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27–588 PDF 2017

S. HRG. 115–118 

NOMINATIONS OF DAVID J. RYDER, HESTER M. 

PEIRCE, AND ROBERT J. JACKSON, JR. 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON 

NOMINATIONS OF: 

DAVID J. RYDER, OF NEW JERSEY, TO BE DIRECTOR OF THE UNITED STATES

MINT

HESTER M. PEIRCE, OF OHIO, TO BE A MEMBER OF THE SECURITIES AND

EXCHANGE COMMISSION

ROBERT J. JACKSON, JR., OF NEW YORK, TO BE A MEMBER OF THE SECURITIES

AND EXCHANGE COMMISSION

OCTOBER 24, 2017 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

MIKE CRAPO, Idaho, Chairman 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

PATRICK J. TOOMEY, Pennsylvania 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

JOHN KENNEDY, Louisiana 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

BRIAN SCHATZ, Hawaii 

CHRIS VAN HOLLEN, Maryland 

CATHERINE CORTEZ MASTO, Nevada 

GREGG RICHARD, Staff Director 

MARK POWDEN, Democratic Staff Director 

ELAD ROISMAN, Chief Counsel 

MICHELLE MESACK, Senior Counsel 

ELISHA TUKU, Democratic Chief Counsel 

LAURA SWANSON, Democratic Deputy Staff Director 

MEGAN CHENEY, Democratic Legislative Assistant 

DAWN RATLIFF, Chief Clerk 

JIMMY GUILIANO, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

TUESDAY, OCTOBER 24, 2017 

Page 

Opening statement of Chairman Crapo ................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2 

NOMINEES 

David J. Ryder, of New Jersey, to be Director of the United States Mint .......... 4 

Prepared statement .......................................................................................... 35 

Biographical sketch of nominee ....................................................................... 36 

Responses to written questions of: 

Senator Brown ........................................................................................... 98 

Senator Rounds ......................................................................................... 99 

Hester M. Peirce, of Ohio, to be a Member of the Securities and Exchange 

Commission ........................................................................................................... 5 

Prepared statement .......................................................................................... 43 

Biographical sketch of nominee ....................................................................... 44 

Responses to written questions of: 

Senator Brown ........................................................................................... 99 

Senator Toomey ......................................................................................... 100 

Senator Tillis ............................................................................................. 101 

Senator Menendez ..................................................................................... 106 

Senator Warner ......................................................................................... 109 

Senator Warren ......................................................................................... 111 

Senator Donnelly ....................................................................................... 114 

Senator Schatz ........................................................................................... 115 

Senator Cortez Masto ................................................................................ 116 

Robert J. Jackson, Jr., of New York, to be a Member of the Securities 

and Exchange Commission .................................................................................. 6 

Prepared statement .......................................................................................... 74 

Biographical sketch of nominee ....................................................................... 76 

Responses to written questions of: 

Senator Brown ........................................................................................... 118 

Senator Toomey ......................................................................................... 119 

Senator Sasse ............................................................................................ 121 

Senator Tillis ............................................................................................. 129 

Senator Menendez ..................................................................................... 137 

Senator Warner ......................................................................................... 142 

Senator Warren ......................................................................................... 147 

Senator Donnelly ....................................................................................... 149 

Senator Schatz ........................................................................................... 152 

Senator Cortez Masto ................................................................................ 153 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Wall Street Journal article submitted by Senator Van Hollen ............................ 155 

‘‘The 8-K Trading Gap’’ submitted by Senator Van Hollen .................................. 159 

(III)

(1) 

NOMINATIONS OF DAVID J. RYDER, OF NEW 

JERSEY, TO BE DIRECTOR OF THE UNITED 

STATES MINT; HESTER M. PEIRCE, OF OHIO, 

TO BE A MEMBER OF THE SECURITIES AND 

EXCHANGE COMMISSION; AND ROBERT J. 

JACKSON, JR., OF NEW YORK, TO BE A 

MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION 

TUESDAY, OCTOBER 24, 2017 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10:02 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Mike Crapo, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN MIKE CRAPO 

Chairman CRAPO. This hearing will come to order. 

This morning we will consider three nominations: Mr. David 

Ryder, to be Director of the U.S. Mint; Ms. Hester Peirce, to be a 

member of the Securities and Exchange Commission; and Mr. Robert Jackson, to be a member of the Securities and Exchange Commission. 

These nominees, if confirmed, will serve important roles in our 

Nation’s commerce and capital markets. 

Mr. Ryder is well equipped to oversee the manufacturing and distribution of our Nation’s currency, as well as collectible coins, national medals, and precious metals, based on his executive experience in the private sector and extensive Government service. 

Most recently, Mr. Ryder served as Global Business Development 

Manager and Managing Director of Currency for Honeywell Authentication Technologies after serving as CEO of Secure Products 

Corporation. He also has firsthand experience with the U.S. Mint, 

having served as its Director beginning in 1991 under President 

George H.W. Bush. 

His time in Government service also includes serving as Deputy 

Treasurer of the United States, Assistant to the Vice President, 

and Deputy Chief of Staff to Vice President Dan Quayle. Raised in 

Idaho, Mr. Ryder attended Boise State University. 

Following Mr. Ryder, we will receive testimony from both Ms. 

Peirce and Mr. Jackson to be members of the SEC. 

2 

Earlier this year, the Senate confirmed the President’s nominee 

for SEC Chair, Jay Clayton, who now serves with Commissioners 

Michael Piwowar and Kara Stein. 

Today we have the opportunity to consider two more highly 

qualified nominees who, if confirmed, would round out the SEC’s 

five-person Commission. 

The SEC has an important three-part mission: protect investors; 

maintain fair, orderly, and efficient markets; and facilitate capital 

formation. Each part of the mission is equally important and 

should not come at the expense of another. 

Today’s nominees have demonstrated a depth of knowledge in securities law and financial markets through their previous experience and body of academic work. 

Ms. Peirce is a senior research fellow at the Mercatus Center at 

George Mason University and the director of Mercatus’ Financial 

Markets Working Group. Before joining Mercatus, Ms. Peirce 

served on the staff of the Senate Banking Committee under Chairman Shelby, served at the SEC as a staff attorney and as counsel 

to Commissioner Paul 

Atkins, and worked as an associate at a Washington, DC, law 

firm. 

Mr. Jackson is a professor of law and director of the Program on 

Corporate Law and Policy at Columbia Law School where he has 

focused on executive compensation and corporate governance matters. 

Prior to joining Columbia in 2010, Mr. Jackson served as a senior 

policy adviser at the U.S. Department of Treasury in the Office of 

the Special Master for TARP Executive Compensation and practiced in the executive compensation department of a New York law 

firm. 

I look forward to hearing the priorities of each nominee in their 

respective positions, as well as their thoughts on the U.S. capital 

markets or the production of our Nation’s currency. 

Congratulations on your nominations, and thank you and your 

families for your willingness to serve. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Mr. Chairman. And welcome to all 

three witnesses. Good to see you all, some of you for the second 

time. So nice to see you. 

David Ryder has been nominated to be Director of the U.S. Mint. 

Congratulations. Ms. Hester Peirce and Mr. Robert Jackson, Jr., 

have been nominated to be members of the SEC, as the Chairman 

said. 

Mr. Ryder previously served as Director of the Mint in the 

George H.W. Bush administration. Since that time he has continued to work in the world of currency design and security in the private sector, most recently at Honeywell. His public service and corporate experience have prepared him to lead the Mint in a time of 

evolving currency design and technology. 

If confirmed, Ms. Peirce would return to the SEC as a Commissioner. Her time at the SEC and working on the Banking Committee’s staff provide her with a broad understanding of the agency’s 

3 

regulatory and legislative issues at a time when technology is 

transforming the way financial markets work. 

Mr. Jackson’s academic and private sector background will help 

him weigh the theoretical and practical sides of SEC policy. His 

scholarship on executive compensation—something very important 

to this Committee—and corporate governance will be useful as the 

SEC works to finish, finally, the executive compensation rules required under the years-ago-passed Wall Street Reform Act. 

The nominees to the SEC will finally bring the Commission to 

full strength. The SEC has joined corporate America as a 

cyberattack victim. Not only must the SEC protect the data it collects, it must make sure the public companies that are the engine 

of our economy are up front with investors and their customers 

about cyber risks and breaches. 

I want to emphasize the SEC’s investor protection mission is the 

cornerstone of a well-functioning stock market, and that is something that is very important to remember. The SEC must work 

tirelessly to ensure integrity and fairness in the capital markets so 

that investors can believe in the markets and in the regulator. 

The failure to hold any senior executives responsible for the massive misconduct during the financial crisis stands out as a failure 

in enforcement and not just at the SEC. Ms. Peirce and Mr. Jackson, this is something that should bother you as well, and if you 

are confirmed, I expect you to do everything you can to promote a 

strong enforcement program. 

Thank you. 

Chairman CRAPO. Thank you, Senator. 

We will now move to the testimony, and before doing so, we need 

to place each of you under oath. Would you please rise and raise 

your right hand? Do you swear or affirm that the testimony you 

are about to give is the truth, the whole truth, and nothing but the 

truth, so help you God? 

Mr. RYDER. I do. 

Ms. PEIRCE. I do. 

Mr. JACKSON. I do. 

Chairman CRAPO. And do you agree to appear and testify before 

any duly constituted committee of the Senate? 

Mr. RYDER. I do. 

Ms. PEIRCE. I do. 

Mr. JACKSON. I do. 

Chairman CRAPO. Thank you. That will do. 

I will begin the questioning with both you, Ms. Peirce, and Mr. 

Jackson. While I—— 

[Pause.] 

Chairman CRAPO. They just reminded me I need to let you make 

an opening statement. 

[Laughter.] 

Chairman CRAPO. I guess I will. 

Senator BROWN. This is so much on the Banking Committee’s 

agenda that we just want to dispense with all the formalities. 

[Laughter.] 

Senator SHELBY. Mr. Chairman, he is from Idaho. You may dispense with it. That is up to you. 

4 

Chairman CRAPO. Actually, I really do want to hear your opening 

statements. 

Senator BROWN. They put all that work into writing the opening 

statements, and nobody wants to hear them. 

Chairman CRAPO. OK. My face is red, and we will now start with 

you, Mr. Ryder, with your opening statement. 

STATEMENT OF DAVID J. RYDER, OF NEW JERSEY, TO BE 

DIRECTOR OF THE UNITED STATES MINT 

Mr. RYDER. Thank you, Mr. Chairman. 

First, I would like to introduce my family who came here today: 

my wife of 35 years, Monie; my daughter, Caroline; and my son, 

Nick Ryder. And my niece, Sarah Ryder, came up from San Antonio, Texas, and is interested in learning more about the Government process, so she came up from San Antonio to be with us 

today. 

Thank you, Mr. Chairman, Senator Brown, and distinguished 

Members of the Committee for allowing me to appear here today. 

Mr. Chairman, as you said, I am a fellow Idahoan, having grown 

up in Boise. In fact, my siblings and I still own a small piece of 

property just outside of McCall, so I do my best to get out to Idaho 

at least once a year to visit family and spend a little time in what 

the great State of Idaho has to offer. 

Chairman CRAPO. We appreciate it, and we hope you bring some 

common sense back with you to your job. 

Mr. RYDER. Thank you. 

First, I must say that I am honored that President Trump has 

nominated me to serve as the 39th Director of the United States 

Mint. 

As you are aware, in 1992, I was nominated by President George 

Herbert Walker Bush to be the 34th Director of the Mint. I received a recess appointment at that time and served for a period 

of 14 months. 

When I left the Government in 1994, I became a partner with Secure Products, a new venture spin-off from the Sarnoff Corporation 

in Princeton, New Jersey, which was formerly the central research 

facility for the RCA Corporation. Our mission was to develop advanced anti-counterfeiting technology solutions to be primarily 

used in currency and branded products. After a successful 13 years 

in business, the Honeywell Corporation acquired Secure Products 

in 2007. The ensuing 10 years was spent with Honeywell as their 

global business development manager and managing director of 

currency. 

In my role at Honeywell, I worked with Government agencies 

and central banks around the world to address currency issues. Interestingly, one of my last duties while at Honeywell was a joint 

project with The Royal Mint of the United Kingdom where we assisted them in the development of the new U.K. one pound coin, 

which was introduced earlier this year. This new circulating coin 

is considered to be the most advanced and secure coins in the world 

today. 

If confirmed, I would like to make education one of my focal 

points at the Mint. As the 34th Mint Director, we introduced an 

initiative called the ‘‘Money Story’’. The goal of this initiative was 

5 

to educate the youth of this Nation on the history of money, both 

coinage and paper, via a teacher’s curriculum and a video co-developed by the U.S. Mint and the Bureau of Engraving and Printing. 

This packet of information was made available to all teachers for 

use in the classroom. Teaching our youth early on how to collect 

coins and other numismatic products, as well as how to start saving their hard-earned money, helps lay the foundation of the importance of money. Over the years, the Mint has continued this excellent tradition via various tools which are located on their website. 

Having worked in the currency industry for the past 25 years 

plus, I have developed a strong operational and technical understanding of this tight-knit industry. I respect the men and women 

who dedicate their lives to this industry. During my time with Secure Products and Honeywell, I was afforded the opportunity to 

visit and work with many private and Government currency manufacturers in the United States, as well as around the world. I will 

bring to the Mint Director position a strong understanding of the 

industry and many of the challenges it faces. 

If confirmed, I would be honored to once again serve in our Government and work with this Committee. The U.S. Mint has an impressive history, and I look forward to becoming part of that history again. As in all businesses, I am sure the Mint has challenges 

to address. I look forward to facing these challenges while at the 

same time fulfilling its mission. 

Thank you. 

Chairman CRAPO. Thank you. 

Ms. Peirce, welcome back to the Committee, and you may now 

start your statement. 

STATEMENT OF HESTER M. PEIRCE, OF OHIO, TO BE A 

MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION 

Ms. PEIRCE. Thank you. Chairman Crapo, Ranking Member 

Brown, and Members of the Committee, it is a privilege to be here 

today with you, and it is an honor to be nominated, alongside Professor Jackson, to be a member of the Securities and Exchange 

Commission. If I am confirmed, I look forward to working to protect 

investors, uphold market integrity, and facilitate capital formation—the three interrelated parts of the SEC’s mission. 

As a young girl, when I was in junior high school, I dreamed of 

being a securities analyst. Now, admittedly, that dream was probably built more on the fact that there was always a Wall Street 

Journal gracing my father’s reading chair, and my mother was always listening to the market news on the radio. And, ultimately, 

that dream was not to come true, but perhaps it planted the seeds 

for why I am here today. 

Ultimately, I went on to study economics at Case Western Reserve University and law at Yale. And following my clerkship, I 

joined a law firm where I worked in the securities practice group. 

Ultimately, I found my way to the SEC where I spent 8 years. The 

first part of my time there was spent as a staff attorney in the Division of Investment Management, after which I joined Commissioner Atkins’ office and worked on a broader range of issues. Then 

I had the privilege of coming to this Committee and working for 

Senator Shelby, and most recently, I have been at the Mercatus 

6 

Center, where I have learned much from my colleagues’ knowledge 

about regulation and economics. 

My desire to return to the SEC is motivated by a belief in the 

importance of individuals, institutions, and innovation. Every individual has a unique set of interests, talents, knowledge, relationships, and in order for our country to be able to draw on those, we 

need to make sure that our capital markets function properly. So, 

for example, an entrepreneur who wants to start a business and 

has an idea, she needs the money so she can meet investors 

through the capital markets. And then when those investors invest 

in her company, she is able to employ other people who can then 

use their skills and abilities to further the enterprise. And then 

when the investors get their returns from their investment, they 

are able to invest it in their own children’s education, and those 

children then become the next generation of entrepreneurs and employees. 

But no one is willing to trust her fortunes and future to the capital markets unless the institutional framework surrounding them 

is strong. We need to have clear rules that are enforced carefully, 

and we need to foster compliance with them. And, of course, everything needs to be done in an orderly way, with impartiality and 

diligence. In the United States, the SEC is a key part of that institutional framework. It is important for it to set and establish clear 

rules and modernize them when necessary. 

And that brings me to my third point, which is innovation. Why 

is innovation important in financial markets? Not only does innovation lower prices and improve quality, but it expands access to people who have not had access to the capital markets in the past, and 

it opens up access to companies that have not had the ability to 

use the capital markets in the past. But sometimes regulation is 

so inflexible that innovation cannot happen, and so we need to 

make sure that our rules are flexible enough to accommodate innovation as appropriate. 

If I am confirmed, I look forward to working with Chairman 

Clayton and my fellow Commissioners to implement, enforce, and 

modernize rules to support healthy, dynamic capital markets. Together we can ensure that our capital markets serve individuals 

and companies across this country, that we build strong institutions, and that we support innovation. 

Thank you, and I look forward to taking your questions. 

Chairman CRAPO. Thank you, Ms. Peirce. 

Mr. Jackson. 

STATEMENT OF ROBERT J. JACKSON, JR., OF NEW YORK, TO 

BE A MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION 

Mr. JACKSON. Thank you. Chairman Crapo, Ranking Member 

Brown, and Members of the Committee, thank you very much for 

the opportunity to join you today. It is my honor truly to be testifying before you regarding my nomination to be a Commissioner of 

the Securities and Exchange Commission. 

For me, there is no greater privilege or responsibility than upholding the SEC’s mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate access to capital. And to 

7 

understand why that is so important to me, I thought it might be 

helpful for me to start today by sharing a bit about myself and my 

family. I was born in the Bronx, New York, to my two wonderful 

parents, Maureen and Robert Jackson, and I feel so fortunate that 

they could be here with me today. My mother was one of nine children; my father was one of five. And of all those people, no one, 

least of all my parents, would have even dreamed that 1 day they 

would be sitting behind their son on an occasion like this. 

You see, the day I was born, my father was working as an encyclopedia clerk—as an accounting clerk at a small encyclopedia company called Funk and Wagnalls. Throughout my childhood, my 

mother held several part-time jobs, including the early shift at 

Dunkin’ Donuts, just to help make ends meet. 

They were young, overworked, and sometimes even overwhelmed. 

But they believed that if they worked hard and saved what they 

could, their son might someday go to college. 

So every month my parents plowed their hard-earned paychecks 

into the market, knowing that if their investments were protected 

and growing they might someday be able to afford to send me to 

school. And that is really the only reason that I had the chance to 

go to college—and the incredible opportunity to be here with you 

all today. 

I believe that the SEC’s purpose is to protect everyday investors 

like my Mom and Dad. Because today’s markets are so complex, it 

can be easy to get lost in technical details and forget why those 

safeguards are so important. But my story shows why protecting 

America’s investors is at the heart of what the SEC does. Safe markets not only encourage investment and entrepreneurship and 

growth. Safe markets make it possible for two young middle-class 

parents to transform their lives so that someday their son has the 

chance to sit before the U.S. Senate as a Presidential nominee. 

Safe markets are at the core of the American dream, and that is 

something I have learned by living it. 

That is why my work—in Government, as a teacher, and as a researcher—has always focused on everyday investors’ confidence in 

our markets. At the Treasury Department during the financial crisis, I was proud to help develop rules that tie top managers’ pay 

more closely to performance and give investors a voice on executive 

compensation. When my research team at Columbia Law School 

showed that the SEC’s systems were inadvertently giving highspeed traders market-moving information before the public could 

see it on the SEC’s website, I worked with this Committee’s staff 

to help make sure the SEC gave investors the level playing field 

that they deserve. And when our team helped convince regulators 

to release additional information about stockbroker fraud, we were 

proud to help others use the data to expose the brokers most likely 

to defraud investors. 

If I have the honor of being confirmed, I intend to bring those 

tools to bear on the SEC’s crucial task. I will be a strong advocate 

for exploring how new technologies can help make corporate disclosures more reliable and enforcement efforts more effective and efficient. I will encourage the staff and my fellow Commissioners to 

draw on the SEC’s long history of favoring transparency as a 

means of maintaining investor confidence in our markets. And I 

8 

will work to implement the corporate governance protections that 

Congress has enshrined into law so that investors, employees, and 

communities can be sure that our companies are working to 

produce the kind of long-term value creation that has been the 

hallmark of the American economy for generations. 

Whether protecting retirees from stockbroker fraud, making sure 

Americans get a fair price when they purchase shares of stock, or 

uniting an entrepreneur with the funding he or she needs to spur 

a life-changing invention, the daily meat-and-potatoes work of the 

Commission and its staff is crucial to the functioning of our economy. It is vital to millions of American businesses and families. 

That is why my parents’ story is such an important reminder to 

me. You see, my parents’ confidence in our markets not only 

changed my life; it changed their lives, too. My father, the encyclopedia company clerk, retired as the chief accounting officer of a 

public company. My mother left Dunkin’ Donuts, earned her teaching degree, and has been teaching elementary school now for nearly 

30 years. None of that would have been possible if my parents had 

not felt they could safely save for their futures—and mine—in our 

markets. If I am confirmed, you should know that helping to make 

stories like theirs possible is what will motivate me every day. 

That is really what makes the SEC so important—and why I am 

so honored to be here. 

Thank you again for the opportunity to appear before you today. 

I would be delighted, of course, to answer any questions you might 

have. 

Chairman CRAPO. Thank you, Mr. Jackson. 

And now we are at the question time, and I will start out. I want 

to start out with you, Ms. Peirce and Mr. Jackson. And while we 

all know that the Chairman of the SEC sets the agenda for the 

Commission, I would like each of you to just discuss one or two or 

three areas that you think the Commission should focus on and 

prioritize during the next year. Ms. Peirce, why don’t you start out? 

Ms. PEIRCE. Thank you. In addition to the rulemaking agenda 

that is going to be taking up a lot of time, I think there are some 

important issues to look at, for example, the supervision, the oversight of firms through OCIE. The Office of Compliance, Inspections, 

and Examinations is an important thing. I want to see how that 

is working, including the oversight of SROs, such as FINRA. And 

I also think it is important to take a look at market structure 

again, not only equity market structure but also fixed-income market structure. I think we need to have a long-term view of how we 

can address some of the problems that we see cropping up in those 

areas. And then, of course, the recent events suggest that cybersecurity will be an important area for us to keep an eye on. 

And, finally, I know that once you get inside an agency, you often 

see things that you did not see before that need attention. So I will 

definitely have an open mind to consider other issues that need to 

be looked at. 

Chairman CRAPO. Thank you. 

Mr. Jackson. 

Mr. JACKSON. Well, thank you, Senator. I would emphasize three 

areas in response to your question, and the first would be cybersecurity. I think recent events both at the SEC and public companies 

9 

have taught us that we have got some work to do, sir, in making 

sure that our securities rules and our securities regulators have the 

tools and technologies in place to keep up with the changing marketplace. So I think that is an area we should focus. 

Second, I would also want to focus on completion of the outstanding rules that the Dodd–Frank Act requires. Sir, I am concerned that some 7 years after the passage of that law, several important investor protections, including protections around executive 

compensation and the clawback of erroneously awarded pay, still 

are not finished. I think those are things we should be working on 

and finishing, and right now the Commission has several proposals 

before it that I think are worth some attention. 

And then, finally, I think we should be thinking about enforcement and, in particular, sir, the law of insider trading. I worry that 

some of the recent events have caused investors to wonder whether 

or not the SEC is really on top of the job, is really the cop on the 

beat that we need to make sure that investors are getting a fair 

deal. I think those enforcement efforts deserve further attention 

and, if confirmed, I would very much look forward to working on 

them. 

Chairman CRAPO. Well, thank you. 

And, Mr. Ryder, similarly, what are some of the top two or three 

priorities you would like to bring to the U.S. Mint? 

Mr. RYDER. Well, having not had a Director of the Mint for some 

8 years, I think one of the things is to get in and get my hands 

dirty and understand a lot of the issues that have not been addressed by a Director in the past 8 years, to address some of the 

EEO issues that may be before the Mint, manufacturing issues 

with the manufacturing facilities, and make sure they are running 

smoothly in order to be able to achieve higher revenue for the Government. Last year, the Mint returned some $550 million to the 

general fund in processes and fees from special coinage programs 

and from of Seigniorage. I would like to try to increase that revenue. And then, finally, work with the Members in this Committee 

to ensure that some of these commemorative programs that do earn 

quite a lot of money for the Government are operated professionally, smoothly, and return the type of value that you all expect. 

Chairman CRAPO. Thank you. And I only have about a minute 

left, so I would like to ask you to be very brief in your response. 

This question is for Ms. Peirce and Mr. Jackson. Both of you 

brought up enforcement in my first question. This question relates 

to it, and while the SEC does not have criminal authority, it does 

have civil enforcement authority. 

To each of you, and, again, briefly, could you describe your views 

on the SEC’s enforcement program as well as your views on bringing actions against individuals and not just regulated entities when 

appropriate? 

Ms. PEIRCE. Enforcement is a key part of what the SEC does. If 

the SEC is not enforcing rules, then no one will take them seriously. So I think it is really important to focus resources on the 

right areas. I am glad that the Chairman is focused on retail fraud. 

And I think that looking at individuals is important. If something 

has been done wrong, an individual has been involved. So I would 

10 

like the SEC to make an effort to look for individuals to hold responsible. 

Chairman CRAPO. Mr. Jackson. 

Mr. JACKSON. Mr. Chairman, I think that enforcing the securities 

laws is critical to maintaining investor confidence. And in particular, what I would be interested to learn more about at the 

agency would be the degree to which new technology is being used 

to make those enforcement actions not just more effective but more 

efficient, so we can make the best possible use of the resources that 

Congress gives us. 

