like that of the company. And so it seems you know unfair to impose a penalty on the very shareholders who and the who of the company who were ripped off.
▶ 0:57:22Other times where company has and the shareholders have gained because of you know some you know financial misdeeds of the company then it would be um you know, I think um fine and and good to then uh find the company itself because the shareholders in the company have benefited from that. Would you look at going after individuals at the corporations? And that's part of it, yes.
▶ 0:57:47So So especially where the shareholders have been harmed by corporate insiders who have either uh lined their own pockets or whatever, that's absolutely where um you know, we need to uh look at remedies against individuals. Appreciate that. Thank you. The chair now recognizes the gentlewoman from Iowa, Ms. Hinson, for any questions she may have for 5 minutes. Thank you, Mr. Chairman, and ranking member for holding this hearing today. And Chairman Atkins, thank you so much for appearing before our committee today.
▶ 0:58:15Uh we know your predecessor, Chairman Gensler, really weaponized the position he was in um to go after Iowa farmers, businesses, and workers by pushing a uh climate agenda that I think reached far beyond the jurisdiction of the commission and the SEC. Um just one example of rogue actions under the previous administration. So in March of this year, I was very pleased to see the commission vote to stop defending uh that controversial climate disclosure rule. So um thank you for helping to protect hardworking Americans against an egregious and outrageous rule.
▶ 0:58:46Uh what is the status of the rule now and what does the commission plan to do in terms of formally rescinding that rule? Uh well, so thank you for the question, uh Congresswoman. Um that that rule was uh adopted I think uh March of last year um by the commission. And um and so but then quickly there were lawsuits filed um in various um uh jurisdictions.
▶ 0:59:11And um and so the commission at the time uh basically put it on ice voluntarily. Um so that's the status of it now. There's still uh the the the lawsuits have been consolidated in the eighth circuit um based in St. Louis. and um, so we're actively studying, you know, what to do with respect to the rule. We were the 8th Circuit posed some questions to us, and we need to answer those here in the coming weeks.
▶ 0:59:39And so, we're we're that's actively working with my colleagues and the staff to figure out the next steps. Well, I distinctly remember my line of questioning in this hearing room last time, and I asked Chairman Gensler if he could find anywhere in the code where the authorization authorization existed at the SEC to go in this direction, and and he could not defend that. And I think that that's probably what the outcome will be.
▶ 1:00:04And again, it's about reversing regulations and overburdensome rules in the US Chamber actually came out in January and made clear the urgent need to roll back the worst of the regulatory onslaught from the past 4 years. This is about creating an environment for our small businesses and our workers to actually be able to thrive. And I agree. So, what is your what is your status of review of burdensome and unnecessary regulations at the SEC, and what does that process look like?
▶ 1:00:31Well, the the thing about burdensome and unnecessary regulations is that it raises costs for everybody. It and it inhibits innovation in the marketplace because of the uncertainty of those rules, and and especially if they, you know, if they create impediments that don't necessarily balance the costs and benefits, you know, for those rules.
▶ 1:00:54So, that's part of the essential part of rulemaking and then reviewing rules to make sure that with changes in technology and in the marketplace, that we stay up to speed as far as, you know, making sure that the rules are fit for purpose, and then to pair back or to add, depending on, you know, what's needed.
▶ 1:01:14The FTC, we had Commissioner in last week, and they have a portal online to take feedback and and kind of tips on what could be rolled back or maybe seen as anti-competitive. Are you anticipating doing something similar where people can flag for you rules that you can review? Yeah, in fact, I was just talking about that yesterday that that was probably a good idea. We do we will enter into round tables like on the crypto side. We've done that and have I think one or two more left to do that the task force is planning.
▶ 1:01:45But more generally, you know, to have like a suggestion box, let's say, you know, is not a bad idea for to address thing anomalies that the staff of the SEC not being active practitioners um outside, you know, may not be aware of. So, it's important. Well, I certainly bet some of my constituents have some some strong feedback um as to some of those ideas and we could probably get that list started for you.
▶ 1:02:12Um what would you say are your top three goals with deregulating at the SEC? you know, I I don't know about deregulating, but maybe just focusing on what the you know, the real issues are that where again there are impediments that are are thrown up. The securities laws have been around now 90 years 90 some years.
▶ 1:02:35And so, you know, anything needs to be everything needs to be looked at in the spring cleaning if you will because things build up over time and people don't have time to to address um you know, things that might have become problematic.
