Back in 2013, when he nominated Mary Jo White to head the Securities and Exchange Commission, President Barack Obama praised his pick’s zeal and fortitude. “You don’t mess with Mary Jo,” he said. Well, somebody didn’t relay that message to Sen. Elizabeth Warren (D-Mass.).

Warren initially shared the President’s high hopes that she would be “the strong leader the SEC needs” and a “tough watchdog for the American people.” Things have certainly changed. In a 13-page letter she wrote to White on Tuesday, however, her tenure is described as “extremely disappointing” and full of “broken promises.” "I voted for your nomination despite my concerns about your lack of experience as a regulator," Warren wrote. "I am disappointed by the significant gap between the promises you made during and shortly after your confirmation and your performance as SEC Chair. We have continued to talk, and you and I met personally on May 21 to discuss these issues. At that meeting, however, you said little that indicated you would be changing your practices at the SEC.”

“Even worse,” Warren adds, “at that same meeting you provided me with what appeared to be misleading information about the timing of new CEO pay disclosure rules that was contradicted by an Office of Management and Budget publication released that very same day.”

Warren’s concerns, in summary: that the SEC has failed to  finalize important Dodd-Frank rules, notably the disclosure of CEO compensation as a ratio to  the pay of the median employee; the Commission has failed to curb the use of waivers for companies found to be in violation of securities law; the agency has settled the vast majority of enforcement cases without requiring that companies admit guilt (since June 2013, when White announced a new policy to require more guilty admissions, through September 2014, of 520 settlements the SEC required admissions of guilt in only 19 cases); and that White has been unable to participate in numerous cases because of recusals related to her prior employment (she was chair of the litigation department at Debevoise & Plimpton) and will continue to be unable to participate in certain cases because of recusals relating to her husband’s ongoing employment at a Wall Street legal defense firm, Cravath, Swaine & Moore.

A tally by the New York Times, cited by Warren, found that White recused herself from more than four dozen enforcement investigations. “The impact of a recusal on the operations of the SEC can be quite damaging,” Warren wrote. “If, for example, the SEC is split 2-2 on whether to pursue a prosecution, your recusal would mean that no prosecution could go forward.”

Warren asked White to respond to six information requests by July:

An explanation of the inconsistencies made about the timing of the pay-ratio rule.

A detailed timeline for completion of the pay-ratio rule.

A list of all SEC settlements since September 2014, with information on whether a settlement contained an admission of guilt and, if so, details on these admissions (Warren also requested a similar update on enforcement actions every six months).

A list of all waiver decisions by the SEC, from January 2015 to the present.

A list of all SEC investigations or cases from which White had to recuse herself and why, updated every six months.

An explanation for why the SEC removed campaign finance disclosure from its rulemaking agenda and has not responded to rulemaking petitions.

“I am disappointed that you have not been the strong leader many had hoped for, and that you promised to be,” Warren wrote. “I hope that you will step up to the job for which you have been confirmed.”

 

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