Sen. Chris Van Hollen (D-Md.) and six of his Democratic colleague sent a letter to the Securities and Exchange Commission’s Inspector General requesting an investigation into reports that Commissioner Michael Piwowar “linked potential regulatory action to an unrelated policy Citigroup recently issued to promote responsible conduct by customers engaged in processing firearms transactions.”
Van Hollen was joined in drafting and signing the letter by senators Kamala Harris (D-Calif.), Christopher Murphy (D-Conn.), Richard Blumenthal (D-Conn.), Robert Menendez (D-N.J.), and Dianne Feinstein (D-Calif.).
Piwowar allegedly used an April 24 meeting with representatives of Citigroup regarding derivatives regulations to rail against the firm’s recent firearms policy.
“Piwowar may have abused his government position in an attempt to unduly influence Citigroup to reverse a business decision that conflicts with his personal and political views,” the letter says. “Most concerning are reports that Commissioner Piwowar delivered a ‘thinly veiled threat’ by suggesting that the Commission would withhold support for Citigroup’s regulatory request due to the company’s unrelated and entirely lawful corporate practices relating to firearms.”
“Simply put, the SEC should base regulatory decisions on facts and merits, not on unrelated corporate practices that a particular commissioner dislikes or that are disliked by organizations they support,” the letter adds, urging the SEC’s Inspector General to “open an investigation into this meeting to protect the integrity of the agency and its decision-making process.”
In response to the February shootings at Marjory Stoneman Douglas High School in Parkland, Fla., many businesses in the retail and financial sectors announced plans to reevaluate their policies on firearms. Among them were Dick’s Sporting Goods, Metlife, Citibank, and Bank of America.
“Simply put, the SEC should base regulatory decisions on facts and merits, not on unrelated corporate practices that a particular Commissioner dislikes or that are disliked by organizations they support,” the letter says. “Indeed, this principle is codified in the Standards of Ethical Conduct for Employees of the Executive Branch, which, among other improper conduct, prohibits federal employees from using their public office in a manner that is intended ‘to coerce or induce’ another person to provide a benefit of any kind to himself or groups with whom he chooses to affiliate. It is alarming that Commissioner Piwowar, who is expected to be independent, appears ready to condition his support for regulatory change on Citibank’s withdrawal of a responsible corporate practice that conflicts with his personal views or political agenda.”
On March 22, Ed Skyler, executive vice president of global public affairs for Citigroup, explained his bank’s decision.
“As a society, we all know that something needs to change. And as a company, we feel we must do our part,” he wrote on a company blog post introducing a new U.S. commercial firearms policy.
Under this new policy, the bank will require new retail sector clients or partners to adhere to best practices: that they don’t sell firearms to someone who hasn’t passed a background check; that they restrict the sale of firearms for individuals under 21 years of age; and that they don’t sell bump stocks or high-capacity magazines. The policy will apply across the firm, including to small business, commercial and institutional clients, as well as credit card partners, whether co-brand or private label.
“We have few relationships with companies that manufacture firearms,” Skyler added. “For those that do, we will be initiating due diligence conversations on the subject to better understand what products they make, what markets and retailers they sell to and what sales practices those retailers follow to ensure adherence to the best practices outlined above. This same due diligence screening will apply to potential clients going forward.”
“We recognize that we don’t have all the answers and that existing technology in our industry doesn’t allow for a more targeted approach at points of sale,” he added. “For that reason, we would like to convene those in the financial services industry and other stakeholders to tackle these challenges together and see what we can do. We hope to leverage collective action to encourage responsible practices by all who sell firearms.”