Chairman CRAPO. Thank you. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

Mr. Jackson, senior executives at Wells Fargo and Equifax, both 

who testified in our Committee recently, they oversaw longstanding 

problems: fraud pushed from the top at Wells Fargo, undoubtedly, 

and negligent cybersecurity practices at Equifax. They were allowed to retire after giving up only part of their compensation 

packages. Equifax CEO Richard Smith, who retired in sort of humiliation, received salary and stock worth $57 million in 2016, 

could still receive about $90 million for retiring. I suppose that is— 

57 plus 90 is about a dollar for every person whose information was 

stolen, if I can personalize it a little bit. Existing clawback rules 

in the proposal under the Wall Street Reform Act only apply if 

there is financial fraud. We now have two examples frankly that 

could be just as bad as cooking the books. 

Mr. Jackson, how should corporate boards and the SEC encourage sound executive compensation practices and improve accountability? 

Mr. JACKSON. Well, thank you, Senator, and just to begin, I could 

not agree with you more that corporate accountability and making 

sure that investors see that when things like this happen executives do not walk out the door with the kinds of payments you are 

describing are critical. Senator, that is why I would favor finishing 

the rules that the SEC is currently working through that are mandated by the Dodd–Frank Act. And, in particular, Section 954 of 

that statute authorizes and requires the SEC to promulgate rules 

requiring companies to adopt policies or develop policies on the 

clawback of executive compensation in a variety of circumstances. 

And I think this would be one that we should be taking a careful 

look at. 

It is troubling to me, Senator, that 7 years after the passage of 

that law, those rules still are not in effect, and I think that is 

among the first questions I would ask if I were confirmed. 

Senator BROWN. And I think both of you—I do not know either 

of you well. I have spoken, obviously, privately and publicly in this 

sense with each of you. I think you both understand how this undermines the public’s confidence in the people you regulate and in 

the Government for the fact that—you know the litany—nobody of 

major consequence went to prison. We think it is a victory around 

here when a CEO who resigns in disgrace gives up his bonus—always a ‘‘his,’’ it seems—gives up his bonus, like that is a major 

give-back even though they have pocketed tens of millions of dollars with no real accountability. And I hope that both of you underVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
11 

stand what that does to people’s faith in Government, in regulators, and particularly in the financial sector. 

I want to talk about—let me go with this next question. This will 

be for Ms. Peirce and Mr. Jackson. I am concerned that companies 

are failing to disclose information to investors and to the public. 

Wells Fargo covered up a fake account scandal. They were investigated. They were sued by three regulators. They agreed to a $180 

million fine. Cynics and people not so cynical would say that is just 

a cost of doing business. The company said this was not material. 

In the meantime, investors and consumers who entrusted Wells 

Fargo with their money were left in the dark. 

Equifax waited over a month to disclose the breach that led to 

the theft of over 145 million Americans’ personal information, has 

never said when or how it determined the breach was material. In 

the meantime, investors and consumers—even though executives 

knew, some of them, the investors and consumers were left in the 

dark. 

Ms. Peirce, how can investors be confident they are getting the 

whole story from companies like Equifax and Wells Fargo that 

seem—these companies seem to choose when the rules apply to 

them? 

Ms. PEIRCE. Senator, without speaking to any particular company’s disclosure, it is really important for companies to think carefully about what material facts they need to disclose. And the SEC 

staff works intensively with companies and goes back and forth 

about what is happening at the company. But, of course, ultimately 

the company knows better than the staff what is material and 

what is not, and so the ultimate responsibility is on the company. 

Senator BROWN. So you argue that we should leave the decision 

to the company on what is material? 

Ms. PEIRCE. No. My point is just that the SEC is pushing companies on what is material and what is not, but the ultimate responsibility—when omissions are made, the ultimate responsibility lies 

with the company, not with the staff. 

Senator BROWN. When a company makes a decision like Equifax, 

they apparently thought it was not material for a period of time. 

The Equifax stock price dropped 25 percent after it disclosed. That 

seems material to me. If you are saying that it is up to the company to decide materiality, doesn’t that mean company executives 

should be held accountable when it clearly—maybe they thought it 

was not material, but certainly the stock market and investors and 

the public did. 

Ms. PEIRCE. Again, without speaking to any particular company’s 

disclosure, it is important to hold companies and individuals responsible when omissions are made. 

Senator BROWN. OK. Mr. Jackson, what can the SEC do to make 

sure fewer companies make the wrong decisions in terms of materiality especially? What do we do to make sure those companies that 

make—that they make fewer wrong decisions, if you will, like 

Equifax and Wells Fargo? 

Mr. JACKSON. Thank you, Senator. I think the way to think 

about this and the way I think about it is from the point of view 

of investor protection. The materiality standard asks us to think 

through what would a reasonable investor think affects the total 

12 

mix of information about the stock that they are choosing to buy 

or sell. 

Now, for me, my concern is that the SEC’s rules in this area and 

guidance on what materiality is is not keeping pace with the 

changes in our markets and our companies. I think the recent 

events you talked about are some evidence of that. And for me, this 

requires the SEC to think through how are the kinds of disclosures 

companies are making in today’s market different from the ones 

they were making in the market 5, even 7 or 10 years ago? And 

how do we need to update the way we guide companies about what 

is important to investors going forward? That would be the way I 

would think about this issue. 

Senator BROWN. Thank you. 

Chairman CRAPO. Senator Shelby. 

Senator SHELBY. Thank you, Mr. Chairman. 

Mr. Ryder, on October 16th, the Inspector General of the Treasury Department, Mr. Eric Thorson, provided a memorandum to the 

Treasury Secretary discussing challenges that the Department is 

currently facing. In this memo, the Inspector General stated that 

the U.S. Mint should consider the effect of alternative payment 

methods and other technological advances. If confirmed, in what 

ways will you address Inspector General Thorson’s concern in the 

area of cryptocurrency? 

Mr. RYDER. Thank you, Senator. Having spent the last 25 years 

primarily with technology-related companies, I certainly appreciate 

the advancement in technologies. Some of the things that we did 

for central banks around the world were based on advancements in 

anti-counterfeiting technology. If confirmed, I do plan on entertaining as many technology companies that want to come to the 

Mint and present their technology. I think it is important to grow 

the technology base. Given how old it is, certainly change is necessary in certain cases. So I would welcome the opportunity to do 

that. 

Senator SHELBY. Could the cryptocurrency be a challenge to a lot 

of the central banks and so forth that regulate our currency? 

Mr. RYDER. Probably. Central banks are pretty old institutions 

that do things one way. 

Senator SHELBY. I know. 

Mr. RYDER. And they do that for a long time, and it is hard to 

change. The payment systems, vending machines, all of those 

apparatuses worldwide would need to be looked at, retrofitted if 

necessary, but with the proper technology, I think it is possible to 

certainly entertain it and see where it takes us. 

Senator SHELBY. If you do not, won’t the market get ahead of the 

regulators? 

Mr. RYDER. That is quite possible. Technology is a pretty slippery 

slope, and you have to be pretty darn sure of what you are implementing in a market this size that it is going to work, is going to 

work effectively, and not slow down the payment process. 

Senator SHELBY. Ms. Peirce, I join Chairman Crapo in welcoming 

you back to the Committee where you spent a lot of time. If confirmed, you will be tasked, as you well know, with protecting everyday investors—you mentioned that—while maintaining the efficiency and integrity of U.S. capital markets. I have long believed 

13 

that the best way—one of the best ways for the SEC to do these 

things is to conduct a thorough cost-benefit analysis on all rulemaking. For the U.S. to maintain its longstanding position as having the strongest capital markets, I believe the regulators must ensure that they prevent bad actors from taking advantage of individuals while also not creating an undue regulatory burden. Do you 

want to speak to that? 

Ms. PEIRCE. Yes, I think that the—— 

Senator SHELBY. The cost-benefit analysis. 

Ms. PEIRCE. Economic analysis is extremely important. The agency needs to figure out what the problem is it is trying to solve, and 

then it needs to look at the different methods. 

Senator SHELBY. And also how you do it, right? 

Ms. PEIRCE. Exactly. The different methods of solving it and then 

the costs and benefits associated with each. And it is very important to also build in metrics so that you can look back and see how 

the rule is working. 

The SEC has improved its economic analysis in recent years, but 

there is more room for improvement, and if I am confirmed, I look 

forward to working on that. 

Senator SHELBY. Mr. Jackson, you had a compelling statement a 

few minutes ago, and I believe you, along with Ms. Peirce, will be 

a great addition to the SEC. I have the same basic question to you, 

because in a 2016 brief I have been told that you filed in the case 

between MetLife v. the Financial Stability Oversight Council, the 

FSOC, you stated—and, of course, I know you are an advocate. You 

stated that using a cost-benefit analysis to designate institutions as 

systemically important, your words, ‘‘reveals a lack of understanding of basic principles of financial regulation.’’ What did you 

mean there? Or do you disagree with what she said? 

Mr. JACKSON. Thank you, Senator. In that brief, in that particular case, the position we were taking was not that cost-benefit 

analysis is not important. 

Senator SHELBY. OK. 

Mr. JACKSON. And, Senator, I agree with you that thinking 

through the costs and benefits of any particular rule is critical 

to—— 

Senator SHELBY. It is important to all of us, isn’t it? 

Mr. JACKSON. Yes, sir. I agree with you. The point we were making in that brief was not that costs and benefits are not important, 

but that we should know the limits of what we can know about 

costs and benefits in any particular case, because at the end of the 

day, Senator, although regulators must work hard to know what 

costs and benefits are, many of us make policy judgments, including, with all respect, the Congress, not knowing exactly what the 

implication might be of any particular choice. And that was the 

point we were making in that case. 

Senator SHELBY. OK. Ms. Peirce, quickly, we have a lot of layers 

of regulation, sometimes—well, we have laws, too, that are overburdensome and so forth. How will you at the SEC work to look 

back on some of the regulations and ascertain if they are duplicative, do they make sense—in other words, good oversight? Because 

I think the SEC should do good oversight, just like we should. 

14 

Ms. PEIRCE. Yes, it is very important, and the SEC has been 

around for a long time, so it does have quite a few years of rules, 

and I think it makes sense to go back and see how individual rules 

are working and also see how they are working together and when 

we need to pare things back or when we need to add things. But 

we should do it very carefully with being mindful of the overall 

burden. 

Senator SHELBY. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Reed. 

Senator REED. Thank you very much, Mr. Chairman. 

I was struck, Ms. Peirce and Professor Jackson, that you both 

identified cybersecurity as one of the key challenges. In that regard, you seem to be closely aligned with Chairman Clayton because he said when he was here for his confirmation, ‘‘I think cybersecurity is an area where I have said previously I do not think 

there is enough disclosure. In terms of whether there is oversight 

at the board level that is comprehensive for cybersecurity issues, 

that is something that investors should know, whether companies 

have thought about the issues, whether it is the particular expertise of the board or not. But I agree that it is something companies 

should know. It is a very important part of operating a significant 

company. Any significant company has cybersecurity risk.’’ 

I assume you agree with the Chairman, Ms. Peirce. 

Ms. PEIRCE. I do think that almost every company these days has 

cybersecurity risk, and I think it is important for them to think 

about how to disclose that to investors and for the SEC to think 

about whether it needs to provide additional guidance to help them 

do that in light of some of the recent changes in recent years and 

the fact that the threats are greater now than they were even 5 

years ago. 

Senator REED. Professor Jackson. 

Mr. JACKSON. Absolutely, Senator, I think the risks that companies face on the cybersecurity front today are different than they 

were even just a few years ago. And my concern is that we make 

sure that the rules they face and the disclosures they provide to investors keep pace with those changes. I think it is a critical area 

for the SEC. 

Senator REED. Would it help to have some legislative direction 

so that the SEC could move more expeditiously? 

Mr. JACKSON. Well, Senator, I think it is always helpful to have 

guidance from the Congress about exactly what the SEC’s priorities 

should be, and I look forward to working with you and your staff 

on those questions. But I should point out that updating these 

rules is critical to the SEC’s mission more generally, and they can, 

and I think sometimes they should, do it without legislation. 

Senator REED. All right. Another aspect of the SEC’s responsibility for cyber is having the resources. In Dodd–Frank, I helped 

legislate a $50 million per year fund for the SEC for technology improvements and cybersecurity. And, again, I asked Chairman Clayton in September about the fund, and he said essentially, ‘‘We need 

more money, and we will ask for more money.’’ And I would again 

ask, starting with Professor Jackson, do you think we will need significant resources to get the SEC ready? 

15 

Mr. JACKSON. Yes, and the reason, sir, is that companies are 

spending—the markets that the SEC hopes to regulate are spending billions of dollars on the latest technology. And for the SEC to 

keep up, they need to have the kind of resources that you just described. 

I was very glad to see that provision in Dodd–Frank that provides the SEC the funding, and, sir, I am not sure we can ask the 

SEC to keep up unless we provide them the resources that allow 

them to do so. 

Senator REED. Ms. Peirce, your view? 

Ms. PEIRCE. Funding is obviously an important component of the 

SEC’s ability to oversee the markets, but it is also important that 

resources be used well. And it is a little bit difficult from the outside to understand how well resources are being used. You know, 

I can see Inspector General reports that talk about problems on the 

inside. But it will be much easier to assess that when I am actually 

there. 

Senator REED. My sense, though, is that given what we have 

read in the newspapers, what we have seen on television, given 

what your regulated entities spend, particularly the large ones, on 

cybersecurity, the funds that the SEC is devoting are rather meager. So my instincts would be that we need to reinforce your efforts, in addition to providing more guidance, and we are working 

on legislation to help you do that. 

Professor Jackson, you pointed out in your testimony that the 

purpose of the SEC really is to protect people on Main Street, not 

people on Wall Street, and because of the complexity of the markets, because of the complexity of products, I wonder if you might 

expand on those points. 

Mr. JACKSON. Thank you, Senator. Yes, I think it is very easy to 

be at an agency like this one and talk about and think about these 

problems in very technical ways. What should the 8-K rules look 

like? What is the right market structure for us? And for me, the 

important thing, and what I hope I might be able to do if I am confirmed as a Commissioner, is keep in mind why you do it. And I 

think the reason that you do it is so that everyday investors can 

have the kind of story my family had, where they can somehow 

find a way by plowing away money into safe investments in the 

American economy, somehow find a way to change their lives. And 

that certainly would motivate me, if I am confirmed, sir. 

Senator REED. Thank you very much. 

And just for the record, Mr. Chairman, I am not trying to imitate 

Senator Brown. I have a bad cold. 

[Laughter.] 

Chairman CRAPO. Well, and you finished within your 5 minutes, 

also, and I appreciate that. 

Senator Rounds. 

Senator ROUNDS. Thank you, Mr. Chairman. 

First, I want to thank all of you for meeting with me in my office 

last week, and I just want to start with Ms. Peirce and Mr. Jackson. We had the opportunity to talk about FINRA at our meetings, 

and I believe there is room for improvement at FINRA, especially 

in the area of transparency and in the way that they work with 

compliance with different companies who are producing products. 

16 

FINRA must also do, I think, a better job of giving producers an 

outlet to air their concerns. Sometimes I suspect that the actual 

companies or the compliance departments want to make sure that 

producers are absolutely not in front of or involved in any reporting 

whatsoever of anything that is inappropriate other than directly 

through a compliance department itself. 

I am just curious whether or not it is time to take a second look 

at FINRA and whether or not their directions with regard to compliance is appropriate at this time and whether or not it has to be 

looked at and reviewed. 

Ms. PEIRCE. I do think that FINRA needs to be reviewed. I am 

encouraged by the fact that they are now under the leadership of 

Robert Cook, who has made an effort to reach out to a whole range 

of constituencies to find out their concerns about FINRA. That 

said, I think it is important for the SEC to oversee that process 

closely. I worry about transparency, too, and I have heard from 

small firms that have concerns about their ability to be heard by 

FINRA. So I think that is important. 

We are seeing the number of small firms drop pretty dramatically, and so one has to ask: Is that related to the fact that the regulatory burden is just not properly calibrated? But then you also 

raise an important issue, which is we want to make sure that the 

communication between FINRA and its regulated entities is such 

that when someone sees something bad happening in the industry, 

they can go and tell FINRA without being scared that that is going 

to train FINRA’s attention on a firm that is fully compliant and 

doing things well. 

Senator ROUNDS. Do you think that atmosphere exists today? 

Ms. PEIRCE. I worry that the atmosphere now is one just as you 

described: You keep your head low, and you do your thing, and you 

are not even willing to raise issues when you see real fraud happening. 

Senator ROUNDS. Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. As we discussed in your office, I think it is important that the SEC take a prominent oversight role with respect to FINRA, and as we discussed, I am in particular interested in the part of your question that talks about 

transparency. One thing that FINRA has been doing is collecting 

important information and data on the degree to which stockbrokers are engaged in fraud. And one thing that has come to light 

very recently is that there are a number of repeat offenders in that 

space, and I am not sure that FINRA has been transparent enough 

in giving that information to investors so investors can tell the difference between a producer who can help them plan for their retirement and somebody who is going to take their money. 

So I think there is a lot of work to do in that area. But I am 

also encouraged by Robert Cook’s leadership. I think he understands this, sir, and if confirmed, I very much look forward to 

working with you. 

Senator ROUNDS. Thank you. 

I think that the Department of Labor’s fiduciary rule is fundamentally flawed, and I firmly believe that this should have been 

done at the SEC in the first place. I think you would have done 

17 

a better job and you would have understood the need of small investors. 

In addition to the jurisdictional issues, this rule truly does hurt 

that small investor by—most of them are going to get priced out 

of the market based upon the DOL’s current fiduciary rule. Chairman Clayton has been active on this issue since starting at the 

SEC. What are your views on the DOL’s fiduciary rule? And what 

role do you believe the SEC should have in this space going forward? I will begin with you, Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. Let me start by making clear 

I agree the SEC should have an important role in the development 

of these fiduciary standards. It is a natural area for the SEC to do 

rulemaking. And I understand that presently the Chairman is 

working with the Department of Labor and other regulators to develop the SEC’s presence. 

Without commenting too much on a matter that might come before me if I were confirmed, I want to say my own view is that 

what is important in developing this standard is to make sure that 

the market and investors have consistency. Senator, my concern is 

that someday investors are going to think they have one standard 

of protection for their retirement assets and another standard of 

protection for their brokerage accounts. And I think that kind of 

confusion is not only costly but does not let investors know what 

they need to know about the protections that they have. 

Senator ROUNDS. I am going to run out of time, but Ms. Peirce? 

Ms. PEIRCE. I have concerns about the DOL’s rule as it is currently written. I am glad that calmer minds have prevailed and 

people both at DOL and at the SEC are taking a look at it. I think 

it is important to work with the States as well and try to get everyone in a room to work together for the objective that everyone has, 

which is to make sure that investors know the type of service they 

are getting and that they have access to service. 

Senator ROUNDS. Thank you. 

Mr. Ryder, I am out of time, but I will ask one question for the 

record, but I will submit it to you for the record if that is OK with 

the Chairman. I think you will do a fine job, sir. 

Mr. RYDER. Thank you. 

Senator ROUNDS. Thank you. 

Chairman CRAPO. Senator Cortez Masto. 

Senator CORTEZ MASTO. Thank you. I am over here at the children’s table. 

[Laughter.] 

Senator CORTEZ MASTO. I appreciate it. I am a new Senator from 

Nevada. I appreciate the conversation we are having here today, 

and, Mr. Jackson, I just wanted to follow up, and Ms. Peirce, on 

some of the conversation that I have heard already from Senator 

Brown and some others with respect to individual executive accountability and what that should look like at the end of the day. 

Ms. Peirce, what specific steps would you take to bolster executive accountability? I have heard you having this conversation, but 

what would you actually do when it comes to executive accountability and making sure that the SEC is doing the enforcement 

necessary? 

18 

Ms. PEIRCE. I think a lot of it really does come down to specific 

cases and asking questions when you get a settlement that only involves a company pushing and saying ‘‘why are we settling only 

with the company without individuals being involved?’’ Because it 

really is a case-by-case issue. 

Now, we have to be able to prove the case, obviously, against the 

individual, but I am worried that too often we are just seeing settlements that are using shareholder money to take the focus off the 

executives. 

Senator CORTEZ MASTO. Thank you. 

Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. My own view about this is 

that there are two things we should be thinking through. 

First, to what degree is the SEC pursuing the enforcement actions that it can against individuals? And I agree with what has 

just been said that we could focus on not only settlements with corporations, but also the individuals who are responsible. And I think 

it is terrific to ask that question. 

But I would back up, Senator, and ask a broader question, which 

is: Do we have the law we need, does the SEC have the tools it 

needs to bring those cases successfully? Because the standards of 

proof are extremely high, the cases can be difficult to make, and 

I am wondering whether the law that we have is the law that we 

need to hold individuals accountable. And that is something I 

would very much look forward to working with this Committee and 

you and your staff on, updating that law to make sure that individuals can be held accountable when things go as wrong as they did 

in the financial crisis. 

Senator CORTEZ MASTO. I appreciate those comments, because 

my next question kind of fits right into that, and you are familiar 

with the Yates memo, and I specifically am concerned. When I 

asked Mr. Clayton about the Department of Justice potentially 

withdrawing the Yates memo from the previous administration, he 

really could not comment on the potential impact on the SEC’s enforcement program. As you know, this memo outlines six key steps 

prosecutors should take to strengthen the pursuit of individual corporate wrongdoing, and news reports indicate that the Attorney 

General, Attorney General Sessions, may rescind the memo or 

scale it back. 

So if confirmed to the SEC, will you commit to redoubling efforts 

to hold individuals accountable for corporate wrongdoing, even if 

the Department of Justice backs away from the previous administration efforts? Ms. Peirce. 

Ms. PEIRCE. Yes, the SEC is an independent agency and has its 

own enforcement agenda to pursue, and an important part of that 

is looking at individuals. So I will commit to looking at individuals. 

Senator CORTEZ MASTO. Thank you. 

Mr. Jackson. 

Mr. JACKSON. I agree with Ms. Peirce, and I share that commitment. The SEC is an independent agency, and whatever the Department of Justice does, I think it is important that the SEC redouble its commitments to enforcement and, in particular, holding 

individuals accountable. So, yes, Senator, I will commit that to you 

today. 

19 

Senator CORTEZ MASTO. I appreciate that. 

Arbitration clauses, Ms. Peirce, you have written critically about 

the CFPB’s rule limiting forced arbitration clauses. As we know, 

this rule will give consumers a choice as to whether they want to 

resolve disputes with financial companies through a rigged arbitration system or have their day in court. Your claim is that the 

CFPB’s rule should be repealed and the market can solve this problem. If consumers do not like the clauses, they simply can refuse 

to do business with companies that use them. 

But let us take the two recent examples that we have talked 

about. With the Equifax data breach impacting 145 million Americans’ personal data, the company initially included a forced arbitration clause in its identity theft protection service, only removing it 

after tremendous public outcry. Meanwhile, other credit reporting 

agencies still use these clauses, and Equifax still even uses such 

restrictions in it general terms of service. Wells Fargo continues to 

maintain in court that forced arbitration clauses apply even to fake 

accounts that consumers never even requested in the first place. 

Can consumers ask to be deleted from credit reporting agencies’ 

data bases if they do not like their arbitration clauses? They simply 

just cannot walk away. And this is data that they do not necessarily own, even though it is their personal information. What 

rights do they have to vote with their feet when Wells Fargo tries 

to enforce such a clause on a fake account or Equifax does the 

same thing with data that is really not their own? 

So I am curious how you can make that statement and what 

your actions would be into looking at forced arbitration clauses as 

SEC Commissioner. 

Ms. PEIRCE. So credit reporting agencies are not regulated entities of the SEC, but in general, arbitration can work well for people, but, obviously, the circumstances around it matter. So if I were 

at the SEC, I would be happy to work with staff and my fellow 

Commissioners to consider arbitration as it comes up. But I do 

think that arbitration in general can be actually more beneficial 

than class-action litigation. Treasury issued a report yesterday, I 

think, talking about that. So I think it is important to look at the 

evidence. 

Senator CORTEZ MASTO. So you would be willing to study it as 

an SEC Commissioner, forced arbitration clauses and the impact 

they have on individuals who are really entering into adhesion contracts that do not really have the ability to walk away from if they 

need service? 

Ms. PEIRCE. As that issue comes up on the SEC’s agenda, but, 

as I said, the SEC would not be looking at something like the credit reporting agencies, which are outside its purview. 

Senator CORTEZ MASTO. My time is running out, and I appreciate 

your comments. 

Mr. Jackson, is this something that you think the SEC would be 

willing to study or take a look at or has a role? 

Mr. JACKSON. I think it should, and let me just say, Senator, that 

this issue is going to come up again because, increasingly, companies are including mandatory arbitration provisions with respect to 

shareholder lawsuits against them. And to the degree that these 

kinds of provisions come up and shareholders are asked to go 

20 

through arbitration instead of litigation, I will have real questions 

about the degree to which we are protecting those shareholders. To 

me, Senator, what is puzzling about that development is we already have some law, the Private Litigation Securities Reform Act, 

that increases the burdens of proof and tries to deal with nuisance 

litigation. And, more generally, Senator, I do not have the sense 

that what we have in corporate America is too much accountability. 

So for me, I would be skeptical of those clauses, and I want to take 

a close look at them. 

Senator CORTEZ MASTO. Thank you. I notice my time is up. 

Thank you for your indulgence. 

Mr. Ryder, I have no doubt you will do an incredible job. I appreciate all three of you, really, and your willingness to serve in public 

service, so thank you. And welcome to your families as well. 

Chairman CRAPO. Senator Kennedy. 

Senator KENNEDY. Thank you, Mr. Chairman. 

Mr. Jackson, I listened to your comments about everyday investors and transparency, and I agree with you. Have you ever bought 

a stock? 

Mr. JACKSON. Yes, sir. 

Senator KENNEDY. Before you buy, did you read the prospectus? 

Mr. JACKSON. Well, I reviewed all the disclosures. It was a company that had gone public some time ago, but I read all the relevant disclosures, yes. 

Senator KENNEDY. No. Did you read the prospectus? 

