On March 27, 2025, the Senate Banking Committee (Committee) held Paul Atkins’ confirmation hearing for Chairman of the U.S. Securities and Exchange Commission (SEC or Commission). Below are some highlights, observations, and takeaways following the hearing.
On April 3, Atkins’ nomination cleared the Committee along party lines and is now headed to the full Senate for a vote. It is our expectation that Atkins will be confirmed as SEC Chairman by next month (May 2025).
Stock Sale Disclosure Requirements for Corporate Insiders
Several Senators directed questions to Atkins regarding the discrepancy in stock sale disclosure requirements between domestic and foreign executives (i.e., traditional corporate insiders) who sell shares of stock in their respective companies that are listed on a U.S. exchange (Covered Trades). In particular, Senator Kennedy (R-LA) inquired about the regulatory asymmetry under the federal securities laws that require domestic (but not foreign) executives to file with the Commission a statement of beneficial ownership change within two business days of executing Covered Trades, known as the short-swing profit rules.1 Atkins acknowledged the regulatory asymmetry but did not provide any further substantive comments on the issue. Senator Kennedy exhorted Atkins that the Commission should make sure to close this regulatory gap under his leadership.
Shift Away from the Regulation of ESG Investing
When asked about the relevance of environmental, social, and governance (ESG) factors, Atkins decisively responded that he “wants to get politics out of the financial markets.” He shared his view that the pursuit of ESG investment objectives in the public company context is akin to “using other peoples’ money to try to influence corporations through the distortion of the corporate governance process,” and promised to put protections in place so “money managers and others will be focused on actual investment strategy and not on politics.” Atkins did not comment any further on what those protections would be, but perhaps he will consider taking additional steps to insulate public company officers and directors from the type of ESG initiatives and rulemaking pursued by the prior administration. Atkins’ statements at the hearing came just a few days before the Commission voted to officially end its defense of the climate-related disclosure rules,2 and the Division of Corporation Finance issued new guidance creating significant limitations on shareholders’ engagement related to ESG.3
Fostering Capital Formation in Public Markets
Senator Banks (R-IN) inquired with Atkins as to how the Commission can reduce the burden on American manufacturers and developing companies seeking to raise public funds and pursue initial public offerings (IPOs). Atkins noted that there are 30% fewer public companies today than there were 30 years ago, and the market has experienced a sharp decline in the number of IPOs. He attributed the reduced activity in our capital markets primarily to increased regulatory burdens associated with public registration, the prevalence and cost of litigation, and dysfunctional public markets. To facilitate more registered offerings, Atkins indicated an intention to work with Congress to more effectively implement certain provisions of the JOBS Act, such as those related to Emerging Growth Companies (EGCs),4 and to eliminate regulatory roadblocks that help streamline the registration process.5
Expansion of Private Fund Investment Opportunities
Senator Reed (D-RI) and Senator Smith (D-MN) focused their questioning on efforts to expand the availability of private market funds, such as hedge funds and private equity, to retail investors. Senator Reed expressed concern that such investment opportunities could expose retail investors to potentially risky and illiquid assets and pressed Atkins on whether further oversight is needed to provide greater investor protection. Atkins noted that SEC regulations to help mitigate risk in private market funds already exist, pointing to diversification compliance rules that limit concentration risk and promote a more balanced portfolio less susceptible to volatility shocks in the market. Atkins provided no indication that the Commission under his leadership would pursue additional private fund regulation, such as, for example, the private fund rules promulgated under Chairman Gary Gensler that were later overturned by the Fifth Circuit.6
Further, Senator Smith raised concerns over the elevated fees and expenses associated with investing in private market funds compared to public markets investments. Atkins opined that the subset of investors most likely to participate in private market funds tend to be more sophisticated, understand their governing fee structures, and do not require heightened protections from their investment decisions. Ultimately, Atkins embraced the view that investors have the freedom of choice when it comes to investing their capital and that public market alternatives are available if they choose not to participate in private funds.
The SEC has taken affirmative steps in recent weeks to facilitate capital formation in the private offering context, including by issuing new guidance and a no-action letter providing greater flexibility to certain issuers seeking to raise capital by means of general solicitation and advertising under Rule 506(c) of Regulation D.7 It would not be surprising to see Atkins continue efforts to expand and incentivize the private offering process through rulemaking and additional regulatory guidance.