▶ 1:02:50So, I I do think that um it's incumbent on us to make sure that we are as efficient as possible and that we have well-tailored rules that are not creating you know, workarounds or things where um people can take advantage of the rules. Certainly. Thank you, Chairman. Thank you, Mr. Chairman. I yield back. Thank you very much. Chairman, I'll recognize the gentleman from You can let the people who haven't had a chance to So, you're waving your time? I would like to have it, but I know they haven't had a chance to go crazy.
▶ 1:03:21IT'S GOOD JOB. CHAIR NOW RECOGNIZES the gentleman from North Carolina, Mr. Edwards, for 5 Thank you, Mr. Chair. Uh Mr. Atkins, thanks thanks for being with us this afternoon.
▶ 1:03:37Um in the fiscal year 2025 Securities and Exchanging Securities uh salaries and expenses account was appropriated 2. Let's call it $1 billion. And in your written testimony, you stated at your height a year ago, you had approximately 5,000 employees plus 2,000 contractors.
▶ 1:04:04Uh and that today you're at approximately 4,200 employees and 1,700 Uh that's a reduction of about 15%. Do you expect that the SEC's fiscal year 2026 request for salaries and expenses will be lower than that $2.1 billion? Uh well, thank you very much, Congressman, for that question.
▶ 1:04:30Uh you know, the the process um yeah, I I was saying earlier that uh the budget process is uh new to me, and uh so we'll be working with the um you know, assessing internally what we need and and working with um you know, the with you all in Congress and the administration to uh right-size, you know, what we need. And that may be more. There are a number of things that are in the offing with respect to the for example, the Public Company Accounting Oversight Board, whatever may happen there.
▶ 1:05:00But um you know, so it's a lot of things are I think left up in the air. So, I I don't I can't really speak to the 26 budget. When when do you think we'll know the detail of that request? Uh well, I I I don't know exactly, you know, the the process just yet, but I as as we work through it, um, uh, you know, I I I assume this summer or I am not sure what what the timing Uh, how many SEC employees chose to partake in the Trump administration's deferred
▶ 1:05:30resignation, volunteer early retirement, or voluntary separation incentive payment programs? Uh, well, we had about 600 some odd people uh, that uh, took part in those voluntary uh, retirements and says about 15% of the of the head count. So, the reduction that you saw was a result of the voluntary separations is what I'm hearing you say. Yes, sir.
▶ 1:05:56Was there a common denominator in the folks that chose to take that voluntary Uh, I don't know about that. I I don't I don't I'm not sure that uh, we've um, gone to that detail or haven't seen it, but um, uh, you know, people uh, retire for all sorts of reasons and and some of the people who have retired I know and so some are living uh, away from uh, the Washington area and and uh, you know, want to continue to do that.
▶ 1:06:24Other people uh, you know, have felt that I mean, we've we've longevity at the SEC uh, it is up there. I mean, the retention um, uh, by this agency is um, you know, higher than most and so the way I look at a lot of this is you know, people want to retire and that provides a lot of opportunity for younger folks uh, to then move up in the ranks and get more experience and and and cut their teeth that way.
▶ 1:06:51Do you Do you expect to look a bit deeper into that to find what the common denominators were? For example, you men- you mentioned people that might live away from DC, folks that were approaching retirement anyway, folks that may be have been under a performance improvement program. Is that Is it Is that worthy to look at to see where the separations are coming from? Oh, I think so. But I I would think you'd have to do a the survey or or something, obviously. Or And that was that was my question.
▶ 1:07:17Are you intending to look in to those separations with that level of depth? Well, I think that'd be interesting. I think and to do a sounding on that and to cuz we do surveys of employees annually, whether it's done by us or or um you know, private sector folks who who rank the various agencies as to employee morale and whatnot. final question in this round.
▶ 1:07:45What percentage of SEC office space is being utilized now that was not being utilized under the maximum telework period under the Biden administration? So, I don't have that figure. I can get back to you on that one. Um I know that uh you know, everybody's we're we're back to work uh in general, which is good to have people in the building. I'm not sure what it was like beforehand, obviously. It must have been very lonely there within that massive building.
▶ 1:08:14But um anyway, so I I I I'm glad to have people back and um and but I can get back to you on the the space usage. All right. Thank you, Mr. Chairman. I Thank you, Mr. Edwards. Mr. Ivey still feeling generous, so we'll now recognize the gentleman from Missouri, Mr. Alford, for any questions he has. Uh thank you, uh Chair, ranking member, and thank you, Mr. Ivey. Appreciate Uh thank you, Chairman Atkins, for being here today.