Mr. JACKSON. I do not recall in that particular case, but generally I would want to know all the things disclosed, both in the 

prospectus and the more recent disclosures. 

Senator KENNEDY. All right. Have you ever bought a bond? 

Mr. JACKSON. Yes, sir. 

Senator KENNEDY. Did you read the prospectus? 

Mr. JACKSON. No. In that case, I do not think so, sir. 

Senator KENNEDY. OK. Ms. Peirce, have you ever bought a stock? 

Ms. PEIRCE. I am a mutual fund investor because I realize my 

limitations. 

[Laughter.] 

Senator KENNEDY. Before you bought the mutual fund, did you 

read the prospectus? 

Ms. PEIRCE. I did not read the prospectus before I bought the 

mutual fund, I will admit. 

Senator KENNEDY. I guess my question is: What is the point? I 

mean, I believe in disclosure. And we all talk about everyday people and ordinary investors. But yet we have made the disclosure 

documents inaccessible. 

Now, you are both well-educated, intelligent people, presumably 

sophisticated investors. You are going to be on the SEC. I mean, 

what is the point of a prospectus if nobody is reading it? 

Ms. PEIRCE. I mean, I think you make an excellent point, which 

is that especially for things like mutual funds, where it is a retail 

investor audience that you are going for, it is important to have 

documents that are tailored for them to read. Now—— 

Senator KENNEDY. Well, I know I am making a good point. What 

are you going to do about it on the SEC? 

21 

Ms. PEIRCE. Well, I think that that is an issue that—for example, 

the Investor Advisory Committee is a relatively new addition, a 

Dodd–Frank addition to the SEC, and I think it can be very useful 

in helping the Commission figure out what kind of disclosure is 

needed, and also there is more—the SEC is making a greater effort 

to do investor testing and things like that. And I think that there 

is real promise there. 

Senator KENNEDY. Well, I can save some time on the investor 

testing. The lawyers have made the prospectus meaningless. People 

do not read them. OK? There is your poll. I do not know anybody 

who reads it. I am not saying we should not have disclosure. We 

need more disclosure. But what we are doing is not working. 

Ms. PEIRCE. I fully agree that we need to revisit disclosures to 

find out what we can do to make it work. 

Senator KENNEDY. I mean, it looks to me like the only people 

benefiting are the lawyers. You used to be at Wachtell Lipton. I bet 

you all charged—I am not saying—look, I believe in free enterprise. 

But, I mean, what do you pay a law firm to put together a prospectus? 

Mr. JACKSON. I am sure it is expensive, Senator. 

Senator KENNEDY. Yeah. That has always bothered me that the 

SEC always talks about disclosure, and what I think the SEC does 

in many cases is undermines it. 

Let me ask you this: Can we agree, Mr. Jackson, that the recession from 2008 was probably the worst we have had since the 

Great Depression? 

Mr. JACKSON. Yes, sir. 

Senator KENNEDY. How many people went to jail—well, let me 

strike that. What caused it? 

Mr. JACKSON. Well, Senator, it is complicated. 

Senator KENNEDY. How about giving me a one-sentence answer? 

I do not mean to be rude, but I try to stay—how about this: greed? 

Would you agree with that? 

Mr. JACKSON. I would agree that was an important factor, Senator, absolutely. 

Senator KENNEDY. All right. How many people went to jail? 

Mr. JACKSON. In terms of high-profile, important accountability 

convictions, I do not think there are any, sir. 

Senator KENNEDY. Did the SEC take a lead in trying to hold real 

people with beating hearts who were greedy, did the SEC do anything to make them accountable? 

Mr. JACKSON. Well, sir, they did bring some cases in this area, 

but as you point out, there were no successful convictions at the 

highest possible levels of corporate management. And if you are 

asking, sir, did we do enough to hold those people accountable, 

then, Senator, the answer is no. 

Senator KENNEDY. Ms. Peirce, do you think anybody broke the 

law on Wall Street in 2008? 

Ms. PEIRCE. Certainly. 

Senator KENNEDY. And how many went to jail, again? I forgot. 

Ms. PEIRCE. Yes, I mean, individual accountability is important—— 

Senator KENNEDY. Well, where was the SEC? You could not have 

found them with a search party. Where were they? 

22 

Mr. JACKSON. Well, Senator, as I say, the SEC did bring important cases in that area, but if you are unsatisfied—— 

Senator KENNEDY. And you can count them on this hand. 

Mr. JACKSON. Sir, if you are unsatisfied—— 

Senator KENNEDY. Missing a couple of fingers. 

Mr. JACKSON. If you are unsatisfied, sir, with the job the SEC 

did in holding those people accountable for the devastation of that 

crisis, so am I. 

Senator KENNEDY. I mean, we all give lip service to everyday 

people and transparency, but when it counted, uh-uh. 

I am over my time, but only by 30 seconds. That is a record. 

Chairman CRAPO. And I appreciate that. 

Senator Heitkamp, see if you can beat his record. 

Senator HEITKAMP. You know, I am going to follow up on his line 

of questioning because I think it is critical. We certainly hope those 

fund managers are reading the prospectus. And we certainly need 

to make sure that the information is made more accessible in terms 

of summary data with background information. And so that can be 

a big challenge for you guys. But I am sure as a general matter 

you guys need to know if you share my belief that the quickest way 

to provide a deterrent from insider trading or all kinds of nefarious 

bad acts is send someone to jail, right? 

Mr. JACKSON. Absolutely, Senator. Enforcement, especially in 

that area, is absolutely critical. 

Ms. PEIRCE. Yes, I mean, sending people to jail is certainly a deterrent. 

Senator HEITKAMP. Yeah, I think there is this sense that people, 

especially in white-collar crime, there is this sense that if you give 

someone a big fine—but frequently the profits exceed the fine and 

the fine is inadequate to deter behavior, and we need to see people 

go to jail. And if we have got a problem, as I think we do with the 

mens rea qualification or standard for proof of intent, then we need 

to fix that. And we expect advice from the SEC on how we can do 

that. I think I talked about this with both of you when you were 

in my office. 

I just wanted to get a couple things on the record. As you know, 

Senator Heller and I pushed and were successful in getting something called the ‘‘Small Business Advocacy Act’’ passed. Now that 

the SEC has an obligation to put a small business advocate into 

policymaking at the SEC, I want to know, if confirmed, do I have 

your commitment to move quickly to set up the new office and appoint that advocate with a background that understands the capital formation crisis that is facing middle America? Do I have your 

commitment? 

Ms. PEIRCE. Yes, I think it is extremely important to get that 

voice at the SEC. 

Mr. JACKSON. In a word, Senator, yes. 

Senator HEITKAMP. OK. Thank you. And can I also get your commitment that you will work to ensure that the Commission appoints individuals to the Advisory Committee who understand the 

specific challenges of rural startups in the United States of America? 

Ms. PEIRCE. Yes. 

23 

Mr. JACKSON. Absolutely. I think the SEC needs to cast a wide 

net and make sure that those kinds of individuals are in those positions so we can really find out what those challenges are and we 

can address them. 

Senator HEITKAMP. This whole bill was never about checking a 

box and saying look what great thing we did for small business. 

This is about changing the culture of the SEC as it relates to small 

business, and so I am glad to have your commitment that you will 

take that effort very seriously. 

Under the Model Business Corporation Act Section 8.42(b), there 

is a passage that I think is very instructive: ‘‘for purposes of establishing knowledge within a corporation of material violations of law 

or bad behavior.’’ The passage covering fiduciary obligations reads 

you ‘‘must report certain matters to others in the company, including any business information within your sphere of responsibility 

that you know or have reason to believe to be significant, or concerns actually or probably material violations of the law.’’ 

To my knowledge, not one State has adopted this model guidance 

into law. Would a more robust duty-to-report requirement such as 

the one proposed by MBCA with associated criminal fines and penalties help force material information up the chain of command to 

the board and top executives within a corporation? 

Ms. PEIRCE. That does seem to be more of a State-level issue 

than an SEC issue, but I think that there are some changes that 

have happened. I think the whistleblower changes in Dodd–Frank 

also have the effect of helping to force stuff up the chain. So I am 

hopeful that we will see better compliance. 

Mr. JACKSON. I do think, Senator, the whistleblower part of the 

Dodd–Frank law has been important in this respect. What I would 

like to do, if I have the honor of being confirmed, is learn more 

about how we can encourage that information to get up the corporate chain, whether it is—— 

Senator HEITKAMP. I do not want to just encourage it, because 

everybody agrees it should go up the chain. I want to mandate it, 

because I am tired of executives saying, ‘‘I did not know,’’ ‘‘Not my 

business,’’ ‘‘Did not look, not my business.’’ And we absolutely need 

to change the culture at the top. And we have tried over and over 

and over again various iterations of forcing this information up the 

chain only to be unsuccessful. And so let us not pass the buck to 

State organizations. Let us just sit down and figure out how we are 

going to get this accountability at the very highest level of corporate America moving forward. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you, and almost totally on time. 

Senator Scott. 

Senator SCOTT. I will try to reverse that trend, Mr. Chairman. 

Thank you very much. 

[Laughter.] 

Chairman CRAPO. I have a gavel. 

Senator SCOTT. Yes, sir. That is a warning. 

Good morning. Thank you, folks, for being here this morning. I 

will say to Ms. Peirce and Mr. Jackson your answer to Senator 

Rounds’ question on the fiduciary was a very important answer, 

and I thank you for your answer. There is no doubt that there is 

24 

an important opportunity for the SEC to coordinate with the DOL 

as well as State insurance regulators during this 18-month window, because in South Carolina the average person who is close to 

retiring only has 1 year of income in their retirement account. So 

the importance of opening the door for more financial experts to 

come into households and provide expertise so that those retirees 

have a chance to use their limited resources in the most effective 

way cannot be overemphasized. So I appreciate both of you being 

informed, educated, and, frankly, motivated about making a difference in that space. So thank you both for your answers. I was 

going to ask that question. 

Ms. Peirce, I have a different question. You have written about 

Government regulations that make it nearly impossible for new 

credit rating agencies to enter the market. I am concerned anytime 

the Government hinders competition. How can the SEC help 

change this dynamic, especially with investor guidelines? 

Ms. PEIRCE. It is a problem, I think, especially in an area where 

we have seen the damage when you only have a few large credit 

rating agencies. So I think that the SEC needs to be willing to 

work with the credit rating agencies, the smaller agencies, to help 

them to comply with the rules. And then in terms of investor guidelines, those are private, so it is difficult for the SEC to intervene 

and force that change. But I think if the SEC allows new credit rating agencies to come up and start, then it is more likely those investor guidelines will change over time. 

It is important that all of the NRSRO ratings be removed from 

regulations and statutes. I think that is the start to then getting 

the investor guidelines to change. 

Senator SCOTT. Thank you. 

Mr. Ryder, we have given you too much time off this morning, 

so I want to ask you a very important question. There are 10,629 

jobs held by South Carolinians because of our $2 billion-a-year 

scrap recycling industry. I have got folks from Spartanburg to Clinton to Cayce and all the way to the coast in South Carolina sitting 

on millions of dollars of mutilated coins the Mint will not accept. 

Is reinstating the Mint Mutilated Coin Redemption Program something you will be working on? 

Mr. RYDER. Yes, sir. It is a program that was suspended in 2015, 

for good reason. They needed to review the program. It had been 

in operation for quite a number of years. 

Senator SCOTT. Yes. 

Mr. RYDER. And they are currently on track to have a new set 

of rules hopefully introduced by the end of this year. 

Senator SCOTT. Thank you. On behalf of 10,629 folks in my 

State, we appreciate that. 

Mr. Jackson, some believe that the balance between corporate 

management and shareholders is tilting too far in one direction. 

Chair Clayton seems to agree. Do current shareholder proposals’ 

resubmission thresholds further fair and efficient markets? 

Mr. JACKSON. It is a very important question, Senator, so thank 

you. What we are trying to do, as you point out, is strike a balance 

between making sure corporate management can run the firm as 

they see fit to maximize its value, provide jobs and growth; on the 

other hand, make sure that they are held accountable, sir, for the 

25 

decisions that they make by the owners of the company. And the 

shareholder proposal rules are really shareholders’ best opportunity 

to have a dialog with the company, to bring forth ideas and proposals to management, almost always on a nonbinding basis, to 

guide the management about what the shareholder thinks the right 

next step for the company is. 

My own sense is that, with respect to the resubmission proposals, 

the SEC very well could and should take a look at whether repetitive proposals are furthering that goal. So I am someone who is 

very focused on dialog between shareholders and management, and 

I think as long as we can advance that goal but minimize the repetitive proposals that consume corporate management’s time and 

cost, I think that would be a good way forward. 

Senator SCOTT. Mr. Jackson, Ms. Peirce, Mr. Ryder, thank you 

very much for your time. 

Mr. Chairman, I yield back. 

Chairman CRAPO. I appreciate that 13 seconds. 

Senator Van Hollen. 

Senator VAN HOLLEN. Thank you, Mr. Chairman. I thank all of 

you for your testimony today, and I have some questions to start 

out with for Mr. Jackson and Ms. Peirce. 

There has been a lot of talk about insider trading, and when we 

had a hearing on Equifax, one of the issues that came up is at 

what point in time did they have an obligation to inform the public 

about the hack that had taken place which could have an impact 

on shareholder value? And that is a big issue of what triggers this 

obligation and materiality. But there should be no dispute that 

once a company reaches that decision, they have to inform the public; they have to file an 8-K; that after that point in time, in my 

view, they should not be engaging in trading their own stock. And 

I know, Mr. Jackson, you have written about this. You have written about the 8-K gap and shown that during this window of time, 

the reality is that executives and insiders have traded, so far technically legally, and ended up getting a better deal for themselves 

than would be available to a member of the public who is informed 

about these developments. 

Could you comment on that? Because we are working on some 

legislation, bipartisan legislation, to address at least that window. 

Mr. JACKSON. Thank you, Senator. Yes, you are right. This is an 

area in which I have written before, and I am very concerned, sir, 

that corporate management might be engaging in trading right before the announcement of a material public event, but after the 

event has occurred. And I think this is a troubling pattern, and I 

was delighted to hear Chairman Clayton at the last hearing say 

that it really is good corporate hygiene for insiders not to be trading during this period. 

Senator, I would very much look forward to the opportunity to 

work with you and your staff on the legislation you described. I 

cannot understand the case, candidly, Senator, for why insiders 

should be trading right before they are about to announce important news to the public. 

Senator VAN HOLLEN. Right. Ms. Peirce, would you agree? You 

had an exchange a little while ago with the Ranking Member 

about, you know, what triggers materiality and who makes that deVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
26 

termination. But, clearly, once a company has made the determination that they have an obligation to file an 8-K, doesn’t it make 

sense to say that executives cannot engage in trading at that point? 

Ms. PEIRCE. Yes, I mean, I thought that Professor Jackson’s work 

on this point was really interesting, and I think there is some useful work to be done in the area, and I look forward, if I am confirmed, to working with you and the other people working on this 

legislation. 

Senator VAN HOLLEN. Thank you. 

Now, Mr. Jackson, you said that one of the purposes of, you 

know, a company’s leadership is to ‘‘maximize value and to promote 

growth and jobs.’’ And, clearly, if a company is making decisions 

that are in the long-term interests of its long-term shareholders, 

that is something that can promote growth as they make investments, whether in their workforce or other things, but we also have 

a lot of short-termism. We have lots of examples where CEOs and 

the top brass seem to make decisions that benefited them at the 

expense of the long-term interests of the corporation. And I am interested in beginning to look at some of the incentives that are 

under the jurisdiction of the SEC in that regard because we are 

about to embark—we are embarked already on a big debate over 

tax reform, and as you all may be aware, you know, the Department of Treasury under Secretary Mnuchin removed from the 

website something that had been there through Democratic and 

Republican administrations about where the benefit of a corporate 

tax cut goes, whether it is to workers or to the capital side, shareholders, plus folks who benefit from stock buybacks. And it is going 

to be a really important question. 

What you have, I think, at your disposal are some tools that can 

address this short-termism, and I wondered, starting with you, Mr. 

Jackson, whether you can talk about issues with respect to CEO 

compensation in the form of stock that might give them an incentive to look to the long term, not simply short-term profits for 

themselves. 

Mr. JACKSON. Thank you, Senator. Yes, I think that is an extremely important issue, and we are all concerned, I think, about 

what short-termism is doing to American companies and the economy more generally. 

With respect to executive compensation, what I would say is I 

think it is time for corporate managers who are worried about 

short-termism to put their money where their mouth is, sir, and to 

commit to hold the company’s stock over much longer periods of 

time than they currently do, to show investors and communities 

and employees that the decisions that they are making are longterm decisions. 

If that is their argument, Senator, if their argument is that we 

really want to do the right thing for the long term, then it is hard 

to understand why they do not want to hold the company’s stock 

over the long term. 

You mentioned buybacks, and if I could just add a point on that, 

Senator, I share your concern that, to the degree that corporate 

money might soon find its way back in the United States, if there 

is some legislation on this point, you know, the previous research 

on the last time we did this makes very clear that that money, the 

27 

last time we had a tax holiday of this kind, was spent on share 

buybacks. And I would be concerned that we have the right rules 

in place governing stock buybacks to make sure that if that tax 

change were to happen, companies are prepared and required to 

explain to investors if they are going to use that money for 

buybacks. 

Senator VAN HOLLEN. Thank you. I see my time is up. 

Mr. Chairman, if I could, just for the record, submit a Wall Street 

Journal article describing what happened back in the earlier 2000s 

when we had the tax holiday and which essentially confirms what 

Mr. Jackson said, that that money essentially went to buybacks, 

shareholders, and they actually cut their workforce. Thank you. 

Chairman CRAPO. Without objection. 

Senator Cotton. 

Senator COTTON. Thank you, Mr. Chairman. And congratulations 

to each of you on your nomination. 

Ms. Peirce, Mr. Jackson, I want to raise with you an issue I 

raised with the Chairman a few weeks ago when he was here and 

that we have also discussed, which is the audit treatment of small 

broker-dealers. The Dodd–Frank Act requires broker-dealers to be 

audited by a Public Company Accounting Oversight Board-registered accounting firm, even when they are small, even when they 

are not introducing brokers, so they do not take custody of assets. 

I find that a curious policy since the PC in PCAOB is ‘‘public company,’’ not ‘‘small firm.’’ It also, it should be said, takes away business from small accounting firms in communities in States, all 

across a State like Arkansas. 

So starting with Ms. Peirce, could I get your thoughts on this 

policy and what the SEC might be able to do, if anything, to give 

our small broker-dealers as well as our small accounting firms a 

little bit of relief? 

Ms. PEIRCE. I think that the SEC in its oversight capacity of the 

PCAOB can work with them to understand how they are approaching their supervision of their oversight of broker-dealer auditors 

and think about whether the scope of that requirement is appropriately tailored. I think, you know, in general, smaller entities 

that are overseen by the PCAOB have a tough time, and so maybe 

there are ways that we can help foster compliance to help them try 

to be compliant rather than coming down on them for problems 

without essentially forcing them out of the industry, because I 

think that is the choice that a lot of them are making—that it is 

just not worth it, so they just get out of that business altogether. 

Maybe there is a way that we can work with them to foster compliance. 

Senator COTTON. Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. This broker-dealer auditing 

program is relatively new, and we are learning some things about 

it. And as you and I discussed, one of the things we are learning 

is about the kinds of dynamics and costs when it comes to smaller 

firms. 

One opportunity I am wondering about, Senator, is whether or 

not we can and should distinguish between custodial and noncustodial broker-dealers for this purpose. I look forward to looking into 

that. I would want to hear more about what the facts on the 

28 

ground are. But I look forward to working with you and your staff 

on making sure that those firms can engage in their business and 

grow. 

Senator COTTON. Thank you. I appreciate both answers, and I 

look forward to working together with you and the Chair and the 

other Commissioners upon confirmation. I do not think there is a 

question of less oversight or less disclosure. It is just a question of 

smart oversight and recognizing the difference between, you know, 

a small broker-dealer with a half dozen or a dozen employees and 

a giant firm, likewise giant accounting firms and small accounting 

firms. 

I would like to now turn to the issue of the consolidated audit 

trail for which the SEC has asked and just raise the question of, 

you know, with the SEC’s data breach, with the data breach we 

saw at OPM, is it smart for the SEC to be seeking this information? What is the problem it is trying to solve? And is there away 

that we could solve that without introducing new risks to sensitive 

data? Again, we will start with Ms. Peirce and then go to Mr. Jackson. 

Ms. PEIRCE. I do have concerns about anytime the SEC is collecting data, I think it needs to ask: Do we need the data? What 

are we going to use it for? And can we protect it? I am not convinced that those questions have been answered to my satisfaction, 

but, again, it is difficult to know that without being at the SEC and 

understanding why they decided on such a broad scope of data. But 

those are questions, if I were confirmed, that I would want to ask. 

Senator COTTON. Thank you. 

Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. I think it is important to remember why we began the consolidated audit trail program in the 

first place, and it was really motivated by the flash crash and the 

need to understand exactly what happened in those markets so we 

can make sure it never happens again. 

Now, I have the same question that Ms. Peirce just described. I 

am wondering what degree do we need personally identifiable information to solve that problem, and, sir, coming from the outside, 

I do not know the answer to that question. SEC staff have been 

working on it for years. I would want to get a better sense of what 

they are thinking on that question and how well they feel they can 

protect that PII before making any decisions. But I do think it is 

important, sir, that we put the cat in place because flash crash is 

something that we do not ever want to repeat, and we want to be 

sure we can protect investors if something like that were ever to 

happen again. 

Senator COTTON. Thank you. 

Mr. Ryder, this will be your second rodeo at the Mint, 25 years 

on. What are the biggest changes that you have seen at the Mint 

from when you were the Director 25 years ago? 

Mr. RYDER. Well, coinage is pretty old, and it does not change 

much. But at the Mint, I think some of the advances in manufacturing, some of the technology that is used in the industry has 

been quite interesting. I hope to carry that tradition on and see 

where we can take the Mint from a technology point of view and 

29 

advance it to the next century and beyond. So I look forward to 

that challenge. 

Senator COTTON. Well, thank you very much for being willing to 

serve again in a very specialized but very critical role. 

Mr. RYDER. Thank you. 

Senator COTTON. Thank you all. 

Chairman CRAPO. Thank you. 

Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

The 2008 financial crash exposed serious problems in our securities markets, and in response, as part of the Dodd–Frank Act of 

2010, Congress directed the SEC to issue new rules that would protect investors. 

It is now 7 years later, and the SEC still has not completed more 

than 20 of these required rules. Think about that. Seven years and 

20 rules are still unfinished. The SEC has the worst track record 

of all the financial regulators. And when the SEC recently released 

its regulatory agenda for the upcoming year, it did not even include 

most of these unfinished Dodd–Frank rules. 

Now, Mr. Jackson, do you think it is all right that the SEC still 

has not finished so many of the Dodd–Frank rules and apparently 

has no plans to finish them anytime soon? 

Mr. JACKSON. Absolutely not, Senator. My view is that those protections are critical to preventing the next financial crisis, to making sure investors are protected, and I am especially concerned 

about the executive compensation protections in Dodd–Frank that 

are still today not the law. 

Senator WARREN. Good. So we are going to come to those in just 

a minute here. I just want to be clear on the record. If you are confirmed, will you make it a top priority to get these rules back on 

the agenda and get them completed as soon as possible? 

Mr. JACKSON. Absolutely, yes. 

Senator WARREN. Thank you. 

And, Ms. Peirce, same question. If you are confirmed, will you 

make it a top priority to get these rules back on the agenda and 

completed as soon as possible? 

Ms. PEIRCE. I will work with the Chairman as he sets the agenda 

to try to get the rules done that are not done. Obviously, sometimes 

things come up that are not anticipated that have to take precedence, but I will work with him to get the rules completed. 

Senator WARREN. OK. I am a little concerned. The answer 

seemed to be a little less definitive than Mr. Jackson’s because it 

is the Chairman right now who set the agenda for next year, and 

he has not even put the rules on the agenda for work. 

Ms. PEIRCE. So I think it is important, if I am confirmed, to get 

to the SEC and to talk with the Chairman to understand what is 

motivating his decisions about what goes on the agenda. As I mentioned, often when you get inside an agency, you discover that 

there are other priorities that you did not actually know about on 

the outside. So I think it is important to remember that the agenda 

has to follow where the risks really lie. And so, yes, getting rules 

done that Congress has directed the agency to do is important, but 

you also have to look at it in context of everything else that is happening at the agency. 

30 

Senator WARREN. Well, Ms. Peirce, I just want to be clear. These 

rules are not optional. It is not a set of rules that says Congress 

said write these rules if you all feel like it or if it fits in your agenda. We passed a law requiring the SEC to write these rules, and 

we did that because they matter. 

For example, three of those unfinished rules relate to executive 

compensation. One requires disclosures on why executives are paid 

what they are paid. Another requires public companies to adopt 

policies for clawing back compensation from executives. And a third 

prohibits bank executives from receiving incentive compensation 

that it could encourage the wrong kind of risk taking. 

Study after study has shown that the chance to receive giant bonuses pushed executives to take enormous risks in the run-up to 

the 2008 crash, risks that blew up the whole financial system, and 

we know it is still happening. 

In the Wells Fargo fake account scam, executives pushed employees to open new accounts at all costs. Why? Because it made the 

Wells’ stock price go up, and that put millions of dollars in the 

pockets of the executives. 

You know, the SEC was told to write these rules 7 years ago. 

They are central to the SEC’s mission of investor protection. So I 

want to ask the question why you think it is OK for the SEC to 

continue to ignore them. 

