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Split at SEC means swaps waiver rule likely to get big alteration

Publisher: Marketwatch
Author: Francine McKenna

The SEC on Wednesday agreed, by an unusual 3-2 vote that was not, for a change, split along party lines, to send a proposed rule about waivers for swaps “bad actors” out for comment.

However, the SEC will soon get at least two new commissioners, and the dissents expressed strongly-worded desires for substantial changes to the rule. It’s also likely this will be a very different rule once it’s finally ready for a vote.

Commissioners Kara Stein, a Democrat appointee, and Michael Piwowar, a Republican, voted no to the waiver rule proposal, but for very different reasons. They were overruled, however, by three votes from Luis Aguilar, a Democrat, Daniel Gallagher, a Republican, and Chairwoman Mary Jo White. Gallagher announced his resignation from the Commission in May. Aguilar is also leaving, although not quite as quickly. He has promised to stay on until a successor is named, something that may take a while given the controversy over candidates proposed by the Obama Administration driven by a group of progressive Democrat organizations inspired by the anti-revolving door rhetoric of Sen. Elizabeth Warren.

Stein and Piwowar made lengthy statements at the meeting on Wednesday that provided few points of agreement, suggesting a significant rewrite will be required before they’re on board. Public comments on the swaps waiver proposal will be posted in the next sixty days. If the rule takes more than a year or more to come to a vote, after the next presidential election, there may even be a new SEC chairman.

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