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US Securities and Exchange Commission

SEC Nominees Lizarraga, Uyeda Cruise Through Banking Panel Hearing

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

Bill Flook  Editor, Accounting and Compliance Alert

· 5 minute read

SEC nominees Jaime Lizárraga and Mark Uyeda emerged from a Senate Banking Committee hearing having said little of substance, but with no obvious roadblocks to confirmation in sight.

President Joe Biden nominated the two last month. Uyeda is an SEC attorney temporarily on detail as securities counsel to the Senate Banking Committee’s minority staff. He would fill a Republican seat on the commission left vacant by the departure of Elad Roisman earlier this year.

Lizárraga is a senior advisor to House Speaker Nancy Pelosi, who spoke on his behalf early in the hearing, calling him “a devoted champion of working families, a respected expert on financial services, and a lifelong public servant.” He would succeed outgoing Democratic Commissioner Allison Herren Lee, who in March announced she would leave the commission once her successor is confirmed.

Both nominees were at times overshadowed by Michael Barr, Biden’s nominee for vice chairman for supervision at the Federal Reserve. During the mostly sedate hearing, Lizárraga and Uyeda were careful in providing only high-level answers to questions that ranged from cybersecurity to social media-based market manipulation to SEC comment periods.

In one case, Sen. Tom Tillis, a North Carolina Republican, noted the SEC under Chair Gary Gensler was “moving very quickly” on rule proposals with short comment periods, and asked the two “how would the SEC have the bandwidth and staff support to get these proposals done right?”

“And just with the sheer number of proposals, how can we make sure that some of the smaller entities that would like to weigh in to the process with these abbreviated comment periods? Tillis added. “How can we be sure that we get the resource balance right both at the SEC and among those who have something to say about the proposed regulations?”

Lizárraga replied that he has “not been privy to the internal decision-making, so I’m not in a position to comment on” the first part of Tillis’s question.

“But I do think it is important for stakeholders to have an opportunity to comment on these proposals,” he said. “In some instances, smaller issuers do have some relief included for them. But as a general matter, I believe in the principle of stakeholders having a meaningful opportunity to comment on these proposals.”

Uyeda said he believes “that the ability of all stakeholders whether large or small to comment as part of the Administrative Procedure Act notice and comment process is critical to make informed decisions and have a rational basis for those decisions as required by law.”

The SEC recently agreed to extend comment for its climate risk disclosure proposal in Release No. 33-11042The Enhancement and Standardization of Climate-Related Disclosures for Investors, , as well as other proposed rules, a concession to pressure by industry and a bipartisan coalition of critics on Capitol Hill. (See Bowing to Pressure, SEC Extends Comment Period for Climate Change Rule Proposal in the May 10, 2022, edition of Accounting & Compliance Alert.)

Tillis said he plans to continue “positive discussions” with the SEC’ on this issue, and said he’s “spoken with members on the other side of the aisle who share the concerns.”

Noncommittal answers from the nominees appeared to frustrate at least one senator. Sen. Robert Menendez, a New Jersey Democrat, asked the two if they would commit to bringing 2021 diversity recommendations from the SEC’s Asset Management Advisory Committee (AMAC) up for a vote. (See SEC Looking at Requiring Diversity Disclosure at Asset Managers Following Advisory Panel Recommendations in the July 12, 2021, edition of ACA.)

Lizárraga said he embraces “diversity and inclusion as fundamental values,” and said he looks forward to exploring the possibility of a vote on the recommendations, “recognizing that I would need to look into the details of that process, but I agree with the sentiment that’s expressed by the advisory committee.” Uyeda, who said he helped stand up AMAC when he was on SEC staff, said that if confirmed, he would “commit to considering any item that Chair Gensler, who oversees what items go on the agenda, are put up on diversity and improving inclusion in the asset management.”

“You both learned in your time in Congress to be very cautious in your answers,” Menendez said. “I’m going to submit questions for the record. I’d like to support both of your nominations, but I just simply want to hear a yes or no.”


This article originally appeared in the May 20, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.

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