Ms. PEIRCE. Having been a staffer on this Committee, I do appreciate the role that Congress plays, which is directing the SEC what 

to do. And it is the responsibility of the SEC to implement the 

rules that it has been directed to implement. But, again, part of the 

reason that those rules are given to the SEC to implement is that 

it thinks about it in terms of all of the priorities in order to protect 

investors, facilitate capital formation, and uphold the integrity of 

the markets. So, yes, it is an obligation of the SEC to do that, and 

if I get to the SEC, it is something that I will want to understand—— 

Senator WARREN. My time is out here, so let me just ask this. 

I just want to make sure to get it on the record. Do you believe 

you have an obligation to complete these unfinished congressional 

mandates from 2010 before any other discretionary rules or 

projects? 

Ms. PEIRCE. I cannot answer that question without—— 

Senator WARREN. Well, I think that is an answer then. You 

know—— 

Ms. PEIRCE. ——being at the SEC. The SEC is obligated to implement rules that Congress tells it to implement, but I cannot tell 

you in what order they are obligated to implement them. 

Senator WARREN. Well, but it is supposed to implement the 

rules. I do not care if you are a Democrat or a Republican. I do not 

care if you love Dodd–Frank or you hate Dodd–Frank. The SEC is 

required to follow the law. And if you believe in the American constitutional system, you should demand that the SEC stop this lawless behavior. 

I am glad you are willing to do that, Mr. Jackson. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Tillis. 

31 

Senator TILLIS. Thank you, Mr. Chairman. Welcome to all of you 

and congratulations on your nomination. 

Mr. Ryder, I am going to ask you the first question, but before 

I do, I am going to ask Ms. Peirce and Mr. Jackson to think about 

their answer. One of the things I want you all to do, if you take 

a look at the mission of the SEC as protecting investors, maintaining a fair, orderly market, facilitating the capital formation, and 

enforcement. So I would like for you all to talk about your critical 

assessment of the SEC, whether or not the ratios are right in terms 

of fulfilling that mission. I will give you a chance to think about 

that. 

Mr. Ryder, I have always believed that silence is consent, so the 

fact that you have not gotten many questions makes me think you 

are going to do just fine with your confirmation, so you should consider that a good thing. 

I just have one question for you, and it really has to do with the 

future of the Mint. You are right, coinage is kind of old or longserving, but the world is changing. I was thinking the other day, 

I was at a convenience store, and 20 years ago I would have never 

pulled out a credit card to make a $2.50 purchase because at the 

time people would think you just did not have $2.50, that you could 

not afford it. Now it is completely inverted. I mean, people that 

carry crash are crazy. I am not one of them, and let any burglars 

hear that. 

But where do we go from here? When you start talking about alternate payment methods, first we have got counterfeiting. I want 

you to talk a little bit about that because I know you have some 

expertise in that area, anti-counterfeiting, I should say. But then 

where do we go, I mean, what do we do in terms of the future of 

coins and dollars? And what does it look like 10, 20, 30 years from 

now based on the nature of the way people settle payments today? 

Mr. RYDER. Sure, Senator. Thanks for the question. First of all, 

I do not think currency is going anyplace anytime soon. I think it 

is going to be around for quite some time. It may be in a different 

form, but I think what you see is—— 

Senator TILLIS. And I am getting to the form part. 

Mr. RYDER. And the dollar bills or the dollar coins or the different forms of the currency, I think they are going to be around 

for a while. 

In the coinage industry, that may change with the use of credit 

cards and so on and so forth, and the vending machines, but the 

technology that is used to accept those products is also changing 

because the technology is changing. It gives you a better opportunity to do things that might be a bit more modern, up-to-date. 

Senator TILLIS. And just because I want 2 minutes for 1-minute 

responses from each of the other two nominees, what is the top priority in terms of an additional role that you all will play in anticounterfeiting? 

Mr. RYDER. I think anti-counterfeiting is something that is becoming to be a critical issue. With coinage specifically, the bullion 

side of the house, with the counterfeitings that are coming out of 

China and elsewhere that are exceptionally good, I think technology there has to be developed and implemented within the 

32 

United States Mint, and that is something I look forward to working on. 

Senator TILLIS. OK. And, Ms. Peirce, I asked a question before. 

I will not be able to do a lot of follow-ups, but give me an idea of 

your critical assessment of the SEC today and with respect to their 

mission, whether the ratios and the actions are, in your opinion, 

just you get confirmed, you want to continue the status quo or not. 

Ms. PEIRCE. I think the three parts of the mission too often are 

thought about as separate parts when they are really interrelated 

and complementary. So you cannot protect investors if you do not 

give them investment opportunities. You cannot protect investors if 

your markets are not working the way they should. And so, unfortunately, I think the SEC has too often taken the view, a very paternalistic view of how to protect investors, which is to limit their 

options and make sure that nothing bad happens. Instead, I think 

we should think about investors having access to a portfolio of good 

investments, because it really is not—you should not think about 

it—a finance professor would tell you do not think about it on a 

company-by-company basis. Think about it across a portfolio of 

companies and give investors access to a broader array, and also 

make sure that you are allowing companies of all sizes to take advantage of the market. So we may need to make adjustments in 

order that small companies are better able to access capital. 

Senator TILLIS. Mr. Jackson, do you disagree with any of that? 

Mr. JACKSON. Thank you, Senator. I think Ms. Peirce has quite 

aptly described a lot of the challenges the SEC faces, but I want 

to be clear about something, sir. I think the critical question for 

me, if I am confirmed, will not just be about what the SEC is focused on. It will get the focus on making sure that the SEC uses 

all the resources Congress has put at its disposal. Let me give you 

an example of what I have in mind. 

There is a wonderful and very deep source of market data that 

the Enforcement Division has at the SEC. It is a critical resources 

that Congress has helped to fund, and it occurs to me, sir, that 

other divisions at the SEC should be using and have access to 

those data. In other words, we should try to keep the SEC from becoming too siloed an organization and instead work together across 

divisions, as Ms. Peirce described, to achieve all the parts of its 

mission. 

So I would look forward to working on that, sir, if I were confirmed. 

Senator TILLIS. Thank you, Mr. Chair. 

Chairman CRAPO. Thank you. 

Senator Schatz. 

Senator SCHATZ. Thank you, Mr. Chairman. 

Thank you for your willingness to serve. I have a question for 

Ms. Peirce and Mr. Jackson. A few weeks ago, I asked a question 

of the Chairman about the disclosures related to severe weather, 

and I pointed out that there are troubling examples of publicly 

traded companies that are essentially throwing up their hands and 

saying because the risk of climate change and severe weather is 

hard to predict or quantify, we are going to just assume that there 

is no risk. And I want to read to you an example from Valero Energy’s 10-K filing from 2016, and I quote: ‘‘Some scientists have conVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
33 

cluded that increasing concentrations of GHG emissions in the 

Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of 

storms, droughts, and floods and other climatic events. If any such 

effects were to occur, it is uncertain if they would have an adverse 

effect on our financial conditions and operations.’’ 

And then, at the end of August in 2017, Hurricane Harvey, one 

of the strongest Atlantic storms in history, shuttered 20 percent of 

the U.S. oil refinery industry and shut down over a third of 

Valero’s refining capacity over a week. These closed Valero refineries usually produce 1.1 million barrels a day. 

And so my question, and I will start with Ms. Peirce, is: Risk is 

risk, whether it is cybersecurity risk, whether it is political risk, 

whether it is regulatory risk, or whether it is the risk of severe 

weather. Do you commit to making sure that the Division of Corporation Finance holds companies accountable for adequately disclosing all risk, including the risk of severe weather? 

Ms. PEIRCE. Yes, I mean, I think companies need to be thinking 

of a broad array of risks, and that includes cybersecurity and 

weather, as you described. And I think it is helpful to have Corp. 

Fin. looking at disclosures across industries so they can get an idea 

of a company’s ability to disclose particular types of things. You obviously do not want to have speculation in disclosure documents, 

but you do want shareholders to have a real sense of the whole 

array of risks that companies face. 

Senator SCHATZ. Thank you. 

Mr. Jackson. 

Mr. JACKSON. Thank you, Senator. As we were discussing earlier, 

materiality really is the touchstone of the securities laws and the 

disclosure mandates. And one of the things that we think about 

when we wonder about whether something is material is whether 

shareholders are interested in it, whether that is something that 

shareholders are focused on. And so more and more, shareholders 

are pressing companies to better understand these risks, and that 

signals to me that this might be something increasingly important 

that we need to make sure these companies come forward with disclosures on. 

So I would very much hope that Corporation Finance is thinking 

about those questions, and I think it is important to point out that 

in that back and forth between the Division of Corporation Finance 

and a company, they really should be pressing and making sure: 

Have you thought through whether you have material climate risk? 

And if the answer is yes, sir, that should be disclosed. 

Senator SCHATZ. Thank you, and I will stay with you, Mr. Jackson. The question is on stock buybacks. Since the SEC issued Rule 

10b-18 in 1982, which effectively removed barriers to stock 

buybacks, the amount of money companies have put into stock 

buybacks has ballooned to over $700 billion in 2016. Companies 

have choices when they decide how to spend their extra cash, and 

more and more they choose not to spend it on their workforce, on 

capital investments, or R&D. When they have extra cash, they immediately pass it on to shareholders. This is not a good thing for 

these companies or for the economy. 

34 

Looking at the performance of companies on the S&P 500, we see 

that companies that spent the most on shareholder payouts underperformed companies with the highest spending on capital investments and R&D. We may wonder what has happened to productivity in our economy, but I think the answer, at least partly, has 

to do with the choices that the SEC made. 

Do you think that the enormous scale of stock buybacks is a 

problem for economic growth and the economy generally? 

Mr. JACKSON. Senator, I am worried—I think you are right to 

raise the concern—that what is happening with buybacks is companies are consistently choosing not to invest in their employees, in 

their communities, in the future, and I—— 

Senator SCHATZ. Just in the interest of time, for both of you, are 

you willing to reconsider that rule passed, which obviously precipitated a golden age of buybacks? And I have 30 seconds, so I will 

start with you, Mr. Jackson. 

Mr. JACKSON. Absolutely, sir. 

Senator SCHATZ. Ms. Peirce. 

Ms. PEIRCE. I am willing to look at the rule, which has been on 

the books for a while, and so it could be looked at again. 

Senator SCHATZ. Thank you very much. 

Chairman CRAPO. Thank you very much, Senator Schatz, and 

that does conclude the questioning. 

Before I conclude, although I will wrap up the hearing, I want 

to again thank each one of you for agreeing to attend and participate in today’s hearing and your willingness to serve our country. 

You are strong candidates, and I believe you will all have the support of the Senate to move into your positions and be confirmed. 

For Senators, all questions for the record need to be submitted 

by Thursday, close of business, and for our witnesses, responses to 

those questions we ask be due by Monday morning. So you will 

have a little bit of work to do, assuming that there are questions. 

Usually there are some, and usually they are not overwhelming. 

But we ask you to get them to us on Monday morning if you can. 

With that, this hearing is adjourned. 

[Whereupon, at 11:42 a.m., the hearing was adjourned.] 

[Prepared statements, biographical sketches of nominees, responses to written questions, and additional material supplied for 

the record follow:] 

35 

PREPARED STATEMENT OF DAVID J. RYDER 

TO BE DIRECTOR OF THE UNITED STATES MINT

OCTOBER 24, 2017 

I would like to first introduce my family who are joining me here today. My wife 

of 35 years Monie, our son Nick, and our daughter Caroline Ryder. 

Thank you, Mr. Chairman, Senator Brown, and distinguished Members of the 

Committee for allowing me to appear before you today. Mr. Chairman, my siblings 

and I still own a small piece of land outside of McCall, so I do my best to get out 

to Idaho at least once a year to visit family and spend a little time enjoying all that 

the great State of Idaho has to offer. 

First, I must say that I am honored that President Trump has nominated me to 

serve as the 39th Director of the United States Mint. 

As you are aware, in 1992, I was nominated by President George H.W. Bush to 

be the 34th Director of the Mint. I received a recess appointment at that time and 

served for a period of 14 months. 

When I left the Government in 1994, I became a partner with Secure Products, 

a new venture spin-off from the Sarnoff Corporation in Princeton, NJ, formally the 

central research laboratories for the RCA Corporation. Our mission was to develop 

advanced anti-counterfeiting technology solutions to be primarily used in currency 

and branded products. After a successful 13 years in business, the Honeywell Corporation acquired Secure Products in 2007. The ensuing 10 years was spent with 

Honeywell as their Global Business Development Manager and Managing Director 

for Currency. 

In my role at Honeywell, I worked with Government agencies and central banks 

around the world to address currency issues. Interestingly, one of my last duties 

while at Honeywell was a joint project with The Royal Mint of the United Kingdom 

where we assisted them in the development of the new U.K. One Pound Coin, which 

was introduced earlier this year. This new circulating coin is considered to be the 

most advanced and secure coins in circulation today. 

If confirmed, I would like to make education one of my focal points at the Mint. 

As the 34th Mint Director, we introduced an initiative called the Money Story. The 

goal of this initiative was to educate the youth of this Nation on the history of 

money, both coinage and paper currency, via a teacher’s curriculum and video codeveloped by the U.S. Mint and the Bureau of Engraving and Printing. This packet 

of information was made available to all teachers for use in the classroom. Teaching 

our youth early on how to collect coins and other numismatic products, as well as 

how to start saving their hard-earned money, helps lay the foundation of the importance of money. Over the years, the Mint has continued this excellent tradition via 

various education tools which are located on their website. 

Having worked in the currency industry for the past 25 plus years, I have developed a strong operational and technical understanding of this tight-knit industry. 

I respect the men and women who dedicate their lives to this industry. During my 

time with Secure Products and Honeywell, I was afforded the opportunity to visit 

and work with many private and Government currency manufactures here in the 

United States, as well as around the world. I will bring to the Mint Director position 

a strong understanding of the industry and many of the challenges it faces. 

If confirmed, it would be an honor to once again serve in our Government and 

work with this Committee. The U.S. Mint has an impressive history and I look forward to becoming part of that history again. As in all businesses, I am sure the 

Mint has challenges to address. I look forward to facing these challenges while at 

the same time fulfilling its mission. 

Thank you. 

36 


10241701.eps

STATEMENT FOR COMPLETION BY PRESIDENTIAL NOMINEES 

Name: 

Ryder David Jerome 

Positioo to which nominated: Director oftbe Uoited States Miot 

Date ohominatioo: 

Date ofbirti: 10/ 4/1~5 Place of birtb: BiiUogs, Mootua 

Marital Stat1s: Married Full oame of spo•se: Margaret Mary Ryder 

Name and ages of child rea: Niciolas WiUia• Ryder (30) 

Caroline Murphy Ryder (27) 

Educatioo: 

Honors 

aod awards: 

Memberships: 

lnstillltion 

Boise Sla!t University 

Dates 

attended 

1974175 

Degrees 

received 

Dates of 

degrees 

N/A 

list below all scbolarships, fellowships, honorary degrees, military medals, honorary 

society memberships and any other special recognitions for outstanding service or 

achievement 

• United States Department of the Treasury Meritorious Service Award 

Honeywell Specialty Products Achievement A ward 

• Honeywell Performance Materials and Technology Presidents Club A ward 

• European Patent Specification Award# EP 2 272 504 Bl for Machine 

Readable Security Elements and Products Containing Them 

list below all memberships and offoo held in professional, fraternal, business, scholarly, 

civic, charitable and other organizations. 

Organization 

NJA 

Office held (if any) Dates 
37 


10241702.eps

Employmall monl: List below all positions held since college, including the title cr dcsaiplion of job, name 

of anplo)menl, localion of woR, and inclusive dales of anplo)ment 

HONEYWELL- Perfonnance Materials and Technologies ·Authentication Technologies Global BIJ!!nm Dev!!oomtn! Marwo• and MtOJqlna Dirtctor for Cur!!nex (Nov. '07· Rosglned 5115117) 

Morris Plains, NJ 

SECURE PRODUCTS 

Pm!dt!llll!d CEO 

S1111mlt, NJ 

UNITED STATES DEPARTMEHT OF TliE TREASURY 

Di!Ktor. \tj!d SliM lllnt 

Dtputy T!!t!U!![ of the Unbd S!a)U 

Weahlngton, DC 

OFFICE OF TliE VICE PRESIJEHT OF THE UNITED STATES 

Dtputy Chltf of Stall 

Washington, DC 

TCOIII SYSTEMS, INC. 

OirWr c! Optratlons 

Washington, DC 

OFFICE OF TliE VICE PRESIDENT OF TliE UNITED STATES 

Mtiltantto the VIU l'midtnt & Director of Advance 

Washington, DC 

UNITED STATES DEPARTMENT OF COMMERCE 

eomm!glontr ~ of Section. lli!K19! of u.s. PIYIIioo 

Lous!an!a Wo!!d Exposition 

New Orleans, LA 

OFFICE OF TliE VICE PRESIDENT OF THE U.S. 

DtPYtv D!rulo! of Adv!1!!9! 

Washington, DC 

UNITED STATES DEPARTMENT OF ARGICULTUR£ 

Sptcia! AHI!bnllo lht s.u.lary 

Weahlngton. DC 

REAGAN/BUSH FOR PRESIDENT 

Alexandrla

~ 

, VA 

FLOOR BROKERS ASSOCIATES-NY COMMOOffiES EXCHANGE 

Btott!! Ag!s!ant 

NtwYoct, NY 

(Ftb. '94-Nov. '07) 

(Jan. 10 ·Feb. '94) 

(Jan. '89 • JIJ\. '90) 

(Pte. 1& ·Nov. U ) 

(Mtreh ·as . OK. '86J 

(Apri113 • Fob. '15) 

(April '82 ·lbrch '83) 

(Feb '81 ·April '82) 

(Oct 79 • Nov '80) 

(April71 ·Nov '1t) 
38 


10241703.eps

AMERICAN FREEDON TRAIN 

Operations (Oct75-Mareh 77) 

Falls, Church, VA 

Government 

experience: List any experience in or direct assoeiation with Fedml. State, or local governments, 

including any advisory, consullative, honorruy or other part time service or positions. 

Direc.ted Vice Presidential Advance operations for Richard B. Cheney's visits to Afghanistan from 

2005 to 2007. 

Deputy Di.rector of Operations, 2004 Republican National Connntion 

Directed Ad1•ance Operations for the 2002 NATO Rome Summit for Pmident George W. Bush 

Deputy Director of Operations, 2001 Republican National Convention. 

Director of Operations, 1988 George H.W. Bush Presidential Transition Team 

Director of Operations, 1988 Republican National Con1·ention for Vice President Bush 

Published 

Writings: 

Poliiical 

Affiliations 

list the titles, publishers and dates of books. articles. reportS or other published materials 

you have 11 riucn. 

N/A 

and activities: List embe~ips and offices held in and services rendered to all political parties or 

election commiuces during the last I 0 years. 

N/A 

Political 

Contributions: llemize all political contributions ofSSOO or more to any individual. campaign 

organization, political party, political action comminee or similar entity during the last 

eight years and identify specific amounts, dates, and names of recipients. 

Qualifications: 

Future employment 

relationships: 

N/A 

State fully )Our qualifications to serve in the position to which you have been named. 

(See Attachment "A") 

l. lndicate whether you will sever all connections with your present employer, business 

firm, association or organization if you are confimted by the Senate. 

Yes 
39 


10241704.eps

Potential coafiicts 

of interest: 

2. As far as can be foreseen, state w~r you have any plans after completing 

government service to resume employment, affiliation or practice with your previous 

employer, business finn, association or organization. 

NO 

3. Has anybody made you a commitment to a job after you leave government? 

NO 

4. Do you exjlect to serve the full term for which you have been appointed? 

YF.S 

I. Describe any financial arrangements or deferred compensation agJeements or other 

continuing dealings with business associates, clients or custom~ who will be affected 

by policies which you will influence in the position to which you have been nominated. 

None 

2. List any investments, obligations, liabilities, or other relationships which might involve 

potential conflicts of interest with the position to which you have been nominated. 

None 

3. Describe any business relationship, dealing or financial transaction (other than taX 

paying) which you have had during the last 10 years with the Federal Government, 

whether for )'Ourself, on behalf of a client, or acting as an agent, that might in any 

way conSiitute or result in a possible conflict of interest with the position to which you 

have been nominated. 

Wbile I was employed with Hoaeywel~ I bad business dealings with the U.S. 

Treasary Department's Bureau ofE1gnving aad Priutiag regarding currency 

issues, as well as the U.S. Department of State regarding t•e issuance of new U.S. 

Passports. 

4. List any lobbying activity during the past ten years in which you have engaged in for the 

purpose of directly or indirectly influencing the passage, defeat or modification of any 

legislation at the national level of government or affecting the administJation and 

execution of national law or public policy. 

None 
40 


10241705.eps

Civi~ criminal ud 

investigatory 

actio as: 

5. Explain how you will resolve any conflict of interest that may be disclosed by your 

responses to the items above. 

If reqaired, I will explain •Y Honeywell business dealings and anytbiag else of 

any concern witb tbe appropriate coverament ofrlcWs. 

I. Give the full derails of any civil or criminal proceeding in which you were a defendant 

or any inquiry or investigation by a Federal, State, or local agency in which you were 

the subject of the inquiry or investigation. 

None 

2. Give the full details of any proceeding, inquiry or investigation by any professional 

association including any bar association in which you were the subject of the 

proceeding, inquiry or investigation. 

None 
41 


10241706.eps

Attac~ment "A" 

Pemnal Qualifications to Serve Statement 

for 

David J. Ryder 

For the past I 0 years, I was employed as Global Business Development Manager & Managing Director 

for Curren<:y, Authentieation Technologies {AT), Honeywell COfJlOiation. AT developed, 

manufactured, and sold coven and forensic anti-counterfeiting technology for the authentication of 

CUl'lellC)', value documents and brand related products. Additionally, Authentication Technologies 

developed electronic detectors that revealed otherwise invisible masks for both manual, and high~eed 

authentication of currency, passpons, bank checks, and other commercial products. I directly managed 

all high-profile national central bank customers, U.S. and foreign government agencies, and COipOI'Ilte 

customer relationships. I was responsible for defining the marketing and sales strategy for the AT 

business, as well as assisted in managing our technology team by developing state-of-the-an highly 

advanced technology products and processes relevant to our core central bank customer requirements. I 

also kept the business abreast of relevant developments in the global currencies markets. Custome~ 

included the U.S. Treasury Depanmen~ the Bank of England, the European Central Bank, the British 

Royal Min~ the Reserve Bank of India, the Bank ofThailand and others. 

From 2014 to2017, I worked closely with the British Royal Mint, as AT assisted in the development 

their new British One Pound circulating coin, which was introduced in 2017. The technology 

employed in the coin is considered the most technically advanoed and secure coin in the world today. 

In addition to working with the British Royal Min~ I've worked with other global mints and bullion 

manufactures in the development of gold and silver bullion anti-counterfeiting technologies. 

Prior to joining Honeywell in November 2007,1 was Chief Executive Officer of Secure Products 

Corporation, a corporate spin-off of the David Sarnoff Research Center. Secure Products, a privatelyowned company, focused on anti-counterfeiting technologies sold primarily to brand owners and global 

Central Banks. Customers included the U.S Treasury Depanmen~ the Bank of England, and the 

European Central Bank. Secure Prod1cts was acquired by the Honeywell Corporation ia 2007. 

In 1992,1 was appointed Director of the United States Min~ U.S. Depanment of the Treasury by 

President George H.W. Bush. As Mint Director, I \vas responsible for the oversiteofthe Mint's annual 

budget and the production of 17 billion circulating coins per year, which produced over $300 million in 

seigniorage profits to help finance the federal dept. We also manufactured and sold gold and silver 

bullion coins, as well as other numismatic and commemorative coin products generating additional 

profits to the treasury. 

Immediately preceding this appointmen~ I served as Deputy Treasurer of the United States, providing 

management oversight to the U.S. Mint, the Bureau of Engraving and Printing. and the U.S. Savings 

Bonds Division. I also was a member of the U.S. Treasury Depanment's Advanced Anti-Counterfeit 

Detenenoe Committee, whose members consisted of representatives from the Bureau of Engraving and 

Printing. United States Secret Service and the Federal Reserve Bank. Prior to joining the Treasury 
42 


10241707.eps

Oepartmen~ I served in the Bush I Quayle Administration as Assistant to the Vice PrtSident and Deputy 

Chief of Staff overseeing the operational aspeas of the Office of the Vice PrtSident. 

Below I have listed additional experience that give credence to my overall management abilities: 

• Directed Advance operations for Vice President Richard B. Cheney's visits to Afghanistan 

from 2005 to 2007 

• Deputy Director of Operations, 2004 Republican National Convention 

• Deputy Director of Operations, 2001 Republican National Convention 

• Director of Operations, 1988 George H. W. Bush Presidential Transition Team 

• Director of Operations, 1988 Republican National Ccnvention for Vice PrtSident Bush 

• Ccmmissioner General of Section and Director of U.S. Pavilion for the 1984 Lousiania 

World Exposition- U.S. DepartmentofCommeree 

Over the years. I have built relationships with many Central Banks and related organizations. I 

have broad experience dealing with highly technical currency and coinage issues. Combine this 

experience with my broad management experience serving in various positions within U.S. 

Government and private seaor, as well as having se"·ed as the 34'h Mini Director previously 

makes me uniquely qualified to serve as the Jl)'h U.S. Mint Director. 
43 

PREPARED STATEMENT OF HESTER M. PEIRCE 

TO BE A MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION

OCTOBER 24, 2017 

Chairman Crapo, Ranking Member Brown, and Members of the Committee, thank 

you for considering my nomination. It is an honor to be nominated by the President, 

alongside Professor Robert Jackson, to be a member of the Securities and Exchange 

Commission (SEC). I welcome the opportunity, if I am confirmed, to work to protect 

investors; maintain fair, orderly, and efficient markets; and facilitate capital formation—the three interrelated and complementary aspects of the SEC’s mission. 