▶ 1:08:42This disastrous SEC climate disclosure rule propagated by former Chair Gensler would have required public companies to disclose climate-related information registration statements and annual reports. The initial rule would have required companies to not only disclose their direct and indirect emissions from purchased energy, but also all indirect emissions occurring throughout an organization's value chain also known as scope three emissions.
▶ 1:09:08This reckless rule falls far outside the boundaries of the commission's statutory authority. The SEC is a market regulator as you know, not a climate regulator. So Chair Atkins, the SEC has recently stated it's ending defense of the rule. If you are no longer defending this rule in court, would you consider fully repealing it? Why or why not? Well, thank you Congressman.
▶ 1:09:32Well, I you know, everything is you know, under review in that respect the the eighth circuit so where there is the these various lawsuits have been consolidated has opposed some questions to us you know, with respect to what our plans are. So we will be coming out. I'm actively talking to the staff and to my colleagues about you know, the the way forward.
▶ 1:09:58And one thing I do you want to pace an ad is that you know, this the climate rule that was promulgated by the SEC last year is just one thing that affects American companies. You should just do not lose sight of the fact that in Europe there is the corporate sustainability due diligence directive and other aspects that will affect has effect that will affect American companies and that's hotly under debate in Europe right now
▶ 1:10:28and I'm concerned about that as well. So please keep that on your radar but then just yesterday I think Friedrich Merz in Germany came out with you know, some statements about the dangers of that CS triple D. But in general, do you support the SEC climate disclosure rule? No, I've been before I got there I've been publicly critical of it. So you know, I share your concern about everything that you and Congresswoman Hinson were talking about.
▶ 1:10:59So, um um The House Financial Services Committee's portion of the one big beautiful bill contains a provision that would transfer the Public Company Accounting Oversight Board's authority directly to the SEC. This follows the Biden administration's blatant politicalization of the PCAOB by voting along partisan lines to remove former Chair Dunkey and filling all five board seats with hand-picked Democrat How would moving the PCAOB directly into the SEC make them more accountable to us in Congress and prevent future
▶ 1:11:29of the board's authority? Well, thank you, Congressman. The obviously that is up to you all in Congress to decide what to do with the Public Company Accounting Oversight Board. It's a creature of Dodd Frank. And so, I, you know, will obviously accommodate whatever you all decide. As I mentioned earlier, I think, you know, we are fully capable of taking on those duties that the PCAOB does.
▶ 1:11:58And obviously what we would need resources to do that. But, you know, the you know, the we'll be looking obviously at at all of this as time goes on this this year. Consolidated audit trail of cash requirements for brokers to submit investors personal personally identifiable information is pretty concerning. We all know our federal financial regulators abysmal record of protecting American sensitive information. Last year rogue CFPB employee made an unauthorized transfer of sensitive records.
▶ 1:12:28Um will you commit to reviewing whether continued investment in the CAT is justified given what's been going on? Absolutely. I share your concern on on those various points. And so, we will we will review where we stand with consolidated audit trail, its costs, and Well, thank you, Chair, for being here, and I yield back. Thank you, sir. And with that, we're out of time. Just kidding, Mr. Ayden.
▶ 1:12:59Calm down. Chair now recognizes the gentleman from He did it with a straight face, too. He had me fooled there, so uh Thank you, Mr. Chairman. Um I I did want to follow up on a couple of the answers that you gave a few minutes ago with respect to um I guess it's the the division of labor jurisdiction with respect to the SEC and the CFTC, and also the collectibles With respect to some of the meme coin issues that we asked about that I asked about a moment ago,
▶ 1:13:33my understanding is that the um Trump meme website says that um they're not intended to be or to be subject of an investment opportunity, investment contract, or security of any type. And so, it sounds like they're talking about this in terms of it being a gift. Um it appears uh the Trump group is not soliciting money in exchange for an investment or tangible product, but soliciting money in exchange for nothing.
▶ 1:14:03That is asking for a gift that will benefit them personally. Uh and that would raise a emolument clause issues potentially, especially since it appears that many of the investors in these these vehicles uh foreign investors.
▶ 1:14:20I wanted to to see if you could clarify for me what you meant by the collectibles comment, and whether you think if you if it is a collectible, does that mean SEC has the jurisdiction over it, CFTC, or some other entity? Who's guarding the hen house right now, basically? And then the other part, too, is it a gift, uh or is it something Uh well, thanks for the question.
