Trump pick for SEC faces sharp conflict-of-interest scrutiny

Paul Atkins, President Donald Trump’s pick to lead the Securities and Exchange Commission, faced an early political test over his strong ties to Wall Street and digital-asset firms.

At his nomination hearing Thursday, the former Republican SEC commissioner and founder of consulting firm Patomak Global Partners met with stiff opposition from Democratic lawmakers over his potential conflicts of interest and support of deregulation.

Senator Elizabeth Warren, speaking just before his Banking Committee hearing, said she’s concerned that Atkins is “thinking about his past and future clients” rather than American families. That criticism is unlikely to get in the way of his approval by the GOP-controlled Senate. Atkins is considered a qualified candidate and an ideal choice to roll back Biden-era policies, support capital formation and provide clarity to the crypto industry.

Atkins told lawmakers that he’s committed to standard ethics requirements. In his testimony, he promised lawmakers to work on “clear rules of the road” for Wall Street and digital-asset firms.

“Unclear, overly politicized, complicated and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment,” Atkins said. “It is time to reset priorities and return common sense to the SEC.”

If confirmed, Atkins, 66, would be the wealthiest SEC chair in recent decades. He and his wife, Sarah, an heir to a roofing-products firm, have a net worth of at least $327 million, according to disclosures filed with the Office of Government Ethics.

His stake in Patomak is worth at least $25 million, based on the documents made public on Tuesday. Atkins said he will resign as the consultancy’s chief executive officer within 90 days of confirmation.

The firm’s long list of clients has raised questions about Atkins’ ability to navigate any conflicts of interest. His financial filings highlight compensation from Bank of America Corp., Barclays Plc, Exxon Mobil Corp., global investment firm Temasek Holdings Pte. and trading firm Virtu Financial Inc., among others.

His firm has also worked with Options Clearing Corp. and asset manager Invesco Ltd. Atkins’s filings list an investment of $1 million to $5 million in a fund managed by digital-asset investment firm Off the Chain Capital LLC.

Atkins has pledged to divest his interest in many companies, including Patomak, within 90 days of confirmation. But Warren, the top Democrat on the Banking Committee, has pressed him for details on who will purchase his membership interest in his firm.

Divestitures aren’t enough “unless he agrees to disclose to Congress who the buyer will be and whether they are paying for access to the SEC chair,” Warren said in an emailed statement before the hearing.

Warren also has accused Atkins, an SEC commissioner from 2002 to 2008, of downplaying issues in the market before the financial crisis. Atkins responded by saying the crisis was multifaceted but rooted in subprime mortgage loans made by Fannie Mae and Freddie Mac under government pressure.

Atkins is expected to scale back regulation and enforcement, a path the SEC is already taking under the Trump administration.

Last month, the SEC asked a federal court to delay arguments in its legal defense of climate disclosure rules. And on Monday, the agency’s acting enforcement director said penalties will generally be lower.

The agency is also set to lose about 500 full-time employees who have accepted recent resignation and early buyout offers.

For the crypto community, Atkins’s nomination is viewed as critical for the development of a light-touch regulatory framework that sharply contrasts with former SEC Chair Gary Gensler’s aggressive approach. Gensler pursued firms for failure to register as exchanges or register and disclose information about their tokens.

Atkins has served as co-chair of the Token Alliance, an advocacy organization affiliated with the Digital Chamber, since 2017. He resigned from both organizations in December.

Wall Street firms often criticized Gensler’s fast-paced rulemaking agenda and tight time-lines – sometimes as few as 30 days – to respond to agency proposals. They have also complained about the time and money spent complying with regulations, including new disclosures in their corporate financial statements.

“It’ll be more of an emphasis on capital formation and investment choice as opposed to more of an emphasis on investor prohibition or greater regulatory obligations,” said Nick Morgan, president of the Investors Choice Advocates Network and former SEC attorney. “In our view, that’s a very good thing.”