I have spent nearly two decades working on financial regulation. I studied economics at Case Western Reserve University and law at Yale. After a judicial clerkship, I was an associate in the securities practice group of a large law firm. I then 

spent 8 years at the SEC. I first worked as a staff attorney in the division that regulates mutual funds and investment advisers. As a counsel for Commissioner Paul 

Atkins, I was able to work on a broader array of issues. Following my time at the 

SEC, I had the privilege of serving on the staff of Senator Richard Shelby on this 

Committee. Now I am a Senior Research Fellow and Director of the Financial Markets Working Group at the Mercatus Center at George Mason University, where I 

have learned much from my colleagues’ economic and regulatory expertise. 

I desire to return to the SEC because I believe that individuals, institutions, and 

innovation are important to our capital markets and the broader society. 

Properly functioning capital markets enable our society to draw on each individual’s unique set of talents, experiences, relationships, and knowledge. An entrepreneur’s vision comes to life because we have markets that enable her to share that 

vision with others who have money to invest. Investors’ funds pay the salaries that 

unlock the potential of other individuals in society. The returns investors make are 

used to educate the next generation of entrepreneurs and employees. 

Individuals trust their fortunes and futures to the capital markets because these 

markets have grown up within a robust institutional framework. Without strong institutions, people would not use the capital markets. An effective institutional 

framework establishes reasonable rules, fosters compliance, and swiftly pursues violations when they occur. It does all of these things with an unwavering commitment 

to due process. The SEC is a key part of our institutional framework. It is therefore 

incumbent on the SEC to lay out clear rules, enforce them diligently and impartially, and modernize them when necessary. 

If regulation is appropriately flexible, innovation can bring new investors into the 

financial markets, lower prices, and improve the quality of financial products and 

services. Innovation forces existing companies to stay on their toes and pushes them 

aside when they fail to meet people’s needs. A regulatory structure that blocks new 

firms or prohibits innovation lets existing companies grow complacent to the detriment of the rest of the economy. By contrast, a regulatory system that invites competition ensures that the capital markets work for Main Street. 

I look forward, if I am confirmed, to working with Chairman Clayton, my fellow 

commissioners, and the SEC staff to implement, enforce, and modernize rules that 

support healthy, dynamic capital markets. Together we can ensure that the U.S. 

capital markets work effectively for individuals and companies across this country, 

are supported by strong institutions, and accommodate innovation. 

Thank you. I would be happy to answer your questions. 

44 


10241708.eps

STATEMENT FOR COMPLETION BY PRESIDENTIAL NOMINEES I· 

Name: 

Peirce Hester Maria 

Posllion to wb.ieh aominated: Commissioner, Securities and Exchange Commission 

Date ofnominatioa: 19 July2017 

Date or birth: 12 October 1970 

Marital Statui: Single 

Name ADd qes or chlldrea: N/A 

Eclaeation: 

l.ostitutioo 

Yale I.aw School 

Place or birth: Cleveland, Ohio 

Full name or spouse: N/A 

Dates 

attended 

Degrees 

received 

Falli994-Spring 1997 JD 

TedmicalUIIMrsityofVienna Falli993-Spring 1994 NIA 

Case Wes1an Reserve Uaivemty Falli989-SpriDg 1993 BA 

Dates of 

degrees 

June 1997 

NIA 

Mayl993 

Mayfield High School Falli98S.Spring 1988 High School June 1988 

2000-2001 N/A NIA 

Hoaon 

and awards: 

List below all scllolarships, fellowships, honorary degrees, mili18ry medals, honorary 

society memberships and any other special recognitions for outstanding service or 

acllievemcot. 

FulbriBht Scholanhip, Austria 1993-1994 

CoDege Awards 

• Phi Bela Kappa 

• Gtawemeyer Scholarship for Study in Germany 

• McMyler Awn for Ecooomics 

• Barloon Award for &onomlcs 

• Kilpelridt Scholul Athlelt A ward, 

• Folba1h Prizo for Gaman 

• Gtawemeyer Award for Researtb in Gamany 
45 


10241709.eps

List below alllllC:IIlbenbips m! offices held in professi<UI, flltcmal, business, 

scllolarly, civic, dllrilable m! oCher Olpllizalioas. 

otlke Dates 

Investor Adviso!y Coolmittee Member 2014 to Preaeot (mactive durill& 

prior DOIDinatioo to SEC and 

inactive oow ckJe to cum:nt 

oominalioo) 

Disbict of Columbia Bar Member 1999 to Pnsem 

Disbict of Columbia Bar Small Co<!blinniD 2014-201S 

m! EmcrM BusiDe5s 

Committee oftbe Qrporatioo, 

F'mmce, m! Securities Law 

Sec:tioo 

ObioB1r Member (inactive CUI'lallly) 1998-Present (Inactive Slatus: 

April23,1998 to October IS, 

1998 m! September 1, 1999 to 

i'nsem) 

Fedenlist Society Member 1997, 2006, 20llto Pracm 

Weet!y Bible Study Group Co-lf*.lcr 2013tol'nsem 

RodcviiJe Bible Fellowship Member 199810 Ptaeot 

Ameritlo lnstitule filr Economic Member 2000-2008 

Researtb 

Literacy Volunteers of America Litcney Volunteer 2002·2006 

George Wl.lhington Univmity 

I Hospital Voluntect Propn 

Volunteer 2000 (cst.)-2002 (est.) 

AmcticaD CouociJ 00 German_y_ . Member 2007 to l're8eot 

CoiiCO'DCid Womeo tor America Member 2002 (est.)I02013 (est.) 

Care« Fdllmhip It McLeln Member 2003 (est.)to2007 (est.) 

l'lesbytaim Cludl 

Libcrtlliln Pill}' of D.C. Member 1999 (est.) 10 2003 (est.) 

Li'bcrtlrim Pill}' Member 1992 (est.) to 2009 (est) 

Yale Law Sdlool Tempoll!)' Member \994 

RestrainlD& Order Proied 

Yale Law Sdlool Fedctalist Member 1994 (est.) 10 1997 

SocietY 

Yale Law Cbristim Fellowship MembcrK>fliar 1994101997 

Cllholit Law Studalls' Member 199410 1996(est.) 

~ 

Yale Law Studeuls for Life Member 1994 (est.) to 1997 (est.) 

Yale l!llviroomental Law Member 1994 (est.) to 1996 (est.) 

Association 

St. MI!Y's Catholic Church Member 1994to 1997 

Morris Tyler Moot Court of Member 199S (est.) to 1996 (est) 

Appeals Project at Yale Law 

Scboo1 

lnlervlnity Christiao Fdlowsbip Member 198910 1993 
46 


10241710.eps

Olsc Western Reserve Univmity Membec/Caplain 1989-1993 (captain during part of 

Cross Colllllry and Track Teams this period). 

Economics Honors Society at Olsc Member/Office 1991 (est.) to 1993 

WestemReserveUnivmity 

Phi Bela Kappa Membec 1993 (est.) to Presart 

NatioMI Parks Conservation. Membec 2013 {est.) to 2014 {est) 

Association 

EmploymeDt rec:ord: List below all positions held since college, including the title or description of job, 

name of cmploymco~ localion of work, and inclusive dates of employment. 

OitecloroffiDaDcial Mazteu Wodcing G!OIIp (1014-pra<ot) sod Seoi« ~Fellow, M-CcotcrotOeorp Masoo Univenity, 

Arlili&!CI>, VA(lmllll}'2012·,_t) 

Adjlmcl Plofessor, GorqeM...,. Univcnity LawSebool,~oa, VA (SpriDg2014 & Spriog201S) 

Member, mYCIIOI Adviscry~ s-itieutld Exclt~CgCCommissico, W~ DC(AQ&"ost 2.01410 ,_1) 

Sarlor c.uc.d, Samt Commilteeon B&nkiDg. lloasDlg. and Olba Alliin, Wulrlnsloa. DC (Allgust 2008-Docember 2011) 

Cowd to ComistiCDer hoi AttW, S«wities ID4 Exd>angt Commiss:oa, Wosbill8100, DC (lme 2004-Aopst 2008) 

Staff A11amey,Di¥isico ofm-~~Securities Uld ExcltltlgCCommissioo, Wllhin&too, DC(April2ro>-lw>e2004) 

Asaoci11c, Wilmer,Cutler&Pickerila(oowWilm<rllale~ Wl!lting:oa.DC(FIIIl998-Mazdt2000) 

OalttoJuda<RDp Andewdt,CoortofFedm!Cbilll$, Weshin&ton. DC(Fall1997·Falll998) 

s....,., Associate, Jooes Dty, Clevdaod, OH (Sommer 1997) 

SllmllCI Aslociatc, 0l011$1Wll Stmrl, Boi1oa, MA (Swnmcr 1996) 

s-.u.ociate, Sqm SIDden, Clmlaad. oo (Sulllmm I99S-96) 

Fllbiabt Sd>obnhip Rltipiall. Viean>, A!lltria(Falll!m-s-1994) 

Resarclt A.ssisiiD~ Ceo:.. for 1\,.;.ui Eoonom!e'-11 Coso Wellerll Resem u.ivenity, Clmlacd. OH (Sllmm<r 1993) 

Gomnmeot 

nperlme:List any experience in or direct association with Fedetal., Slate, or local govermnenlll, including 

any advisory, coosultative, booonuy or other part time semce or positions. 

Nommee for Securitiesl!ld Excbaoge Com:nlssicn (201S.2016) 

M!ll!ber,ln'laiOr AdvisotyCommitseeto tilt s-ities Dd ExcltltlgCCommillioo, WashiJ!&ton. DC (1014 tol'raa>t) 

Seoi« Cowd, S.e Conmtittee oa lld:io& Housing. JDd 1.Jrt>a Affair$, Woshingtoo. DC (AIJtiiSI l.OOII·Decanber 2011) 

Cotmsd to Commisliooer hoi AttW, Seowities Dd Excl>aoge Commission, WllllillgJ<II, DC (111no 2004-AQPS!lOOl) 

Staff Atlorl'.ey, Divisionoflnvatmeot ~~ S«witiesancl ExcltmgeCocnmiaion, W~ DC(Apil 2000-Juoe2004) 

Oattoludgt RDp Alldewdt, Coort offeda11 Claims, W...,.... DC(FIIII997·Falll99l) 

Published 

Wrli!Dp: List the titles, ptillishm and dates of books, articles, reports or other published materials you 

have written. 
47 


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Boob 

Hesttr Peirce IIJd Beojamill Klubey, eds., Rebming Finlooial Regul!tioo: EnhaDcing Stability and Proceding 

~ (Mercatus Cent« at George MIISOD Uoivmity2016). 

Hesttr Peirce and J- Brougbd, eds., Dodd-FI'Bilk: What It Does and Why It's Flawed (Mercatus Cent« II 

George Mason University 2012). 

Hcst« Peirce and Ve~~ Soliman, Re/MIIkbrg 1M Swaps Clearing Mtmdatt, in Refilming Finlooial Regu!atico: 

Enhancing Stabitity and Proecting Co!!$U!!!CII (Hest« Peirce and Benjamin Klutsey, eds., Mertatus Center at 

George Mason University 2016). 

Hester Ptin:e, Gainb!g aNI Slteddil!g Dodd-Frank's Systt.mica/1y lmportl11ll Financklllllslillltton (SIFJ) IAbtl, 

ill !.egli Risk Mou""'P""i Gnvanancellld Cccpp!i~~~ee (Stuart Weinstein IIJd Olldes W'lld, eds., Globe lAw 

IIJd Busiucss 2016), venioa mi1able II 

bl!ps:Jiwww .mertlllls.orgfs~ designations with addaJdum maatus yqsjoo.pdt: 

Hest« Ptin:e, 1Ttle Y and 1M CntpiJtg FtdtralizDJion of btsura7tt% Rtp/llllo11, in Tbe Case Against Dodd· 

Frank: How tbc "Coosumer Protection" lAw Eoda!!gers Americans (Nomen Micbel, ed., Heritage FoWldalion 

2016). 

Hester Peilce, 'file F'INliiCiDJ lllllu.rtry Rep/4tor Alltlrcrily: Not SelfRegulatlon After ..til in Building 

Respo!l!ible F'Pal Regu!l!on in the Aftqmatb of the Global FiniDcia! Crisis (Pablo Jalesias·Rosripz, ed., 

Intenentia 201 S). venioa milable II bttp:Jhneptus.orglpub)iQtiolifT!!!tiia)-indus!ry-rm!alort-mlbcrityfinra.powdf·muJa!ioo:aftg-all. 

.btick31Wor*ing Papm/Policy Brilfi 

Hest« Peirce, IMndling Mmrbm bl tht Financial Indll3try, Broolcinp Series on Financial Markets Regulation 

(May IS, 2017), hl1ps:/lwww.brookings.edulresean:b/dwindlin&·numben·in·tho-financial·industry/. 

Hest« Peilce, Rtvisilillg Dcdd·Fnutk. MUC#Illl Policy PrillteT (Feb. 8, 2017}, 

b!tps :flwww.m~org/p!illic!ljooslreyjsiting:fraok. 

Hest« Ptin:e, .Deriwltivrs Ckaring/Jotua: Clearing tht Way 11J Failvrr, 64 C..EVE. Sr. L REv. S89 (2016). 

Hest« Ptin:e, Repl4tillg tltroug}t 1M Bock Door ot tht Omrmcdily FUbUU Trading Comnti.r3ton, 2 H.arv. J.L. 

& Pub. Pol'y FedaalistEd. 321 (2015). 

Hest« Peilce, lMII'ance Regulation In tilt Dodd-Frank Era (Networks Fi.oaociallnstitutc Surmnit Paper Mar. 

17, 2015). bttp:/lwww.indstatc.edulbusincss/NFVevcots/IIAIPPSic!ocs!!nsurwe::Regulation-Peirce.pd( 
48 


10241712.eps

Hcst« Pein:e and Stephen Mattt:o Miller, Small Banks By the Numbers: 2()()().2014 (Mar. 17, 2015), 

http:/lmertatus.org!publicationlsmall-banks-numbers-2()()().2014. 

Hester P~ ian Robimon, and Thomas S1ratm.WI, How Are Small Banks Faring Undu Dodd-Franlc? CAro 

INSTIMC REsEARCH BRIEFS IN EcoNOMIC POLICY No. 20 (Feb. 18, 2015), 

htto :llwww.cato.orvlpub!icatioWresearch-briefs-eoonomio-oolicylbow-aro-small-banks-faring·ID!det~oddfranlc. 

Hester P~ RegulaJing tArougil tlte Back Door at tlte Commodity FuturtJ Trading Commission (Mercatus 

Center at George Mason Univmity Working Paper November 2014), 

http:/lmerqtus.oWsitesldefault/filesiPein»Baek-Door-CfTC.odf. 

Hcst« Peitte, The Financial Industry Regulatory Authorily: Not Self-Regulation after All (Mercatus Center at 

George Mason UniversityWorkingPaper January2015), a version appeared inP. Iglesias-Rodriguez, ed., 

Building ResPOnSive and RespoDS!ble Financial Regulators in the Aftermath of the Financial Crisjs 

(Cambridge:Intersentia, 2015). 

James K. Glassman and Hcst« Peitte, How Prory Adruo!! Bect~JM So Powerful (Mercatus Center at George 

Mason University Working Paper Novemba' 2014), http://mercatus.orr/publicationlbow-proxy-advisoryservioes-becam&-so-rowerful. 

Jerry Ellig and Hester Peiroe, SEC Regulatory Analysis: A Long Way w Go and a Short 1ime w Get 11Jere, 8 

BROOK. 1. CORP., FIN. & COM. L. 361(2014). 

Hester Peitte, Securities Lending and tlte Unwld Story in tlte Colkzpse of AIG (Mercatus Center at George 

Mason University Working Paper 2014), htto:/lmcrcatus.mublication/securities-lending-and-untold-storvcollapse-aig. 

Abby McCloskey and Hcst« Pein:e, Holding Financial Regulators Acco1mtable: A Case for &ooomic Analysis 

(American Enterprise Institute Worlting Paper 2014), htto:llwww.aei.orrlpublicatiolll1!olding-linancia)-

regulatoJS-accountabl&-a-cas&-for«ooomio-analysis/. 

Hcst« Peirte, ian Robinson, and Thomas Sntmano, How Are Small Banks Faring Undu Dodd-Franlc? 

(Mercatus Center at George Mason Univemty Worlcing Paper 2014), http:llmercatus.oWoublicatiolll1!ow-aresmall·baoks-faring-under-dodd-frank. 

Hester Pein:e and Robert Greene, Opening the Gore w Money Mar'kit Fund Reform, 34 PACE I. REv. 1093 

(2014). 

Hcst« Pein:e, TroubltJhooting: Finance and Innovation, THE AMERICAN INTEREST (Aug. 22, 2014). 

Hester Peitte, Economic Analysis by Federal F'UJancial Regu/alon, 91. I. EcoN. & PoL'Y 569 (2013). 

Hester Peirce and Robert Greene, Relhinking tlte Yolcker Rule, Mercatus on Policy (Jan. 15, 2013), 

htto:/lmercatus.orglpublicationlrethinking-volcker·rule. 

Hester Pein:e aod Robert Grteoe, The Federal Reserve's Expanding Regulatory Umbrella, Mercatus on Policy 

(Apr. 3, 2013), http:l/meratus.orripublicationlfederal-reserves-expanding-regulatory-umbrella 

5 
49 


10241713.eps

Testintolry 111111 ~ 

Hester Ptirct, Refomling lheFioD:W Systan So Jt Worb fwlhe Rat of the Syslr.m, Testimooy befin the 

HouseCommittceooFUIIIIcial Services (Apr. 26, 2017), https://www.maqtus.orrf!l!lblicalionsl!efpgng: 

financilk11!Cmj0=it·Wcnb-rest·Sys!tm. 

Mark 1. WI!Shaw1ky md Hesttr Peirce, Response to P~idential Memorandum on Fiduciuy Duty (Apr. 18, 

2011), httos:Jtwww.mercatus.ol'l'lpublications/r:t!!l(!@presidmtial-memorandum·fiduciao·-dutv=!llle. 

Brill1 Knigl:i, J.W. Veuet, md Bester Ptirct, Rcspoose to OCC White Pl)lfl Exploring Special Purpose 

Nlliooll BIDk Owurs fw Fmtecb Compmies (Jill. 17, 2017), ht!ps;//www.mercatus.m:lpub!ic:ati<m'ooe> 

natjoga!-Ori -cbarters-fintu:b. 

Hesttr Ptirct, Sllltment before the Salate Committee on Banking, Housi!l& md Urban A1fain (March IS, 

2016), hnps:Jiwww .mercallls.orr/publicatjoglstatapeot·bester-maria=oejrte. 

Hester Pei!te, Examining Legislllive Proposals to J>raerve Consumer Cboice IIIII FinaDcialiDdepeodax:e, 

Testimony before tbe House Committee on Finlocial Scrvica (June II, 201S), 

http:IJmerta~us,orgtpublicalion/e:raminin• .. Js:islalive-proposals=presqve.<:0!1SIIer-cboicHnd·financieJ. 

~ 

Hesttr Ptirct, The Dodd-Fnd Act md Regu]IIOiy Ovatadl, Testimoay before the HolDe Committceoo 

FLDIDCill Savioes (May 13, lOIS), http://mercalus.orgtpubticalionldodd·hnk=te!·IQd·!Watory-owmach. 

Hesttr P• md Kristine Jobnsoo, Rule Proposal to lmplemeot the Compcdlensive Automaled Risk Dell 

System (Feb. 4, 201S), https:Jfwww.fun.o!!!lsitesldefault/files/notice commegt file ref714-

37 mercatus oommeots.pdt 

Hesttr Peirce md Vers Soliman, Dildosure of Coolumer ComplaiDt Narrllive DaiJ, Public IDim:st Commcot 

(Sept 10,20141 http:/lmerta!us.omfoyblicllionl~-oomp!lint·DI!I'!!jve-data. 

Hesttr Peirce, Lesis1Jtioo to Refwm the Fedenl Reeerve oo Its I 00. Year Anniverary, 

Testimony before the House Committee on Finlocial Services (July I 0, 2014~ 

bttp:llmqtatuS.or@licationllegislllion·refonn·Cedersl-reserve-its-100->w-angjvmary. 

Hesttr Ptirct, IDcmsing the Effectiveness of the Bureau of Consumer Finmcial Protection in Protecting 

Coosumen, Testimony Before the HouseCommitteeooFmmcial Services (May21, 2014~ 

bttp:J{men:atus.org/publicaliOIYIIICltaSinL--efi'ectiveness-!IJnauooQlOSillller·financil]·protec!ion-QI!#ding: 

~ 

Hesttr Ptirct, ~the Federal Rtsave's Many Maudatesoolts 100. Yesr Amli-r, Testimony 

before the Hoose Committee 011 Fillaocial ScMc:a (Dee. 12, 2013~ bao:J~g= 

fedenl-resqvg.mapy-mandates-its-1 00-yesr-I!!Oiversary. 

Hester Pei!te, Regulatory i..aDdscape: Burden on Small Finaociallnstitutioos, Testimony before the House 

Committee 011 Small Business (Dee. 3, 2013). b!tp://mQtatus.ow/publicalion/re!l!Jlatortl!lldscaoe=burdens· 

small·financial·ins!ituliOIIS 

6 
50 


10241714.eps

Hesler Peirce and Robert Gteene, Office of F"mancial Rese&Idl Study Titled "As$et Mllllllgement and FiDancial 

Stability," Public Interest Comment (Nov. I, 2013), bttp://mercatus.orgipublication/office=financial·researdt· 

studv-titl!!d·asset·management-and·financial-stability. 

Hesler Peirce and Robert Gteene, Money Madcet Fund Reform; Ameudments to Fonn PF (Sept. 17, 2013), 

bttp:/lmereatus.org!publication/money·mmet·fimd·refonn·ameodments-fonn::Pf 

Hester Peirce, Regulatory Impacts: The Impact of Dodd·F111lk on Community Bankillg, Testimony before the 

House Committee on Oversight and Government Refonn (July 18, 2013), 

http:Jimere!tus.orgipublicationlregulatory-burdens-impact-dodd.frank=901JllDuni!y·banking. 

Hester Peirce, Financial Madcet Utilities, Public Intezest Comment (May 3, 2013), 

http:J/mercatus.orgtpublicationlfinancial·market·utilities. 

Robert Hoyt, Karan Bhatia, Lyle Roberts, Hester Peirce, 8lld Olrisllipher Simkins, Brief of Federal &mu of 

Investigation Agents Association as Amicus Curiae in Support of the United States Cireuit Court of Appeals fur 

the Fourth Circuit (Mar. 9, 2000). 

Bl81ldon Becker, Soo Yim, aod Hesler Peirce, Short Sales: SEC Ponders a Regulatory Overl!aul, Wilmer, Cutler 

& Pickering Securities Law Developments (Nov. 22, 1999), 

http:llwww.wilmerhale.oomluploadedFiles/WilmerHale Shared Content!Files/Editoriai/Publicalion/secll· 

~ 

Op-Eds and Blogs 

A fuD list is appended at Scbedule F. 

Polillcal 

Affiliations 

Mid aetMtles: List membelsbips and offices held in and se!Vioes rendered to all political parties or 

eledion committees during tbe last to years. 

Member, Libertwn Party through 2009. 

Politieal 

Conlribatioas: Itemize all political contributions of$500 or more to any individual, campaign 

organiz.alion, political party, political aaion committee or similar entity during the last 

eight yean and identify specific amounts, dates, and names of recipients. 

N/A 

Qaalifications: State fuDy }'OW' qualifications to serve in the position to which you bave been named. 

(attach sheet) Sn Schtiult E. 
51 


10241715.eps

Fature employment 

relatioDSilips: 1. Indicate whether you will sever all connectioDS with your present employer, business 

Potential COIIfUcts 

fum, associatioo or organization if you are confinned by the Senate. 

As desa~bed in my Ethics Agreement, which has been provided to the Committee, if 

oonfiimed, I will sever all such connectioDS. 

2. As far as can be fon:seen, state whether you have aoy plaos after oompleting 

government service to resume employment, affiliatioo or praclice with your previous 

employer, business fum, association or orgaoization. 

I have no such plaos. 

3. Has aoybody made you a oommitment to a job after you leave government? 

No. 

4. Do you ex.pect to serve the fulltenn for which you have been appointed? 

Yes. 

of lllterest: I. Descn'be aoy financial arrangements or deferred compensalion agretmet\1! or other 

oontinuing dealings with business associates, clients or customm who will be 

affected by policies which you will influence in the position to which you have been 

nominated. 

If c:onfumed, I will resign fiom the Mercatus Center at George Mason Univenity and 

will terminate my outside conttibutor agreement with the Brookings Institution. I may 

continue to participate in the 40 l(k) plao run by WilmerHale. My participation does not 

include aoy additional contributions from me or aoy contributions from WilmerHale. 

2. List aoy investments, obligations, liabilities, or other rdaliooships which might involve . 

potential coo.flicts ofioterest with the position to which you have been nominated. 

ill oonnedion wi1h the nomination process, I have oonsulted with the Office of 

Government Ethics and the U.S. Securities and Exchaoge Commission:s (SEC) 

Designated Agency Ethics Official to identify potential oonflicts of interest. Any 

potential coo.flicts of ioterest will be resolved in accordance with the tenns of the 

Ethics Agreement that I have entered into with the SEC's Ethics Official and that has 
52 


10241716.eps

CMI, aimiDalud 

illvtldptory 

actioas: 

been provided to this Committee. I am not aware of any othe: potential conflicts of 

interesl 

3. Describe any busioess relationship, dealing or financial transaction (other than tax 

paying) which you have bad during the last I 0 years with the Federal Government, 

whethe: for yom~ on behalf of a clien~ or acting as an agen~ that might in any 

way constitute or result in a possible conflict of interest with the position to which 

you have been nominated. 