The Future of the PCAOB and CAT
Senator Van Hollen (D-MD) and Senator Kim (D-NJ) raised concerns over the accounting and auditing oversight of foreign companies participating in U.S. securities markets, especially Chinese-listed companies. They pointed out that Atkins contributed to a published work calling for the abolition of the Public Company Accounting Oversight Board (PCAOB) and Consolidated Audit Trail (CAT). Senator Van Hollen specifically asked Atkins to confirm his understanding that neither the Commission nor the President has unilateral power to eliminate the PCAOB. Atkins did not confirm whether he believed the PCAOB could be eliminated by unilateral executive action. Still, he acknowledged that the body serves an essential function of overseeing the audits of publicly listed companies in the United States. Atkins seemed to suggest that CAT should not be wholesale eliminated, but he did provide a noteworthy critique of the overall system. Specifically, Atkins explained that he intended to review its ballooned costs on the Commission’s time and resources, and ensure that the program remains focused on its intended mission.8
Limited Discussion Regarding Cryptocurrency and Digital Assets
Atkins received no questions related to cryptocurrency and other digital assets during the hearing. This is surprising given the related enforcement history and the acute attention the issue received during last year’s Presidential election.
The White House and the Commission each take active roles on this issue by establishing the Presidential Council of Advisers for Digital Assets and the Crypto Task Force, respectively. In addition, President Trump’s nomination of Atkins was viewed as progress toward market innovation in this space and the development of a complementary and pragmatic regulatory framework.
The Commission’s recent actions related to crypto under Acting Chairman Uyeda (e.g., rescinding SAB 121, a near-full retreat on crypto enforcement activities) are indicative of the direction Atkins will take as Chairman. Notably, as part of his opening statement, Atkins emphasized that “work[ing] with my fellow Commissioners and Congress to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach” will be a top priority of his Chairmanship. We expect to see the collaborative development of a regulatory framework for cryptocurrency and other digital assets between the White House and their advisors, Congress, the SEC, and the public throughout this administration.
Atkins’ Record as Commissioner
Many Senators focused on Atkins’ term as a Commissioner from 2002 to 2008 in the lead-up to the global financial crisis and his role on the Congressional Oversight Panel for the Troubled Asset Relief Program. Notably, Atkins acknowledged that the SEC failed to identify and address the underlying issues that led to the crisis. However, Atkins specifically pushed back against Senator Warnock’s (D-GA) suggestion that overregulation was to blame for the 2008 financial crisis.
DOGE’s Impact on the SEC
Senator Reed (D-RI) and Senator Alsobrooks (D-MD) questioned Atkins on his attitude towards Trump’s advisory board, popularly referred to as DOGE (the Department of Government Efficiency). Atkins responded that he welcomed their efforts to create efficiencies at the Commission and was committed to working with them to achieve that objective.
Just a few months into the Trump administration, we have seen several public reports about cost-cutting measures at the Commission (e.g., reductions in staff, proposed closures of regional offices). With this shift towards austerity, we agree with the insightful point made by former Commissioner Troy Paredes at Cozen O'Connor’s recent SEC Fireside Chat9 that the concept of DOGE presents an interesting opportunity for the Commission to leverage artificial intelligence and emerging technologies like quantum computing to streamline its operations and enhance its review process for many important functions.
Concluding Thoughts
Atkins’ nomination hearing before the Committee was light on policy, with many Senators focusing on hot-button issues that will likely not become central to the Commission’s upcoming agenda. The few policy positions that Atkins addressed in substantive detail were largely in line with industry expectations and suggestive that the Commission will pursue a clear and tailored regulatory approach that prioritizes a common-sense balance between investor protection, the promotion of market efficiencies, and the facilitation of capital formation.
At the end of the day, Atkins will begin his role as Chairman with substantial experience in the private and public sector, including multiple roles previously held at the Commission. Atkins is regarded as the consummate professional who is both principled and well-liked. Far from dismantling the agency, Atkins surely has a list of reforms he believes will make the Commission more efficient and effective at achieving its core mission.
1 See 17 CFR § 240.3a12-3.
3 See, e.g., Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting, Question 103.12; Shareholder Proposals: Staff Legal Bulletin No. 14M (CF).
4 Recently, Acting Chairman Uyeda publicly recommended changes to the EGC definition, such as altering the qualification criteria and the duration for which an entity can retain that status. Uyeda also emphasized the importance of allowing EGCs to take advantage of an on-ramp approach to burdensome compliance requirements built into various SEC regulations. Acting Chairman’s Remarks at the Federal Securities Institute and M&A Conference.
6 i.e., the preferential treatment rule, the restricted activities rule, the quarterly statements rule, the adviser-led secondary rule, and the audit rule.
8 CAT was established to help enable SEC and other regulators to identify and address potential inefficiencies in the market by tracking orders of and trading activity for listed equities and options throughout the U.S. markets. However, last month, several Senate and House Republicans sent a letter to Acting Chairman Uyeda asking for a comprehensive review of the CAT system. These officials expressed significant concerns about CAT, including cybersecurity vulnerabilities, an inequitable funding structure, and the collection of investors’ personally identifiable information. How Atkins reconciles the importance of gathering this important market data with these issues remains an open question.