▶ 1:14:46I don't really know uh other than what I've read in the paper about uh you know, this particular coin or um you know, what it's uh you know, the attributes are to it. But, I can say in general um is what I was uh talking about before that uh you know, these uh these sorts of uh um issuances are for uh you know, it's a collectible like baseball card or or whatever in the congresswoman
▶ 1:15:17mentioned uh Beanie Babies. But, um so, the people buy all sorts of things um for collection collectibility. Um and that's kind of uh you know, uh obviously uh the way of the world there. But, uh you know, as far as the other attributes if it if it fits within and this is why I think we need clear rules of the road.
▶ 1:15:41Right now, what really governs is this 1946 uh decision regarding orange groves that the Supreme Court came came down with called Howey versus SEC. And so, it sets out uh you know, various uh you attributes for an investment contract. Before I before the chairman cuts me off from a time standpoint, um just to follow up, I I'll get the Steny treatment, I guess. I get a little extra time.
▶ 1:16:09Um while this determination is being made, um these are tens of millions of dollars, hundreds of millions of dollars that are floating around. And it's especially concerning for two reasons. One is the overlap with Mr. Sun's case that is before the SEC. It's on pause right now, but it's still pending. And the other is because, you know, the president and his family are hundreds of millions of dollars, apparently, um through these vehicles.
▶ 1:16:38Um it seems to me somebody needs to be taking a look at this now. Now, I you've said that you can't talk about whether you have an open investigation or not. and you did talk about how investigations can be triggered, I guess, through some sort of internal Can it be triggered by a request from Congress to conduct an investigation on these issues? Cuz you've got at least one letter with respect to the insider trading piece.
▶ 1:17:04You've got another letter that raises these transactions with respect to the meme coins. Are those sufficient to generate uh or initiate an investigation at the SEC on these matters? Uh well, first of all, we take very seriously uh letters from Congress. And, you know, I I commit uh so uh unlike what I understand in the past, uh I commit that we will respond to uh letters from from Congress.
▶ 1:17:33Um and um and but uh you know, with respect to this particular issue, uh again, I there are a lot of uh very uh ambitious and smart people in the um enforcement division. And so, I, you I I do appreciate that, but it doesn't get much bigger than this. If it's a constitutional violation with with respect to the emoluments clause, somebody needs to be looking at this now. And I don't know if that's you. I don't know if this is CFTC.
▶ 1:18:03Although you said the two of you meet and to make sure, quote, "Nothing falls between the cracks." We can't let this fall through the cracks. And we can't let it drag out. You you all need to make a determination soon, I think, and start looking at this if you haven't already, just to make sure we're moving in the right direction and to restore the public confidence uh that we talked about earlier. And with that, Mr. Chairman, I thank you. Thank you very much. The chair now recognizes the gentle lady from Iowa for any questions she may have in the second Thank you. Just a few more, Mr.
▶ 1:18:33Chairman. Thank you again uh for being here. Uh last week the SEC announced that certain confidential information filed by investment managers on form N-PORT was accidentally made public. Um in 2022, SEC enforcement staff inappropriately accessed documents in administrative law cases being considered by the SEC. And then in 2016, a foreign hacker gained access to the SEC database. Um and we know that they were able to result in uh $4.1 million in illegal profits as a result of that hack.
▶ 1:19:03So, um these are just a couple of the examples. Um certainly um where that trust for American investors is put at risk and violated. So, how um will you plan to address some of those concerns about the retention of data, um some of these bigger cybersecurity vulnerabilities we know we have um many um adversaries who are looking to exploit those weaknesses, and then um then the potential misuse of sensitive uh investor information as a result of Well, thank you, Congresswoman. I completely share your concern.
▶ 1:19:34Um and uh you know, this is it it dumbfounds me that uh uh this sort of thing happens. And so, we at the SEC take it very, very seriously the information and the obligations that we have to disseminate information, the information that we collect, and especially on the confidentiality of what supposedly is confidential. So, we're looking into that, and that's one reason why I really uh you know, I'm happy for the help to look at our information technology system.
▶ 1:20:04It's time for a good scrubbing and spring cleaning um uh to see, you know, where the gaps are, how we can uh you know, undergird it, and and uh you know, make it better. Cuz I had you know, the SEC's uh database was for personnel information was hacked by I think the Chinese something probably about 20 years ago, 15 years ago, something like that. So, my own information is is out there.