In connection with the nomination process, I have consulted with the Offioe of 

Government Ethics and the U.S. Securities and Exchange Commission's (SEC) 

designated agency ethics official to identify potential conflicts of inte:est. Any potential 

oonflicts of interest will be resolved in acoonlanoe with the terms oftbe Ethics 

Agx=nent that I have ente:ed into with the SEC's Ethics Official and that has been 

provided to this Committee. I am not aware of any othe: potential conOicts of interest. 

4. List any lobbying activity during the past ten years in which you have engaged in for the 

purpose of directly or indirectly influencing the passage, defeat or modification of any 

legislation at the national level of government or affecting the administration and 

execution of national law or public policy. 

None. 

5. Explain bow you will resolve any oonflict of inte:est that may be disclosed by your 

responses to the items above. 

In connection with the nomination process, I have consulted with the Offioe of 

Government Ethics aod the U.S. Securities and Exchange Commission's (SEC) 

Designated Agency Ethics Official to identify potential conflicts of interest. Any 

potential conflicts of interest will be resolved in accordanoe with the te:ms of the Ethics 

Agreement that I have entered into with the SEC's Ethics Official and that has been 

provided to this Committee. I am not aware of any othe: potential conflicts of interest. 

I. Give the full details of any civil or criminal proceeding in which you were a defendant 

or any inquiry or investigation by a Federal, State, or local agency in which you 

were the subject of the inquiry or investigation. 

None. 

2. Give the full details of any prooeeding. inquiry or investigation by any professional 

association including any bar association in which you were the subject of the 

proceeding. inquiry or investigation. 

None. 

9 
53 


10241717.eps

SCHEDULE E: STATEMENT OF QUALinCATIONS 

My ecadc:mie and professiooal VIOit provide 1D approprillc ~ for senice IS a CoaJDissiootr of the 

Securities and Exclw!&e Commission (SEC). 

My underpduate study of eoonomics gave me important insights about how the financial Dlllkets wm and 

their eritieal role in the broader eoonomy. My lepl training highligbkd the role that regulation plays in 

tnablin$ the finaocial mmets to serve efftdivdy. My courseworic included clasaea on securities law and 

admini$111tive law. 

I bave spart most of my professiooal career 1IIOitina oo issues rdJied to financial ltJIIlation. After law scbool 

IIIII a clerbbip on the Court of Federal Claims, I joiDed a large law fum IS ao IStOCia!e in tbe securities 

clepartmeat In that job, I wurked oo a rqe ofislues fiom im'CSlmalt compiQy ~on to securities 

Cll!ortemalt and litigation. Maoy of my coUeaps were alumni of the Securities IIIII ExchaDge Commission. 

Their Slories about work at the Commission piqued my intCR:St, and I appUed for 10 opening iD the Division of 

Investment Management. 

Ala Commission staff attorney, I wrote Nles for ioveatment compaoies.ln additioo to pining a deeper 

UDdtnlmdiua of mutual fimd ~oo, I acqllired valuable experience about bow the Division and the 

Commission opa1te. I leamed a1Itmaldous 11D0U111 about the law IIIII the industry fiom the seasoned 

-roes 1110meys wid! whool I Wlded. 

Aller four yean in theDivisiooofln'lestment Maoegemenr, I was detailed 1o theofliceofCommissiooer Paul 

Atkins. This positiou, whichevc:otuallybecameperm~nmt, provided me broader exposure to the Commission's 

wm and to additional areas of securities law. In my four years in the Commissioner's office, I worked 

primarily on investment management and enforcement i!SUeS, but also got exposure to areas such as COipOIItioo 

finance, aecoonliDg. and met ~ation. I had a wealth of apportunities to e~~~~ from staff aaoss the 

Commissioo and from mmy outside partieHncluding investors, issuers, regulated entities, and other 

regulaton-with ID iJXerest in the isaues before the Commission. 

Foltowin$ my time II the~ I bad lhe CIIIIJOflllnity to work oo tbeo RlllkilJa Mtmber Riclwd 

Shelby's ataB' oo theSeollc Committee oo BIDkin& Housing. 8lld Urbco A.f&in. Havingjoilled the Commiuee 

Iliff in Aup 2008, I was quicldy immersed ia the llllfolding finaocial crisis. The Committee staff sought to 

UDderstand the regulaloey and mad:et factors that coat1ibuted to the crisis aod to Cl1ft a legjJiative rapoose to 

the crisis. This mcJataking exposed mo to many c:xpe11s with a wide variety of viewpoints and experiences in 

the financial industry. In additioo, &equent interaction with principals and staft' from different finJocial 

regulatory agencies pvc me new insightJ into the c:halleap reguliiOr1 face as they try to a1ft 8lld implement 

effective I'Cglllatioos. 

A1ltr leaviD& the Committee, I was able to COOiinue my 'Mllk oo liniDcW regulllioo II the Mcn:atus <At« at 

0eorJe Mason U11Mnity. Ia additioo to cdiliDs and coaln"buting to a bock about the [)odd. funk Act md 

IDOtber about fiDiocia1 regulatory rrimD, I have written oa issues sud! IS mooey market mutual fimds, 

ldministnlive process, the use of ecooomic 10alysis 11 federal finaocial.ators, and dtrivatives clearing. I 

also have bad the opportunity to review and provide input oa the work of other sd!olus writiag for the 

Financial Markets Working Groop about a wide amy of fiDaocial regulatory issues. Finally, serving on the 

SEC's Investor Advisoly Commiuee with aa experieoced aad divene group of coUeagues has helped to shape 

my views 011 the impoltaace of investor~ in the SEC's mission. 

14 
54 


10241718.eps

SCHEDULE F: ADDITIONAL PUBLICATIONS 

Hester Peirce and Vera Soliman, The CFPB's Animated Approach to Financial Regulalion, FinRegRag (July 

12, 2017), https 1/finrmag.comlth~fubs-animated-approacb-to-financial-regulalioneS26a5b71eSd?source=colledion home-~---2----. 

Hester Peirce, Finance Is in tbe Midst of a Regulatory Reform Quilting Bee, Real Clear Markets (June 29, 

2017), 

http1/www.realclearmarke1S.com/articles/20l7/06129/firumce is in the midst of a regulatory reform guiltin 

g bee 10276S.hlml 

Hester Peirce, Dodd-Frauk Do-Over, rmRegRag (June 8, 201 7), bttps 1/finreg!ag.oomldodd·frank·do~ver9a3870d769bc?source=colledion home-6-···7---·. 

Hester Peirce, Choice: OLA versus BOLA, FinRegRag (June 6, 2017), https:J/finregtag.comldodd·frank-doover-9a3870d769bc?source=colledion home--6----7---. 

Hester Peirce, TheOLA: Coooept and Reality, FinRegRag (May 26, 2011), https:J/finregrag.com/tbc-ola· 

concept-and-reality=39S880d42b99'lsoUitt"'CClledion homt6-=-·11---. 

Hester Peirce, Seveo Core Principles in Delayed Action, FinRegRag (May 23, 2017), 

bttps://finrewg.oomlseveo-corc-orinciples-in-delayed·action·9379e4S2SI73?source=s:ollection home--6--·-

13--. 

Hester Peirce, ElimiDa!ing Dodd-Frank's Overrated Escape Hatch, Real Clear Markets (May 2S, 2017), 

http://www.realclearmarkets.com/atliclesllOI7/()5!l5/tliminaling doddfranks overrated escape hatch 102707.btml. 

Hester Peirce, Rethinking Regulatory fnl!llewO!k, U.S. News&: World Report (May 22, 2017), 

https://www.IISilews.comlopinion/economic-intelligence/articles/201 7-05-22/seven-core-orinciples-to-refonn· 

the-financial-regulatory-svstem. 

Hester Peirce, Where Have All the BDs and FCMs Oone?, FinRegRag(May 17, 2017), 

https:J/finregrag.oomlwhere-bave-all-the-bds-and-fcms-oone-8e8lb la6dl e2?source=oolledion horn~·-· 

IS-. 

Hester Peirce, Following the Fiduciary Rule, FinRegRag (May IS, 2017), https:l/finregrag.comlwbcro-have-all· 

the-bds-and-fcms-gooe-8e8lb I a6d le2?SOU!I:e"((llection home-=§-!>-==-··. 

Hester Peirce, Five Questions about the DOL Fidicuary Rule, On the Rep (May IS, 201 7), 

httoo1/ontheregs.com/2017/0S/1S/fivO:<JuestiQ!!S:about-the-dol·fiduciarv;ule/. 

Hester Peirce, Big Bailout Court Bout, FinRegRag (May 10, 2017), https:J/finregrag.oonvbig-bailout-court· 

bout·b383SSac74fi'lsoUitt"'CClledion bome-6--18-----. 

Hester Peirce, Highlights of the Financial Regulatory Week, FinRegRag (MayS, 2017), 

httoo://finregrag.com/highligh~f-tbe-financial regulatorv·week-6Sc60Sf3da5d?source=oollection bome---6-

-20--- . 

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Heslu Peirce, h's Spillgtime iD w~ and RqWmy Reform Blost01111, RtaJ aear Mllkds (Apr. 17, 

W17), 

http://www.ralc!eamwtets.com/articlgf2017AW17ffls springtime in wphjpmn and regulatory reform bl 

oesoms 102634.html. 

Hester P~ Governor Tuullo Bids Farewell, FinRegRag (Apr. 5, 2017), bttps;J/finregrag.wmiLOOVernor· 

taru!!~tbids-farewell-leeba7426dc9'1$011!'C£"90llcclion bome-6- -5-----. 

Hester Ptirce, This Week in FIIWICial Re&uJatioa, rlllRegRag (Mar. 24, 2017), https;lllimegrag.OOillhhis-!C!Ckiztfinwifl=regulati<n-20017bl~77!0W!I!EWllccliOD bome-6--7 

Brian K.aiafrt, J.W. Vemt, 8IXI Rester Peirce, The OCC's UnimJajnl!ive AJIIIOidllo llllo'lllioa, Real Qcar 

Mftets (Mar. 20, 2017), 

http:J/www.ralc!eannaOO:ts.oom/articles/20171031l!Vthe O<XS unimaginative apDJOaCh lo innovation 10259 

6.hlml. 

Hester PeUce, OCC's Finledl Cbllter Takes Shape, FinRegR!g (Mar. 20, 2017), btlps://finmqtg,wm/occsfintech.chlrter-takes-sbapo«dd07ai76?SO!IIW'Qlllcclion home-6-=-8:===. 

Rem Ptin:t, CFPBIIId the Divided DC Cittuil, rlllRegRag (Mar. 14, 2017), bnps:/lfinregrag.com/cftl!tapd: 

ti»<!i~-d>a2df17d8ce?sowct"Cddcclioo hoo!e--6--11--. 

Rester PeUce, Clarin& Recovering, IDd Resolvillg, Brookings Series oo Financial Markca and Re&uJatjon 

(Feb. 27, 2017), btlos://www.brookings.edu/rgeardtfclearing-rewverinh~andresolvinW'Iutm sourco:feedblitz&utm medium•FeedBlitzRss&utm camoaign=brookingsm/lopfeeds/latestfro 

mbtookincS. 

Hester Peirteand VeraSolimaD, Basi.oess as Ut!JU lltbeCFPB Is Not Good forColllumen,Real Clear 

Markets (Feb. 23, 2017), 

btlp:/twww.raldearmmca.oomlarticles/2017/021231busincss as usual at the efob is .not good for C!!!!SU!D 

m 1025S7.h1m!. 

Hester Ptin:t, Boiling Down Dodd-Fnmk, FinRegRag (Feb. 9, 2017), bttos://fiongrag.c:om.1loiling-down-doddfrank-9b78c3e§SJ8S. 

Hester Ptin:t, Rethinking the DOL's Approecb to Investor Proteetion, FlllRegRig (Feb. 6, 2017), 

bttps:/lfinregrag.OOIIIImhinking-thc-dols-aooroiCb-l!tinvestor-proteclione60Sd62911c:2?10!!!!?RX!!!cclioo homtt-20--. 

Hester Pcirw, Quick Take: Presideulial Fiolncial Rcgulllory Reform Plao, FinResfUa (Feb. 3, 2017), 

bttps:J/finregrag.oom/guict-~a!-financ:W.~plJn. 

S9l9674SI26a?!OUIIXFOOlleclion ~23--. 

Hester Peirtt, R~g the Resource Extraction Rule, FinRegRag (Feb. I, 20 17), 

btlpt/lfimegrag.cooY!edlinking·tl»resouroo-extraction-rule-686bSe766t:l8?source-wUcclion bome-6-

L__.. 

1S 
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Hester Peirte, Failure to Repeal Dodd-Prank Is WIW Should Have Us Scared, Real Clear Markets (Jan. 19, 

2017), htto~lwww.realclearmarkets.com/articlesflOI710 119/fai ure to repeal dodd· 

frank is wbat should have us scared I 02508.html. 

Hester Peiroe, It's Not Glamorous, But a Very Necessary Financial Reform, Real Clear Markets {1une 3, 2015), 

htto ~/www realclearmarkets.comlarticles/2015106103/ils not glamorous but a very necessary financial refor 

m 10169l.btml. 

Hester Peirte, Five Years Later, Dodd-Frank Is Looking Pretty Haggard, Real Clear Markets {May 20, 2015). 

bttp lwww realclearmarkels.com/articles/2015/0512Wfive yws later dodd· 

frank is looking Very haggard 101675.bbnJ. 

Hester Peirte, Investors Are Eager to Fund a Responsible Puerto Rioo, Real Clear Markets {May 6, 201 5), 

http /www.realclearmarkels.comlarticles/20 5105/06/investors are eager to fund a responsible puerto rioo 

101654.hbnl. 

Hester Peiroe, The CFPB, Not What It Was Hoped To Be, The Hill {Apr. 29, 2015), 

bttp /!hebill.comlblogs/pundits-blogtfinance/240422·1hKfub-not·what·it·waS-hooed·to-be, 

Hester Peiroe, Regulation in tbe Form of Big Bank Coercion, Real Clear Markets (Apr. 22. 2015), 

bttp://www.realclearmarkets.com/articles/2015104!221regulation in tbe form of big bank coercion 101634.h 

tml. 

Hester Peirte, Bank Shareholda-s and Customers Take Backseat to Regul!ton, Real Clear Markets (Apr. 7, 

2015), 

bttp fwww.realc!earmarkets oom/articlesfl0 5/041081bank shareholders and customa-s take baclcsear to reg 

ulators 10161 J.html. 

Hester Peirte, Consumers Are Mud! More Powerful Than Their Government Protectors, Real Clear Markets 

{Mar. 25, 201 5). 

bUp://www.rea!clearmarkets.CQmlarticlesf2015103125/oonsumers are much more oowerful than their govem 

ment protectors 101596.hbnl. 

Hester Peirce and Stephen Matteo Miller, The Small Bank Slide, The Hill {Mar. 23, 201 5). 

bttp://thebill.oomlblogs/pundits-bloglfinance/236572-tbe-small-bank·slide. 

Hester Peiroe, We Must Resist Becoming "Bank-Centric" in the US, Real Clear Markets {Mar. ll, 2015), 

http://www.realclearmarkets.comlarticles/2015103/lllwe must mist becoming bank· 

cm!rjc in lhe us !01573.btml. 

Hester Peirte, No, Mr. Tarullo, We're Not All Maaoprudentialists Now, Real Clear Markets (Feb. 25, 2015), 

http://www.realclearmarkets.com/articles/201S/021251no mr IMU!Io were not all macro!l111dentialists now I 

01548.b1ml. 

Hester PeiNe, Previewing 1he Presidem's Allnolmcement Changing 1he Fiduciary Standard (Feb. 23, 2015), 

http://mercatus.orgtexpert commentaryfpreviewine-omidents-announcement-cbanging-fiduciarv-standardfinancial·services-regulation. 

Hester Peiroe, Saap Regulations that Thin the Ranks of Small Banks, American Banker (Feb. 23, 2015). 

17 
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Hesler Peirce, In Wabingtoo 'AIISICrity' is a 67% Bqet lnaalse, Real Clear Mtrkea (Feb. II, 2015). 

!dtp:Jiwwwmlclelllllld:ets.comll!lic!esi201SI02/Il6o wasbiAgtoo msteritv is a 67 hudget ioaaseJIIm1. 

Hesler Peirce, What Australia Can Teacll Us About Regulatory Hoarding, Real Clear Mlliets (1m. 28, 2015). 

ht!p:l!www.tea!clcarmarkets.com'article!llOIS/01128/wbat auslr11ia cao teach us &bout regulatory hoatdillg 

IOIS08.btml. 

Hesler Peirce, MetLifeGoes to Qrurt, The HiU (1m. 16, 2015). bttp:Jitbebill.ooaYblm'puoditsblo!!lfinarx:d229701-medifo-gog-to.sourt. 

Hesler Peirce,Dodd-Ftd: Most Ubly to Be at die Root ofaFu!mcClisis, Real Clear Mml$(1111. 14, 2015). 

!dtp:Jfwww.realcletlDli!Xets.com/artic!esi2QIW!1141doddfi'ank most likdy to be at die 1001 of a future aisis t0148S.html. 

Hesler Peirte aod KristioeJobnsou. FINRA's Holiday 'CARDS', The Hill (lao. 8, 201S), 

http://thehiU.COII1Allogsloundits-blogltinaoW228908-Jinras-bolidav=cards. 

Hesla' Peirce, Laws Against 'losiderTrading' Come at a Great Cost, Real Cte.r Markets (Dec. 31, 2014~ 

http:Jfwwwmlclearmnets.oomlarticles/20W1213111rn agaiDst insilb Mg come with a grat 0051 I 

01451.html. 

Hester Peirce, Dmlll Up in the Dad ofNisbt, Dodd-Frmi's UnUa!eded ~Real Clear Mukets 

(Dec.l7,2014~http://www.realclearm.arkets.com/lrticle&'2014112/17/drawo up in the dartc of night doddlilnb uninteruled COnsegutllce$ I 0 1443.html. 

Hester P~ Pioaociallodusiry Should Be Its OwiiiCniglit ill Shining Armor, Americao Banker (Dec. 9, 

2014). 

Hesler Ptirc:t, Regulam FoUl Do AJ We Say Not AJ We Do 011 WaD Sind, Real Clear Markets (Doc. 3, 

2014), 

http://www.mlcleannarkets.com/articlesflOI411W3Jregula!m l!)p!v do as we say DO( do as we do 011 

wall street I 01414.hlml. 

Hester Peirte, CFTC Rulemaking Process Needs Gtater &:rutiny, Transparency (Nov. 28, 2014), 

htto:/lnews.beartland.orglnewspaper-artic!ef2014/JI/28/cfto-rulemaking-process·Deeds-greater-squtinytransDI!UICv/. 

HestcrPein:e, A New~ Must Perform MajorSlqayonDodd-Frll!k, Rell Oar Markets (Nov. 19, 

2014), 

h!tp:f/www.realcleannarkets.com/articlql2011111119/a new a!!ll!!qS must oerform major surgqy 011 dodd 

-frank 101397.html. 

Hesler Peirce, Bactdoor aod Badaoom Regulatiou. The HiD (Nov. 10, 2014), htto;ilthebill.comlb!ogsfollllditsblo!!lfioapcef223472-backdoor-and-baek!oom-reguJilioo. 

Hesler Pein:e, Regulatory PdDOia Is aBI!rietto Walth <mtiOD, Real Clear Mukets(Nov. S, 2014), 

h!tp:/lwwwmlcleannarkels.oom/articlcs/2014111/0S/regulatory patiDOia is a bl!rier to wealth aeanon 10 

137t.html. 

18 
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Hester Peirce, Sorry William Dudley, Regulation Itself is the Culture Killer, Real Clear Markets (Oct. 22, 

2014), 

htlp:llwww .realcleannarlcets.oom/articles/2014/10/22/sorrv william dudley regulation itself is the culture ki 

Uer 101349.html. · 

Hester Peirce, License 10 Invest, The Hill (Oct. I 5, 2014), http://thehill.OOIDI1llogs!pundits-blogtfinanct/l20788· 

license-to-invest 

Hester Peirce, Hank Greenberg's AJG Suit Could Crush 'Too Big 10 Fail,' Real Clear Markets (Oct. 8, 2014), 

http:Jfwww.realclearmarkets.oomlarticles/2014/I0/08/hank greegbergs aig lawsuit could crush too big to f 

ail 101315.html. 

Hester Peirce, Banking Regulators Could Use a Lesson in Humility from Hayek, American Banker (Sept. 30, 

2014). 

Hester Peirce, Judge to CFTC: Heads You Wm, Tails You Win Too, Real Clear Markets (Sept24, 2014), 

http://www.realcleannarlcets.oomlarticles/2014/09/24/judge to cftc heads vou win tails vou win too 10128 

~. 

Hester Peirte, Let the Markets Fix Ratings Ageocies, Real Clear Markets (Sept. I 0, 2014), 

http:llwww.rea)c!earmarkets.oomlarticles/2014109110/let the markets fix the ratings ageocies 101270.html. 

Hester Peirte, The Helicopttt Parents at the FSOC Are Running With Sclssor$, Real Clear Markets (Aug, 27, 

2014), 

http:l/www.realclearmarkets.oomlarticles/2014108/27/the helioopt!r oareots at the fsoc are IUillling with sc 

issors 101246.btml. 

Hester Pein:e, Bank of America's Opaque Peoance, The Hill (Aug. 25, 2014), http:/lthehill.com/blogs/punditsbloglfinancel215871-bank-of-americas-opague-oeoance. 

Hester Peirte, 'Living Wills' for Baoks Are Pointless Without Market Discipline, Real Clear Markets (Aug. 13, 

2014), 

http:llwww.realclearmarkets.oom/articles/2014/Q8/13!!jving wjl!s for banks are oointless without market di 

sciplioe 101227.html. 

Hester Peirce, Treading the Regulatory Waters, Pointotl.aw.com (Aug. 13, 2014), 

http:/lwww.oointoflaw.comlarchives/2014108/treading-tho-regulatorv-waters.php!Jmore. 

Hester Peirce, Dodd-Frank: AS~ Story'I,Pointotl.aw.com (Aug. 4, 2014), 

http:J/www.oointoflaw.oomlarchives/2014!08/dodd·frank-a-sucoess·story.php#more. 

Hester Peirte, Dodd-Frank's Birthday Marred By Its Many Inadequacies, Real Clear Markets (July 30, 2014), 

http:l/www.realclearmarkcts.oom/articles/2014107/30/doddfranks birthdav marred by its many inadequacies !Ol197.hbnl. 

Hester Peirte, Dodd-Frank at Warwjth Itself, Washington Examiner (July 25, 2014), 

http:llwww.wasbingtonexaminer.oomldodd·frank-at-war-with-itself7article/2551078. 

19 
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Hater Ptirce, J)odd.frank IIFOIIf, PointofLaw.can (July21, 2014). 

bttp:/lwww.!l0intollaw.comlardtives12011mJdodd.frank«·fO\If.pbp. 

HtSter Peirte, The Gaping Hole in the Middle ofDodd-Fraok, Real Clear Markets (July 16, 2014), 

bttp:J/www.realcleannarkets.comfarticles/2014/07/16/the gaping hole in the middle of dodd·frank.hlm!. 

Hater Patce, FISIHlaoc:i&l Fmxl, PoiliofLaw.can (July II, 2014). 

lttp:Jfwww.oointo8aw.comi1Id!ii:W2()11107Jfish:l!!!!!?.l·fraud.Mp#rnore. 

Hater Ptirce, Flllk ElimlcbiDg Proxy Advi3on, The Hill (July I 0, 2014). b!!p;/llhebill.coavlllogs/!l!llditt 

blcgl2115~fiutber~!Hl!OXY=advjm. 

HtSter Peirte, Class·Actioos &: Market Intesrity, PointofLaw.()()IJI (July 7, 2014), 

htlo:J/www.oojntotlaw.comfarcbivesfl014107/class-actions-market·integrity.pbp#more. 

Hater Ptirce, Dodd-Frank Is N<X Living Up to Its Promists, Real Clear Mmets (July 2, 2014), 

Jmp:/fwww.realcleannartets.comflltides/20111!)7101Jdodd-

&ack is DOl !jviDg up to ils !!l!!!!Ues 101151 blml 

Hater Ptirce, Stress Testsaod Managerial Distnctioo, PoialofLaw.can (1UilC28, 2014). 

http:Jiwww.pointoflaw.comfarcbives/2014106/stress·tesiH!Jd.mana!!t.!i.a!-diS!I!C!ion.pbp. 

HtSter Peirte, FINRA's Fines, PointofLaw.com (June 20, 2014), 

h!tp://www.pointoflaw.comfarcbives/20141061finra9-fines.pbp/linort. 

Hesw Peinle, 0!1 Its 80*, How Call the SEC RaJeWits Missioo?, Real Clec Markets (Juoe 18, 2014). 

bttp:Jfwww.realcleanoarkecom/llticlesflOI+WI8180 \U!J later bow c:an lhe sec renew its missioo 10 

~-

Hester Peirce, AIG's Collapse: The Part Nobody Likes to Talk About, AmeriCID Bloker (JD 16, 2014~ 

Hmer Peirce, Operalioo Choke Point's Back Door, PointoiLaw.com (June 14, 2014), 

http://www.oointofiaw.comfarcbives/2014106/oogation-choke-PDints·back·door.pho. 

Hmer Peinle, What N<X to Do During a FIDIDclal Crisis, U.S. News aod World Report (June 9, 2014), 

bttp:/lwww.umews.comlopillionleconomiQ:igtdliL!CilC0'2()14/06,Wltim-geithnerw!ms·test-sbows-wbat· 

govcrDIDC!I·LOOI·wta!ll. 

Hater Patce, Second Circuit: Pngmalism TNmpSTiuth, Pointo!Law.com (Jupe S, 2014), 

http;/lwww.DOintollaw.comlarchivesflOI4106/sewod.Qmrit-oragmalism·trumpt!IU!h.plw#more. 

