On September 30, the Securities and Exchange Commission quietly rewrote the rule that decides the number of commissioners who must be present to act on agency business. Under the amended Rule 200.41, whenever the other sitting commissioner is disqualified from a matter, the one remaining commissioner will now constitute a quorum. The agency that was created to protect investors and the public market made this change without public comment, calling it internal “housekeeping” that does not “substantially affect the rights or obligations” of anyone.
Congress designed the SEC as a five-member body, with no more than three commissioners from the president’s party, precisely so that no single political party, and certainly no single person, could steer America’s capital markets alone. Today the Commission has no Democratic members and with Commissioner Hester Peirce’s departure on October 2, it is down to two members. A recusal is all it will take for a single individual to wield the full authority of the Commission.
One person is not a regulator; it is a dictator.
Nearly every action or proposed action by the SEC this term either reduces investor information or silences their voice. The SEC has moved to rescind the Climate Disclosure rule, Say on Pay, and 14a-8’s shareholder proposal rule. It plans to slash financial reporting from quarterly to twice a year and plans a sweeping rewrite of Regulation S-K, the backbone of what material information public companies must provide investors. The SEC has even cleared the way for companies to force shareholder complaints into private arbitration, where there is no jury and no public record.
The direction is unmistakable: companies will keep the privilege of raising money from public markets while shedding their traditional obligations. Publicly traded companies now resemble private equity: access without accountability, capital without candor.
Let’s call it what it is: corporate authoritarianism. The SEC has granted itself power without oversight and has, rule by rule, gifted the same to the CEOs it was meant to regulate. Top beneficiaries include the same corporate giants that wrote seven-figure checks to the president’s campaign and inauguration. A CEO freed from disclosure and an agency Commission freed from dissent are two sides of the same coin.
Each unilateral action is defended as reducing corporate burden, but a stock price is only as accurate as the public information behind it. Markets depend on the free flow of information as surely as free societies depend on freedom of the press and the right to peaceful protest. Authoritarian systems like the one the SEC is building depend on the opposite: power that answers to no one.
For the pension funds, endowments, and asset managers that steward the retirement savings of more than a hundred million Americans, reduced information flow is a serious problem. Fiduciaries are bound to act prudently on behalf of their beneficiaries. Strip away the information they need to make informed decisions, and prudence becomes virtually impossible.
Undisclosed risk tends to surface all at once. Meta’s shareholders recently learned that lesson the hard way. Mark Zuckerberg spent years overriding the warnings and requests of his own investors to reduce or eliminate the harmful and addictive content leading to immense public harm. Now, the same shareholders who were proven right, are on the hook for a $17 billion settlement.
America’s capital markets have been the envy of the world for one reason: TRUST. Our founders feared concentrated, unchecked power, and Congress built the SEC to guard against it after the 1929 collapse. Investors from London to Singapore accept American valuations because they believe our disclosures are complete and because our rules are stable. If we continue to erode that trust by capriciously changing the rules, capital will do what it always does: move to where it is respected.
A Commission of one is not a Commission at all. A CEO who answers to no one is not running a public company. Investors and lawmakers must demand that the empty Commission seats be filled, that the definition of a quorum of one be reversed, and that information previously provided to the market be restored before capital is driven from American capitalism.
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