▶ 1:20:30So, with that in mind, I you know, I I feel that obviously we we need to come to um a good understanding of of how we can improve and we'll be discussing with you and the administration about you know, what what may be necessary to do that. Yeah, it's certainly alarming when your own information is is compromised, right? I obviously as a member of Congress, ours was compromised in the DC Health Link hack a few years ago too. So, I certainly feel that on a personal level.
▶ 1:20:58I'm just want to zoom in a little bit on the um Consolidated Audit Trail CAT, um the largest repository of investor information that's literally ever been created and likely also one of the least secure. Um and as you're aware, um the CAT did collect a lot of sensitive information, personally identifiable information on every single American investor, um making that information particularly vulnerable to cybercriminals who then want to steal identities um or as you mentioned, China, um hacking many of our foreign adversaries who will seek to potentially
▶ 1:21:28even blackmail Americans with that data, manipulate our markets. I mean, this could be really really egregious for the American economy. So, um you know, you talked a little bit about some of the IT improvements that you might need, but what steps are you taking to really protect American investors and our markets from some of these vulnerabilities presented by CAT right now?
▶ 1:21:47Well, we're as I mentioned before, we're reviewing uh planning to review um the the Consolidated Audit Trail uh for you know, it's uh uh for its benefits and and costs and then the potential vulnerabilities. Um so, all that's under will be under uh consideration. But again, as far as um shoring up the defenses and the integrity of our systems, uh that's incredibly critical, obviously, uh especially with all the information that the SEC handles.
▶ 1:22:16Uh and so, I that's I I pledge to really focus on that and get the best minds uh to work on how we can do it and and how to maybe restructure things around that. Do you think DOJ could be helpful in that case? I know they've been coming in and finding in in many cases there's um duplicative technologies, again a need for investment in specific places. Have you been able to work with them um and their team on on some suggestions maybe for what might be improved?
▶ 1:22:42Uh they already have been it inside the network and uh so now as they've looked at uh overlapping contracts and inefficiencies, I think the savings is up to $90 million of uh that they've identified. So that's uh that's a great start and they're not finished yet. Let's redirect that $90 million to better IT practices. I think that's a good good approach. Thank you, Mr. Chairman. I yield back. Thank you. Uh thank you. The uh I'll recognize the gentleman from North Carolina, Mr.
▶ 1:23:12Edwards, for any second-round questions he may have. Yeah, thank you, Mr. Chair. I get another chance. Uh Chairman Atkins, earlier this month you stated that a key priority of your chairmanship would be to develop a rational regulatory framework for crypto uh that establishes clear rules of road for the issuance, custody, and trading of crypto assets while continuing to discourage those bad actors from violating the law.
▶ 1:23:39In order to fulfill that mission, uh former Acting Chairman Mark A. Udell established a crypto task force on January 21. How much funding will that task force Uh uh well, I'm not sure exactly. I mean, it's it's it's uh staffed by current employees and and Commissioner Peirce is leading it. Um so, I it's it's not taking any additional funding.
▶ 1:24:09These uh people have been, you know, parts of uh you know, the workforce now for a while. They're experienced. despite the task force only being assembled a few months ago in January, have there been any notable findings thus far that you can report? Well, that's still under development.
▶ 1:24:29Uh they are engaging in uh roundtables, and we've had I believe three or so of them so far, and um and so with another couple to come, and then uh you know, we'll be uh you know, huddling internally to uh you know, figure out uh you know, steps forward after that. But, this is part of a an ongoing process, and but I really salute uh Commissioner Purse for and her team for for focusing on this.
▶ 1:24:56It's uh it's way overdue, and I think uh I think we'll be able to make progress, and then whatever happens in um you know, that will help undergird what we do, and and we're, you know, ready, willing, and able to work with you all. When do you expect the first report from that task force? Uh I don't know.
▶ 1:25:15I'd have to talk to Commissioner Purse about uh about that, uh and then our steps forward, but uh you know, we should have be having something I think here in the in the next few months, uh and uh with proposed uh steps forward. Thank you, Mr. Chairman. I'll yield. With that, our time is concluded. I would like to thank Chairman Atkins for again for being here today. There may be some members who didn't appear today, uh tied up in other committees.
▶ 1:25:44I'm sure that they wanted to be here, but they would like to submit questions for the record. Please submit any questions for the record to the subcommittee staff within 7 days. With that, the subcommittee stands adjourned. Thank you. David, I don't know what our time