Hesler Peirce, 100 Years Later, What's Become of Our Federal Reserve, Real Clear Markets (June4, 2014), 

http:l/wwwm]cleannarkets.comfarticles/2014/06!041100 years Iller whats l!ecome of our fedml reserve 101099.btml. 

20 
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Hester Peiroe, Au Revoir Dollar, Pointofl..aw.com (May 31, 2014), 

htto://www.oointoflaw.comlarcbivesf2014105/au-revoir.00Uar.ohp. 

Hester Peiroe, Oetting Federal F'lll8Dcial Regulators to Analyze Before They Regulate, PointofLaw.oom (May 

22, 2014), bttp :/lwww.!lOintotlaw.com/arcbives/2014/05/gettinl~federal·financial·regulators·to·analvze=beforetbey·regu!ate.pbp, 

Hester Peiroe and Abby McCloskey, Unbridled Regulation SeU Stage for Aootber 2008, Real Clear Markets 

(May21,2014), 

httn://www.realcleannarkets.comlarticles/2014/05/21/unbridled regylation sets stage for another 2008 1010 

69.html. 

Hester Peiroe, FSOC Designating in the Darlc, PointofLaw.oom (May 17, 2014), 

http://www.oointo8aw.comlarchjvesf2014!051designating.jn.tbe-j!ark.php. 

Hester Peiroe, Conftict Minerals Conflict Continues, Pointofl..aw.oom (May 8, 2014), 

bttp:/!www.pointoflaw.com/archives/2014105/conflict·minerals-oooflict-continues.pbp. 

Hester Peiroe, National Mortgage Database: Good for Regulators, Bad for You, Real Cle. Markets (May 7, 

2014), 

bttp:Jfwww.realclearmarkets.com/articles/20!4/05107/national mortgage database good for regulators bad f 

or you 101042.btml. 

Hester Peirce, Equalizing MArkets, PointofLaw.com (May 3, 2014), 

http://www .pointoflaw.comlarchives/2014105/equalizin!!=!llatkets.ohp. 

Hester Peirce, Regulaling By Guidance. Pointofl..aw.oom (Apr. 26, 2014), 

bttn:/lwww.J?Ointoflaw.comlarchivesf20141041regulation-bv·guidaoce.php. 

Hester Peiroe, Most Savers Like Money Market Ftmds the Way They Are Now, Letter to Editor, WaD Sired 

Journal (Apr. 25, 2014). 

Hester Peiroe, A Bad Report Card fur a Security-Righteous SEC, Real Clear Malkets (Apr. 23, 2014), 

h!tp://www.rea!cleannar)®.comlarticles/2014104123/a bad report card for a securitY:: 

righteous sec 101018.btml. 

Hester Peiroe, Conftict Minerals: Umneasured Benefits and Unspoken Burdens, Pointofl..aw.oom (Apr.l8, 

2014), http://www.pointoflaw.comlarcbives/2014/04/contlict-minera!s-unmeasured·benefits-aod-lDISookenbul'dens.pbpllmore. 

Hester Peiroe, FDIC Community Bank Analysis Largely Ignores Impact of Regulatory Bu!den(Apr. II, 2014), 

http://mercatus.org/expert commentarvlfdic-community·\lank·analysis-largely·ignores-impact-regulatory· 

l2Jm!m. 

Hester Peirce, Community Banks, Consolidation, and Regulalo!y Burdens, Pointoflaw.com (Apr. 10, 2014), 

http://www.oointoflaw.comlarcbives/2014104/community-banks-consolidation-and-regylatory· 

burdens.ohp#more. 

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Hester Pein:e,Regulms on the b. PoiDtofl.aw.com(~. 4, 2014~ 

hnot/www.DDintoflaw.oom/an:bivesflOIW4/m;u!atorton-tho:bgphpNmore. 

Heater Pein:e, Tbe Vollier Rule lnaeases the Likelihood tblt Banks Will DefJult, Real Oear Mctets (Mar. 

26,2014), 

http:l/wwwmlc!earmarkets.oom/articles/ZOI4103!26/the vollier rule jnatases 1he likelihood that banks w 

ill default I0097S.hbnl. 

Heater Pein:e, Biddillg Bye to the Baok, PointofLaw.com (Mar. 26, 2014), 

bttp:l{www.oointof!aw.oomlan:bivesflOI41031biddjng·bye-to·tl»baDk.obp. 

Rester Peirce and laD RobiDsoo, Small Banks in the Eye of Dodd-Frank, McCialdly-Tn'buoe (Mar. 20, 2014). 

Hester Pein:e, CITe's Aimles1 BudaetiDa. PoiDtofLaw.com (Mar. 17, 2014~ 

h!tpilwww.pointoflaw.ooml.chivesf201Wl/cftCHimlestbudgeting.pbp#mq!e. 

Hester Pcitte, Ugly Barbie: Is There a Market for Avenao-LookingDolls, Real Clear Mctets(Mar. 12, 2014), 

httpifwwwm!clearmarkets.oomlarticleilOI4103/1211lg!y ba!bie is there a maJket for average looking dol 

Is 1009Sl.hbnl. 

Heater Pein:e, Letting Nonbaob Be Nonbaob, Pointo!Law.oom (Mar. 12, 2014), 

httotlwww.oointoflaw.com/an:bives/2014103fletting·nonbanks·l»oonbanks.php#more. 

Hester Pein:e, Activism at Sharehold Expenae. Pointofl.aw.com (Mar. 7, 2014~ 

bnot{Www.pointoflaw.oomlan:bivesflOI4103/activism-at·Wrd!o!d-expepse.pbp. 

Hester Pein:e, Allli-Shardlolde: Oaa Adioas, Poillloll..rw.com (Mar. I, 2014), 

hbp lwww DOintoflaw.oom/~14103 lPii=sbmbo!der-daswctions.phpl!more. 

Rester Pein:e, Advice with ll«den, PoiJJlofl..aw.CXIID (Feb. 22, 2014), 

bttptlwww.oointoflaw.com/81d!ive&'2014102/!dvjco-wi!IH!o!dm.pbo. 

Hester Peirce, MyRAs: Bad forConsumas, Bad forOovemment, Real Clear Mctets (Feb. 12, 2014), 

bttpt{Www.realclearmariets.oomlarticles/2014102112/myras bad for oonsumers bad for government 100895 

.IJim!. 

Hester Peirce, Does the CFPB Know What's in Your Willet?, US News and World Rtport (Feb. 10, 2014), 

hno lwww usnews.oom/opinioQiecoOD!Il»intel~gence@l41021101whv-is-the-cfub.coUecting-SO=mudHudit· 

tatd-data. 

Rester Peilce, SaingbSetdiug, Po'.DIOII..aw.oom (Feb. 10, 2014), 

bttp;/fwww.oointollaw.~l4102/suin&-for«!!!ing.php#more. 

Hester Peilce, Striving for Justice, PointofLaw.c:om (Feb. 4,2014), 

ht!oi/w!w.oointoflaw.comlan:bivesi2Q14102/strivirutfor·iustice.php. 

Heater Peirce, AIG, Oovernmmt Rescues, &lid Billion Dollar Copiers, Pointofl.aw.com (Feb. I, 2014), 

bttn:llwww.oointoflaw.comlarchives/2014/0Vaiu·government·rescues·and·billion·dollar·copiers.pbp. 

22 
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Hester Peirce, The Fedml Reserve's 'Too-Big-to-Fail' Patemalism, Real Clear Markets (Jan. 29, 2014), 

hbp:/lwww.realclearmarkets.com/articles/2014/0lf29/the fedml reserves too-big-tofail oatemalism 1 00866.btml. 

Hester Peirce, Dodd-Frank's Central Risk· Takers, Pointoflaw.com (Jan. 24, 2014), 

http://www.pointoflaw.com/archives/2014/0l/dodd-franks.cen.1ral·risk·takers.pbp!lmore. 

Hester Peirce, Pro-Coosumet Banking 'Fixes' That Ale Anti-Consumer, Real Clear Mmets (Jan. 15, 2014), 

htm:lfwww.realclearmarkets.com/articles/2014101115/pr!KlOl!SU!!le! banking fixes that are anticonsumer 10084l.html. 

Hester Peirce, Regulatory Budget Battles, PointofLaw.com (Jan. 14,2014), 

· http:/lwww.oointo!ls.w.comluchives/2014/0Jhegu!atory-budget·battles.php. 

Hester Peirce, JPMorgan. Madoff, and Bureaucracy, PointofLaw.com (Jan. I 0, 2014), 

bttp:Jfwww.pointo!law.comlarchives/2014/0lf!pmorgan·madoff-4md-bureaucracv.php#more. 

Hester Peirce, In 2013, Dodd-Fillllk's Limits Began to Emerge, Real Clear Markets (Jan. 2, 2014), 

hbp:/lwwwmlclearmarkets.comlarticles/2014101102/m 2013 dodd· 

franks limits begao to emerge 1 00826.h1ml. 

Hester Peirce, CFPB and Disparate Impact, Pointoflaw.com (Dec. 31,2013), 

hbp:Jfwww.oointoflaw.com/archives/2013/12Jcfpb-and-disparate-impact.php. 

Hester Peirce, Financial Crisis Lessons for Prosecutors, PointofLaw.com (Dec. 26, 2013), 

htm:l/www.oointofls.w.com/ardlives/20131t2Jrethinking-prosecution·after-the-financial-crlsis.obp#more. 

Vern McKinley and Hester ~circe, Presidem Obama Faces a Bigger Ticking Tune Bomb Than Obams.care 

Jtsel~ Foibes (Dec.l9,2013), http:/lwww.fotbes.comlsiteslrealminf2013/l2/19/presidcnt-obama·faces.a-bigger· 

ticking-time-bomltthan-obamaca»itselfJ. 

Hester Peirce, Bureau of Consumer Financial Protection as State AG, PointofLaw.com (Dec. 19, 2013). 

hbn://www.oointo!law.cornlarchives/2013112Jbureau-of-consumer·linanc:ial·protection-as-stato-ag.pbp. 

Hester Peirce, What You Missed Amid the Volcker Rule's Finalization, Real Clear Markets (Dec. 18, 2013), 

http://www.realclearmarkets.comlarticles/2013/12118/what vou missed amid yo!cter rules finalization 1008 

02.btml. 

Hester Peirce, Is Volckertbe New FCPA?, PointofLaw.com (Dec.i4, 2013), 

hbp://www.oointoflaw.cornlarcbives/2013112/is-volcker-the-ncw-fcpaphp#rnore. 

Hester Peirce, Volclcer Rule Is Nothing to Celebrate and Financial Marl<ets Could Suffer, City A.M. (Dec. 12, 

2013). 

Hester Peirce, The Vokker Rule Isn't lhe Best Way to Prevent Risky Bank Trading, US Ne-w'S and World 

Report (Dec. 9,2013), http:Jiwww.usnews.comlooinionlblogsleconomic-intelligence/2013112109/the-volckerrule-isnt·the-besl·way·to=prevent·riskv=bank·IIading. 

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Hester Peiru, Regulatory Conceit Is S1!angling Tomonow's Swt-Ups. Real Cle~r M&lkets(Dec. 4, 2013), 

http://www.realclearmarkets.com/articles/20131121041regu1atory conceit is s!!wling tomonows start· 

ups 10Q775.html. 

Hester Peirce, CFTC's Latest Invitation to Court, PointofLaw.com (Dec. 4, 2013), 

http:llwww.pointoflaw.com/archives/20131121cfu:·gets·another·invitatioo-to-court.php. 

Heater Peiru, The Fed Is Biting Off More Thanh Can Chew, US News and Wodd Report (Dec. 2, 2013), 

http:l/www.usnews.oomlopinionlblogs/economic-inlellinencq'2013112102/janet·vel!en·should-try·to-reduceotbefedeJ11-reservea-responsibilities. 

Hes!ci Peiru, 100 Days at the SEC, PointofLaw.com (Nov. 29, 2013), 

http:l/www.pointoflaw.oomlarchives/20131l111 ()()..days-at-the-sec.php#more. 

Heater Peiru,JPMoTgaD's Unsettli.og Settlement, PointofLaw.com (Nov. 21, 2013), 

http:J/www.pointoflaw.com/ardlives/20131111jpmorgans-unsettling-settJementphp. 

Hester Peiru, Yet Another Government Agency Is Keeping Tabs on You, Real aear Markets (Nov. 20,2013), 

httn:llwww.realcleannarkets.com/articles/2013111120/vet another government agency is keeoing tabs on yo 

u 100747 .html. 

Hester Peiru, Banking oo Wind, Poin!ofLaw.com (Nov. 13, 2013), 

http:f/www.pointoflaw.com/ardlives/2013111/banldng-oo·wind.pbp. 

Hester Peiru, SAC Capital's Offense, PointofLaw.com (Nov. 8, 2013), 

http:llwww.pointoflaw.com/ardlives/2013/111sac-capital$-offense.pbp. 

Hester Peiru,A Smaller Budget Would Make the CFI'C More Effective, Real Clear Markets (Nov. 6, 2013), 

http:llwww.realc1earmarlcets.comlarticlesl20131111061a smaller budget would me the cftc more effective 

I 00712.html 

Hester Peiru, Dodd-Frank and Diversity, PointofLaw.com (Oct. 29, 2013), 

http://www.pointoflaw.com/ardlives/2013/101dodd·frank.php. 

Hester Peiru, The Wisdom of the Crowd, US News and World Report (Oct. 28, 2013), 

htto:l/www.usnews.oomlopinionlblogs/eco~intelligence12013/10128/sec-e>'e9-0nline-crowdfunding­

~. 

Hester Peiru, Is the PCAOB Tumiog Back Towards AS2, PointofLaw.com (Oct. 25, 2013), 

http:l/www.pointoflaw.com/arcbiveai2013/101'JS-tho.pcaob-tumillg·back·towards-as2.php. 

Hester Peiru, Let the Fed Centlally Plan Mooey Management?, Real aear Malkets (Oct. 23, 2013), 

hnp:l/www.realclearmarkets.comlarticles/2013/10123net the fed centrally plan money management 100682. 

ll11!J!. 

Heater Peiru, SEC ChainDan Speaks Again, PointofLaw.com (Oct.18, 2013), 

http:l/www.pointoflaw.comlarchiveal2013/10/sec-dlairman·speaks·again.php. 

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Hester Pei!te, SEC Chairman Speaks, Pointofl.aw.com(Oct.IO, 2013), 

http:J/www.oointoflaw.com/ardllves/2013/I(YHainnan·speaks.pho#more. 

Hester Pein:e, New CFTC Proposal Could Harm Markets, Main Street (Oct 10, 2013), 

bttp:Jfmercatus.or!!lexpert commeniMy/new-cftc-D!Ooosal~d-harm markets·main-street. 

Hester Pei!te, So You Want to Replac:eGaryGenslerat theCFTC, Real Clear Marlcets(Oct 9, 2013), 

bttp:J/www.realclearmarkets.oom/articlesflOI31100311et the fed centrally plan money management 100682. 

html 

Hester Peirce, Don't Distort the Market Further, New York TIDies Room for Debate (Oct. I, 2013~ 

Hester Peirce and Robert Greene, 'Money for Nothing,' But Not for Free, US News and World Report (Sept 

30, 2013), bttp;f/www.usnews.com/opinionfologs/ecooomjc-jntc!Jigence/2013/0913()/mooev-for-nothingdocumentaJv·shows-th&-federal·reserves·flaws. 

Hester Pei!te, FINRA & MSRB Embrace Economics, PointotLaw.com (Sept. 30, 2013), 

http:llwww.pointoflaw.com/ardllves/2013/09/finra.msrb..embrace=economics.pbo. 

Hester Pei!te, Stockpiling Penalties, Pointo!Law.com (Sept. 26, 2013), 

bttp;l!www.pojntoflaw.cornlarclrives/2013/09/stockpilingPties.pbp. 

Hester Peirce, The FSOC's Latest Careless Too Big to Fail Decision, Real Clear Markets(Sepl25, 2013), 

htlo://www.realclearmarl:ets.com/articlesflOI3/09125/the fsocs latest careless too big to fail decision 1006 

32.btml. 

Hester Peirce, SEC Steps Further Away from Its Mission, PoiotofLaw.oom (Sept. 18, 2013), 

http:llwww.poinloflaw.com/ardllvesflOI3109/sec-steos-further·away·from.its-mission.php#more. 

Hester Peirce, Treaswy's Coloring Book, Pointoflaw.com (Sept. 14, 2013), 

bttp:llwww.oointoflaw.com/ardllvesflOI3/09ftreasurvs:coloring-book.pbp#more. 

Hester Peirce, Bemanke's Successor Will Have More than Mooetary Policy to Worry About, City A.M. (Sept. 

13,2013). 

Hester Peirce, The FDIC Doesn't Want to Be the World's Insurer, PointotLaw.com (Sept. 12, 2013), 

bttp:J/www.pointoflaw.com/archives/2013109/tho.fdic-doesnt·want to-b&-th~worl<ls-insuw.pbp#more. 

Hester Peirce, 2008's Regulatory 'Solutions' May Author the Next Crisis, Real Clear Markets (Sept. II, 2013), 

hlto:l/www.realclearmarkets.com/articlesflOI310911ll200&s regulatory solutions may author the next crisis 

I 00609 .html. 

Hester Peirce, Regulators Made Questionable Call on QRM Rule, American Banker (Aug. 30, 20 13). 

Hester Peirce, It's Time to Ask ifDodd·Frank Will Help, or Hinder, Real Clear Markets (Aug. 28, 2013), 

http:Jfwww.realclearmarkets.com/articlesfl0!3/981281its time to ask if doddfiank will he a help or a hinder l00580.btml. 

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Hesler Peirte, CfTC's Distaste for the AdmiDislrali~ Procedure Ad, Poillloll.aw.ccm (Aug. 22, 20131 

bttp:/lwww. 00intollaw.com/an:bivt.fi2013J08/eftc&.dis1ast&-ror-th&-adminis!l'!ti~aa.php#um. 

Hester Peirce, You Don'tNeed Uncle Sam to Pwcbase a Hou5e, Real Clear Markets (Aug. I., 2013), 

http:J/www.ralcleannarlccts.com/articles/2013!08/14/you dont need uncJC sam to purcllue a bouse 10054 

iJ!!ml, 

Hester Prirct, l.tfting the CFI'C Staf£R111 the Sbow, Poiulofl.aw.c:om (Aug. 14,20131 

bttp:Jfwww.poin!oflaw.ccmlan:bivesl2013~dling&cllc.staff:JUD:the.sbow.pllp. 

Hester Prirct, We're All Fabulous, Fab, PointofLaw.c:om (Aug. S, 20131 

http://www.oointoflaw.comlarchive!/2013JQ8/wm:.all-fabulous-ftb.pbpHmore. 

HtSter Peirce, UD8CCOUO!Jble CFPB Avoids Sautiny, Pointofl.aw.com (Aug. 2, 20131 

http:/fwww.00into0aw.comlan:bive!l2013t'08/unacoountable-cfnb-avoidtoourt·mtiny.php#more. 

Hester PQroe, Ccurt Drmauds Durbin Rewrite, Poiulofl.aw.c:om (Aug. I, 20131 

http://www,pointoRaw.CO!!!Ian:!!ive!l3!081court~~in-rewrite.phplmo!e. 

Hesler PQroe, BuildillgtbePerfectFed Cbairmaa, Real Clear Markcts(July31,20131 

http://www.realcleannarlccts.comlarticlesl2013/07131.tuilding the pafect fed chairman IOOSI4.html. 

Hester Peirce, The Government Hu Your Data at Its Fingertips, The Hill (July 25, 2013), 

http://tbebill.conVblo!IJicongnss-blollftl&admlnisttali~t324S-tJ!o.govemmeot-hatvour.$ta-at-its­

~. 

HC!Ilf PQroe, SEC Wmslls Latest Coo1lia, Poillloll.aw.c:om Quly24, 20131 

lllp:/lwww.poimol!sw.c:omlan:biva/2013107/wvwins-it5-latest-<XJII!lict.phpfmore. 

Hesler Peirte, The SEC, InfOIJDIIion Lab, IDd Policy Tweaks, PointofLaw.com (July 23, 20141 

http://www.pointoOaw.comfarcltive!llOI31071tbMcs>informalion-leab-and·oolicv=tweaks.OOp. 

Hester Peirce, Dodd-FrankltThree: Time to Reform the Financial Reform Ad, The Guardian (July21,2013), 

http:/fwww.tlw.'\lll'dian.comlcommcntisfrw/2013f!ul/211dodd-fnmk·financia!·refonn. 

Hester Ptin:e, W'dh Joblcssoeas Jli&!!, SEC MUll Oct Out of the Way of JOBS, Real Clear Mmels (July 17, 

20131 

bttp:ffwww.realc:le:armamcp'articlesl2013ml171with jobllw.q.t bi!!b sec must get out of the way of 

jQbs IQQ483.11!nl. 

Hester Peiroe, King Richard, PointofLaw.com (July 16, 2013), 

bttp;{lwww.nointo0aw.comlan:bivesi2013127Jkipg-ricbanl.php. 

HC!Ilf Peirte, Rclikssly Jailing Baokas, Pointofl.aw.com (July 10, 2013), 

bttp:J/www,poin!oflaw.c:omlardlivesl2013107/rp1gs!r-jailing·bankcrs.php. 

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Hester Peirce, The Fed's Unhealthy Influence, US News and World Report (July 8, 20I3), 

http:Jiwww.usnews.comlooinioolblogsieconomic-intelligence12013107f08/how-the-fed-smws-up=banis-and-

~ 

Hester Peirce, Independence Day? Not for the Derivatives' Market, Real Clear Markets (July 3, 2013), 

http:Jfwww.realclearmarkeu.comlarticles/2013107103{mdependenoe day oot for the derivatives market 1004 

48.html. 

Bester Peirce, FINRA's Profits Should Come With a Price, Pointotlaw.com (July 2, 2013), 

http:J/www.oointoflaw.comlarchives/2013107/finras-profits-should-come-with-a-price.php#more. 

Hester Peirce, CFTC Regulation Clears Court's Low Bar, Pointotlaw.oom (June 26, 2013), 

bttp:Jfwww.oointoflaw.comlarchives/2013/06/cftc.regulalion-clears-courts-low-bar.php#more. 

Hester Peirce, With Bank Failures, the FDIC Is the Problem, Real Olea Markets (Ime 19, 2013); 

bttp://www.realclearmarkets.oomfarticles/2013/Q6119/with bauk &ilures the fdic is the problem 100410.ht 

m!. 

Hester Peirce, Would Be Whistleblowen, Pointoflaw.com (June 18, 2013), 

http:J/www.pointoflaw.comlarchives/2013/06/would-be-wbistleblowen.ohp. 

Hester Peirce, Is the CFTC's Latest Wm a Vicloly, PointofLaw.oom (June 13, 2013~ 

http:Jiwww.oointoflaw.com/arcbives/2013106/is-~-latest-win-a victorv.php#more. 

Hester Peirce, SEC Settles On Poor Cases, Poinlotlaw.com (June 6, 2013), 

http:Jfwww.poinloflaw.com/archives/20I3/06/sec-sett!es-on-poor-cases.nho#more. 

Hester Peirce, An Ugly Future of 'Systemically Imporlant' Institulioos, Real Clear Markets {June 5, 2013~ 

http:J/www.realcleannarkeu.com/articles/20131061051an ucly future of svsttmica!ly imoortant institutions I 

00375.html. 

Hester Peirce, IIregularities at Regulated Exclw!ges, PointofLaw.com {May 3 I, 2013), 

htto:Jfwww.pointoflaw.comlarchivesl20!3f0Sfuregu!arities-at-regulated-exchanges.pbp#more. 

Hester Peirce, Lessons for the CFTC from MF Global, Poinlotlaw.com (May 24, 2013), 

hnp-Jfwww.oointoflaw.comlarcbives/2013105/lessons-for-the-cftc-from-its-oversight-of-mf-global.php#more. 

Hester Peirce, The IRS &then You, So Should the FSOC and CFPB, Real Clear Markeu (May 22, 2013), 

http-Jfwww.realclearmarkeu.com/arliclesflOI3f05n2/if the irs bothm you so should the fsoc and cfpb I 

00336.html. 

Hester Peirce, Speculating on Bitcoin, PointofLaw.com {May 13, 2013), 

hnp-J/www.pointoflaw.comfarcl!jvesi2QI3f05/specu!atjng-on-bitcoin.phpjmore. 

Hester Peirce, The Future of Dodd-Frauk's New Swap Execttioo Facilities, Pointotlaw.com {May 11, 20 13), 

htto-J/www.pointoflaw.oomlarcbives/20131051the-futu!e.of·dodd-hnlcs-new-swap=execution-facilities.pbp. 

Hester Peirce, The SEC's Cross-Border Regulatory Creep, Real Clear Markeu (May 8, 2013), 

htto-J/www.rea!clearmarke1s.comlarliclesf2013f05108/the sees cross border rem!lalion creep 10030S.html 

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Heat« Ptirce, Dl!a Repository Rage, Pointofl.aw.com (May 3, 2013), 

http:/!www,pojntoOaw.comlarcl!jyWlOI3JOS/da!a·RpOSitqy-nge.OOplum. 

Hesler Pei!ce, Bank Regulators Never 'Eacowtge, 'They Require, Real Clear Markeu (Ap. 24, 2013), 

bltp;//www.reajcleannarkets.comlartic!es/2Q!3104fl~ regulators oever eoc:ouragc they require 100280, 

h!ml. 

Heater Peirce, The Uudim;ted CFPB, PoinlofLaw.com (A~. 24, 2013), 

bttp:/lwww,pointoflaw.c:omlardlivcsf201~-cfpb.php!mor; 

Heater Ptirce, Tbe CFPB Must Be More 1iiDsplrud, US News IIIII World Rqm (Ap. 23, 2014), 

http:l/www.usnews.comlooinio®!op'ec91!0!!lkintdligenq/2013104122fourgu-of-(!)!lS11!l!!r·financial. 

protec:!ioa-mUS!-I»held-accocmtable. 

Heater Peirce, Derivatives Diplomacy, Pointofl.aw.com (Ap. 19, 2013), 

http:l/www.oointoflaw.com/arthives/2013104/dtrivatives-diplomacy.php. 

Heater Ptirce, OoVetliiDtllt Dati Gaff~ Pointofl.aw.com (Ap. It, 2013), 

h!!p:Jfwww.!lOintoOaw.c:omlardrivcsf2013AWJhoi:ovamnt:nts-lit·finmphp. 

Hester Pein:e, Presideat Obma Trumpeu 'FI!IIIIcial Capability' While UllliermiDing It, Rat aear Marteu 

(A~. 10, 2013), 

http:llwww.realc!eannarkets.c:omlarticles/2013.WI~president obama trumpets financial capabitity while u 

ndtrnrlning it 1002S3.html. 

Hester Peirce, When Having 200,000 Ftiellds It Not Enough, Pointofl.aw.com (Apr. 3, 2013), 

http:J/www.pointoflaw.comlarthives/2QI3!041wbm-baving-200000-frimds-u=no!ofi10Ugh.pbp, 

Heste: Pein:e, TbeCFPB's MisleadiD& ~lad Dmblse, Pointofl.aw.com (Mar. 28, 2013), 

h!tp:Jfwww.pointoOaw.c:omlarchiye!'lQI~eeding=CO!!Ip!aipk!a!pbp. 

Heater Pein:e, The CFPB Has a Plltial Epiphany, Real Clear Mmceu (Mar. 27, 2013), 

http:/lwww.realclearmarlceu.com/articles/2013103127/tbe cfob has a partial epiphany t00225.html. 

Hesla' Peirte, SEC's Resouroe Misalloc.ttion, Pointofl.aw.com (Mar. 20, 2013). 

http:llwww.rointoflaw.comlarcl!ives/2013/03/secs-I!!SOl!!l»-misallocalio!!.php. 

Hest« Ptirce, Tbe Need fur EcooomicAIIalysis in FintDQal R.eg!lla!ioa. Pointoflaw.com {Mir. 14, 2013), 

hUD:IIwww.DointoOaw.ccm'~I3JOlltho.need.!Dr~ysis=io-6naDcial· 

rqu!l!!joq.pbmoR. 

Hester Ptirce, Dodd-Frank: 'Financial Stability' 011 thellaWofTaxpayen, Real Clear Markeu (Mar. 13, 

2013), bllp:llwww.realclearmar!cets.c:omlarticles/2013/03113/doddfnnk fi!Wicial stability on the backs of tpnaym l00198.html. 

Hester Peirce, For Real Reform, We Must Move Past 'Too Big to Jail' Hype, US News and W<lrid Rqm 

Debate Cub (Mar. 8, 2013), http:/lwww.USDCWS.c:omldtbete-duhlare-baob-bccomig-too:bis-t<tiailllDr·real· 

reform-~must-moYO=piS!-too-big=!O:jaiJ.b)pe. 

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Hester Pein:e, Gabelli v. SEC, Pointo!Law.com (Mar. 8, 2013), 

http:J/www.oointotlaw.oom'archivesfl.0!3/03/Jt11belli-y-sec.php. 

Hester Pein:e, No Need to Rush New Money-Market FUnd Regulations, Wall Street Joii!Dal Letter to the Editor 

(Feb. 28, 2013). 

Hester Peirce, Volcker Rule Continues to Trouble Regulators and Industry (Feb. 28, 2013), 

http://men:atus.orgle:xoert oommentarylvolclcer-rule-oontinues-lrouble-regulators-and-indus!rv. 

Hester Pein:e, The Fed Shouldn'tRegulatt What It Doesn't Unde!Siand, Real Clear Markets (Feb. 27, 2013), 

http:llwww.realclearmarkets.com/articles/2013102/27/the fed shouldnt l'e!.>ulate what it doesnt understand I 

00166·.html. 

Hester Peirce, Sbould the FSOC Be Renamend the FSI!C, PoiotofLaw.oom (Feb. 26, 2013), 

bttp:llwww.ooiiJtoflaw.comla;clllves/2013/02/should-the-®be-renamed-the-~.pbp#more. 

Hesttr Peirce, Senator Warren's Inconsistent Approach to Regulatory Aocountability, Pointo!Law.com (Feb. 

22, 2013), http:l/www.oointotlaw.oom'archives/2013/02/senator-warrens-inconsistent-approach-to-reb>ulatorvaccountability.php. 

Hester Peirce, Wbat the SenateSbouldAskJaclc Lew, Real Clear Markets (Feb. 13, 2013), 

hUp:l/www.realclearmarkets.oom'articles/2013102/13/wbat the senate should ask jaclc lew I00146.html. 

Hester Peirce, Dodd-Frank, Lew, and Too Big to Fail, Poiotoflaw.oom (Feb. 13, 2013), 

http:J/www.nointotlaw.com/archives/2013/Q2/dodd-frank-and-too-big-to-fail.php. 

Hester Peiroe, Fixing LIBOR from Afar, Pointoflaw.com (Feb. 8, 2013), 

http:llwww.oointotlaw.oomlarchivesfl.Ol3/021fixing-libor-from-afar.php. 

Hester Peirce, Obama's Nominations Signal Reg111ation by Enforcanen~ Real Clear Markets(JIIIL 31, 2013), 

http:llwww.realclearmarkets.oomlarticles/2013/01130/obaiDas nominations signal regulation by enforcement 

100119.html. 

Hesttr Peirce, Govemment-8anctioned Credit Ra~ Poiotoflaw.com (JIIIL 30, 2013), 

http:/fwww.oointoflaw.comlarchives/2013/0l/govemnent-sanctioned-credit-ratings.ohp#more. 

Hester Peirce, Today's NLRB Ruling Casts a Shadow Over the CFPB, Pointoflaw.oom (Jan. 25, 2013), 

http:/fwww.oointoflaw.cornlarchives/2013/0l/todays-nJrb.decjsjon-£8S!s-a-shadow-over-the:£fub.ohp. 

Hester Peirce, Why Dodd-Frank Is Pushing lhe US Toward Impending Financial Crisis, City AM (Jan. 23, 

2013). 

Hester Pei!te and Robert Greene, A New Year for Uoaooountable Regulators, Real Clear Markets (JIIIL 17, 

2013), 

http:J/www.realclearmarkets.oomlarticles/2013/0l/17/a new year for unaccount!blc financial regulators 100 

094.html. 

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Hesttc Pel!ee, Sowmgo Fear, PointolLaw.c:om (JilL 16, 2013), 

lrttp:/{Www.pointotlaw.CXIIIIIIrdUvesf2013/0IIIOYCRim-fear.pbp. 

Hester Pel!ee, Dodd-Frank's 10 Bigest <>mission~, Daily Caller (Jan. 9, 2013), 

blrp://dajbgl!er.oon12013/0I/09/dodd-fi11lks.10.biggest-omissi<l!W. 

Hester Peirce aod James Brougbel. Dodd·Fnnk Remains a Troubled Work in Progress, American Banker (Jan. 

9,2013). 

Hester Ptiret, AIG's AttiiUde of Grllil\lde, Poialofl.aw.c:om (J111. 9, 2013), 

http:IIW\!w.oointof!aw.wm/mavcr/2013!l:)11aigs·ll!itudo-of·!!!!litude.Dhp#more. 

Hester Pel!ee, Dodd-Fa Disappoinlmalcs PointoiLaw.c:om (Jan. 8, 2013), 

bltp:J/www.pointotlaw.com/ardlives/2013/0I/dodd·fianlc-disappointm«J!S.ohp. 

HesterPel!ee, 10 WaysDodd.fnnkWillHurtthe Economyin2013, US News and WorldReport(lan. 7, 

2013), ht!p:l/www.llSileWs.oom/opinionlbloWccooomio-intel!igenct/2013/01/07/lO.wavs.oodd·frank·will-hun· 

!he:eoooomy·in-2013. 

Hester Pel!ee, Dodd-F111lk Regula!ory Aclioos to Wlk:h in 2013, ~Clear Policy (1111. 3, 2013), 

bttp:l/wwwmlclta!p2!iql.com/artielcr/201WIA23/dodd· 

frank rmdi!Pry adions 10 wald! in 2013 393.hlml. 

Hester Pel!ee, More SensibleRegulatioos Requin: Pr!xlidable Disclosurt, Real Clear M.vkets (lao. 3, 2013), 

http:l/www.!Wcleamwtets.com/articles/2013/0I/03/more sensible regulations require pm!ic:table disclosur 

e I 00067.blml. 

Hester Pel!ee, GoVfllllltllt's Eulqlemeot with Credit R.atiDgs, PointolLaw.com (Jan. 3, 2013), 

h!!p://www.ooin!oOaw.com/ardlivesflOI)!QIIcovcrnmtn~Hntanglement·wi!IK!edit-ratings.pbp. 

Hester Ptiret, FICCbook's Disappoinlmeuts PoiDsotLaw.c:cxn (Dec. 21, 2012), 

http:lfwww.DOintoflaw.com/an:hivcr/20121121fac:cboot-disappoiD!ments.ohp. 

Hester Peirce, 1be SEC's Budget Blues Ale SomethiDg to Celebnte, ~Clear Mllkets (Dec. 19, 2012), 

http://www.!Wcle8IIII!Itets.comlarticles/20121121!9/lhe sees budget blues are something to eelebrate 109 

OS2.hlml. 

Hester Ptiret, 1be CFJ'C's Vieklrious Day in Court, Poilllofl.aw.com(Dec. 1•, 2012), 

bltp:Jfwww.pointotlaw.!lO!!!!ard!jvesi2/I?Jth&cfu:s.victoriot&dav=in-eowt~ 

Hestu Peirte, This Week's Dodd·Fllllk Implememation Hearings, Poilllo!Law.c:om (Dec. II, 2012), 

hnp:Jiwww.pointoftaw.c:omllld!ives/2012112/!bjt~Vfitb.dodd..frank.imol~pbp#mor; 

Hester Peirte, It's illlle for the FDIC to Stop Playina 'TAG', Real Clear Mmets(Dec. S, 2012), 

btlo:J!wytw.!Wclearmarkets.comlarticlcsf2012/1210S/jiS time for the fdie to SlOp playing tag 100023.html. 

Hester Pel!ee, 1be Reluctant R~r. Poiutoff.aw.c:om (Dec. 3, 3012), 

http:J/www.pointotlaw.com/archives/201211~.pbp. 
70 


10241734.eps

Hester Peirce, Cbai~ Schapiro's Troubled Tenure etthe SEC, PointofLaw.com (Nov. 27, 2012), 

http://www.oointo0aw.oomlardlivesi201'1Jll/cbainnan-scllaoiros-troubled-tenure-at-the-sec.pbp#more. 

Hester Peirce, At U>ng Last, A Merger of the SEC and CFTC, Real Clear Markm (Nov. 26, 2012), 

http:/lwww .realcleannarkets.oomlarticles/201'1111/21/at long last a merger of the sec and cftc lOOOOO.htm 

!. 

Hesler Peirce, Senator-Elect Warren's Quandary, PointofLaw.oom (Nov. 25, 2012), 

hUp:/lwww.oointoflaw.comlarchives/201'1111/senator-elect-warrens-guandary.pho. 

Hester Peirce, Persistent Lack of Delibention at the CFTC, PoiotofLaw.ooro (Nov. 20, 2012), 

bttp://www.oointoflaw.oomlarchivesi201'1Jll/persistent-Jack-of-deliberation-by-thffi\c.pho. 

Hester Peirce, Interpreting the Foreign Conupt Practioes Act, PointofLaw.com (Nov. IS, 2012), 

bttp:Jiwww.oointoflaw.oomlarchivesi201'1Jlllinterpreting-th&-foreil!ll=COilllot·practioes-act.php. 

Hester Peirce, The SEC Staff's Rubber Stamp, PointofLaw.com (Nov. 12, 2012), 

bttp:/lwww.oointoflaw.com/archivesl2012/llfthe.sec.staffs-rubbcr-stamp.ohp. 

Hester Peirce, The Latest CFTC Rulemakiog Cballenge, PoiotofLaw.com (Nov. 9, 2012), 

http:/lwww.oointoflaw.com/archives/201'1111/th&-latest-cfto.!Ulemaking-cba!lenge.php. 

Hesler Peirce, CFTC's Awessive Extraletritorial Reach, PointofLaw.ooro (Nov. 8, 2012), 

hup:/lwww.oointoflaw.oomlarchives/2012/ll/cflcs-aggressive-extnterritorial-reach.php. 

Hester Peirce, Forget Elections, We Suffer an Anonymous Governing Class, Real Clear Markets (Nov. 7, 

2012). 

http:/lwww.realclearmarkets.com/articles/201'1111/07/foruet elections we suffer an anonvmous governing cl 

ass 9997S.btml. 

Hesler Peirce, Regulators Must Think Before They Regulate, Real Clear Markm (Oct. 24, 2012). 

bttp:J/www.realclearmarkets.oom/articles/201'111M4/regulators must think before they regulate 999SO.btml. 

Hester Peirce, In the Post Dodd-Frank Derivatives World, October 12111 Matters, Real Clear Markets (Oct. 10, 

2012). hUp:/lwww.realclearmarkets.oom/articles/201 '111 Oil 0/'m the post doddfraolc derivatives world october 12th matters 99927.html. 

Hester Peirce, Blowing the Whistle on Whistleblowers, Real Clear Markets (Sept 26, 2012), 

bttp:/lwww.realclearmarkets.com/articles/201'1109126/blowiog the whistle on wbistleblowers 99902.html. 

Hester Peirce and Robert Greene, Money Market Maneuvering(Sept 19, 2012). 

hnp:/lmercatus.or!!lexpert commentarvlmonev=market-maneuvering. 

Hester Peirce, The Consumer Financial Protection Bureau's Overinflated Self-Image, Real Clear Markets (Sept. ~~ . 

hnp:/lwww.realclearmarkels.com/articles/2012109113/the coosumer protection financial bureaus overinflated 

self-image 9987S.html. 

31 
71 


10241735.eps

Hem Pein:e, The New Yen Fed's False Assenioo of AJG Bliloll Profits, Rtal Clear MWts (Aug. 29, 

2012), 

http:Jiwlrlw..ralcleumartds.c:omllltidesflOI2108f29hhe new 1'0!k fells bat tip 10 joe CIS3IIIO 99848.html. 

Hater Peirl:c, l!xportiDs Rqulation (Aua. 29, 2012), b!to:lfmqq!!!s.cr!!lexoat £9(ll!lleptary/exDO!!ingRi\l!lliQA. 

Hester Peirl:c, No Bvidcoce that Staudard Olatu:red Is Guilty As Charged, Rei! Clear Markets (Aug. I 5, 2012), 

bttp;//www,rglclearmazkets.ooml111iclqi20JW8f!Sino evidence that standard cb&rtered is guilty as star& 

ed 99825.htm!. 

Hater Peinlc, Tim Gcillmer, LIBOR Mmipublioos, bl tbe BailoUI of AJO, Rei! Cle.r Martels (Aug. 2, 

2012), 

http:/lwww,rCIIckarmarkets.oomlll1iclesf201W8102Jtim geithM h'bor mani!!!lations ml the bailout of ai 

g9979§.htm!. 

Hater Peiroe, NationWetheBallks?, New YOlk Times I.eueriO lbeEdi10r(Ju!y31,2012). 

Hester Pdrcem!James B!OQgbel, IJocld.frlllk: Two YellS Later, Countless QualioosRemain (July 21, 

2012), bUp:llmercllus.orgfexper! C!l!!U!Iq(tao1dodd·frank-l'lro-yem-laler;SOW!lless=gues!i0l~Me~Jlain. 

Hesler Peirl:c, The SEC's Mild-Maaoend, but Tough CAT, Rei! Clear Markets (July20, 2012), 

h!tp:lfwww.rellclearmartets.ccmlllticlq/20J2&712Mhe sees mild-manpered but tough cat 99777.hlml. 

Hester Peiroe, More Regulations ml More ~ators May Not Be the AMwer (July 18,2012), 

http:ffmercstus.O!!!/expert commentaryfmoro-rtgulations·and-moro-rtgulatorJ·m&y·not·bc-answer. 

Hester Peiroe, GovemmtlltApyThms Barclays Settlemeut IDioaPowerOrab, US News ml Wodd Report 

(July 3, 2012), hllp:/fwww USDeWJ,c:omloojpioolb!ogsleoooomic-intdliL~Sct!201 21Q?/Q3/goym!ma!t·agcpcylum!;!!arda!Hidement·inlffpower=mb. 

Hester Peinlc, Wdh 8mb in Teus, Small is Bautiful, Rei! Clear Markell (Juoe27, 2012~ 

http://www.rellcleannad:ets.c:omlllticlesllOl2®7/with banks in texas small is beautiful 99737.html. 

Hester Peinlc, In Fina!K:e, Privale Regulation vs. Government Regulatioo, Rei! Cle~r Markets (Juoe 6,2012), 

http:Jfwww.rellcleannarkets.oonifllticles/2012106106fm finance private regulation vs govcmmeot regulAtion 

J2WJ!!!pl. 

Hester Peinlc, Accollntability for the Self·Regulalor(lUDe I, 2012~ 

bltp:llmercatus.orgiapcrt 001111DeDt1!vfacc:oon11bi!ity-sdf-regulator. 

HesterPeiroe, Too SmaD 10 Survive (June I, 2012~Jmp:/lmuta!us.on:jexoat CO!!I!!Ie!JiaryJioo.small-pviv; 

Hester Peirce, Not Liking Faccbook (May 24, 2012), http:/fmercatus.org!exoert commentarvfnot·liking· 

~ 

Hater Peirce, A Regulator Who Knows No Bouuds (May 24, 2012), 

hbp:llmercatus.orglexoat mmeotary/m!ulatq-who-koov.-s;oo;bomds. 
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Hester Peirce, Double Liability A Better Response to J.P. Morgan Mess, US News and World Report (May 22, 

20121 http:ffwww.usnews.oom/opinionlbtoWeoonomic-intelligence!2012/0SfJ.2/double-lipbilitv=a-better· 

resoonse-to-jp=moiWtmess. 

Hester Peirce, JP Moig811's Beautiful Loss (May II, 20121 http://men:atus.oWexoert commeotarv/jp= 

morgans-beautifu!·!oss. 

Hester Pei!te, Mooey Market Reform's High Stakes, Real Clw Markets (May 8, 2012), 

http://www.realcleannarkets.oomlarticlesfl.OI2/0S/08/mooey market refonns high slllkes 996S9.h1ml. 

Hester Pei!te, Shutting Down the TARP Party (Apr. 27, 2012), 

http://mercatus.ore}exoert oommeotJn1shutting-down-tarp=party.Q, 

Hester Peirce, The CFTC's Regulatory Ambition (Apr. 25, 20121 http://mercatus.org/expert oommentary/cftcs-regulatory·ambitioo. 

Hester Peirce, Dodd-Frank's Office offmancial Researth Is ao Affront to Privacy, Real Clellr Mmets (Apr. 

19, 2012), http:flwww.realcleannmets.oom/articlcs/2012104/19/dodd· 

franks office of financial reseatt.b is m affront to privacv 99624.h1ml. 

Hester Peirce, Citigroup Pay Nay (Apr. 19, 2012), http://mercatus.org!expert oommentary/citigroup=pay-nay. 

Hester Peirce, T ARP Success Trep (Apr. 18, 20121 h!tD://mercatus.or!?/exoert CO!D!!!g!tarv/tarn-success-trap. 

Hester Peirce, The CFTC sod Political Reality (Apr. 4, 2012), http://mercatus.orgfexpert oommenlary/cf\c-mdpolitical·reality. 

Hester Peirce, STOCK and JOBS Only Treat Symptoms (Apr. 4, 2012), 

http://mercatus.orrfexoert oommentary/stock-md-jobs-only·!reat·svmptoms. 

Hester Peirce, The SEC's Money Problems (Apr. 3, 2012), htto:Jimercatus.ore}exoert commeolarylsecs·mooey· 

problems. 

David M. Primo and Hester Peirce, To Stop Insider Trading in D.C., Shrink Government, The Hill (Mar. 28, 

2012), http:llthehill.oomlblogslooogress-blogleoonomy·a·budge!lll8877·to·stop-insjder-tnding·in.OO.shrink· 

government. 

Hester Peirce, CFPB KnoW1 Abuse When It Sees h (Mar. 29, 2012), 

htto:l/mercatus.ore}expert commentary/cfpb=lcnows-abuse-wbeo-it·sees-it. 

Hester Peirce, Goldman CUstomer Setvice versus MF Global Customer Service (Mar. 27, 2012), 

http://mercatus.orgtexoert oommentJn1goldmm-customer-service-versus-mf-global-customer·service. 

Hester Peirce, The SEC Mmt Get On Board with Enl!qxmeurs, Real Clw Markets (Mar. 26, 20121 

http:llwww.realcleannarkets.oom/articlcs/2012/03f1.6/the sec must get on board with entreoreoeurs 99583. 

httnl. 

Hester Peirce, The Real Cost of the 2008 Bailouts, US News and World Report (Mar. 14, 2012), 

htto:llwww.usnews.com/opinion/blogs/economic-intelligence/lOI2/03/14/the-real-cost-of·the-2008·bailouts. 

33 
73 


10241737.eps

Hc8Ur Pcirct, TARP ~(Mar. 9, 2012~ b.ttp:/lmatatus.org/cxpert !!!1!1)!!19!!aohangm. 

Hester Pcirct, N.Uooal Coosumer Protectioo Week (Mar. 8, 2012~ 

ht1p;l/lnat~~US.O!!Icxpat commeotary!nllionaJ-coosumer·protectioD-week. 

Hester Peirce, Geitlmer's Own Forgelfulness (Mar. 2, 2012~ http:f/merta!l!l.org/ex!lC!! coPUDentary/gei~· 

S=9WI!=fonte(fulness. 

Hester Pcirct, Ce1cll!llliDg the Olein, The Hill (Feb. 27, 2012~ b.ttp:/Abebili.OO!!Vblogs!COIIgresr 

b!o&'o0liticsf212789-bester-peircweoior·rggrsb-fello~. 

H!Sir:r PtW., Hijadcing SEC DisclOIIR(Feb. 22, 2012~ b!tp:f/mertg.oafcxpert C!l!D!Ilflllln'ihijacking= 

mdisclm; 

Hester Peirce, The Unacceptably Reserved Federal Reserve (Feb. 21, 2012). 

hhp://Qle!'£a!us.orgtexoert C!l!!!J1!e!l!arl'f:teserved-federaJ.reserye. 

Hester PtW., Budget IDcrel!es Sbould RequireACCOUDiability(Feb. 14, 2012~ 

b!tp:J/mqta!lls.oalcxpert oomm"'''"''Yh:et·inaaseHbould~jljtv. 

Hester PtW., TARP Takes Anothtr MiSSiq) (Feb. 14, 2012~ http://merq!us.qn;lcxoert C!l!!!!!!eollryAirp: 

~-mh1!ep. 

Hester Pcirct, Declaring F'tnaneial Systan Safe Requires Serious AssumpOOIIS (Feb. 13 2012~ 

http:/Jmtmtus.orl!/cxpert commco!Bryldeclaring·financial·s)'Sicm·safe-!!'.!!uircs-scrious·II$SIIlllplions. 

Hcst« Pcirct, The Flip Side of the lnsiclerTnding Ban (Feb. I, 2012). 

hhp:/lmercatus.org/expqt CO!!!!DC:!!IIry!tlidtinsidec-trading-bm 

Hester Pcirct, Selling OuDelws Up b AooCber Cri.si.s Qm 31, 2012~ 

bttp:/fmertalus.orgtaoert ~seltin!!=O!!!!dves-II!Oiber~. 

Hester Peirce, OM's Success and tbe Taxpayers' Tab (1111. 26, 2012). 

hhp:/lme!ta!us.orlliexpqt commcl!tarylgm±tuccess-llld-taxoaycrs·!ab. 

Hester Parce, Halted SEC Rule Good New~ for Investors (Ja 25, 2012), 

bttp:llmtlcatus.om!apqt !X!IDIIIt!!llryi11alted·rec-rulo-good-1!eW$-inytS!On. 

34 
74 

PREPARED STATEMENT OF ROBERT J. JACKSON, JR. 

TO BE A MEMBER OF THE SECURITIES AND EXCHANGE COMMISSION

OCTOBER 24, 2017 

Chairman Crapo, Ranking Member Brown, and Members of the Committee, thank 

you very much for the opportunity to join you today. It is my honor to be testifying 

before you regarding my nomination to be a Commissioner of the Securities and Exchange Commission. 

For me, there is no greater privilege or responsibility than upholding the SEC’s 

mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate access to capital. To understand why that’s so important to me, I thought it 

might be helpful for me to start by sharing a bit about myself and my family. I was 

born in the Bronx, New York, to my two wonderful parents, Maureen and Robert 

Jackson, and I feel so fortunate that they are here with me today. My mother was 

one of nine children; my father was one of five. No one, least of all my parents, 

would have even dreamed that one day they might be sitting behind their son on 

an occasion like this. 

You see, the day I was born, my father was working as an accounting clerk at 

a small encyclopedia company called Funk and Wagnalls. Throughout my childhood, 

my mother held several part-time jobs, including the early shift at Dunkin’ Donuts, 

just to help make ends meet. 

They were young, overworked and sometimes overwhelmed. But they believed 

that if they worked hard and saved what they could, their son might someday go 

to college. 

So every month my parents plowed their hard-earned paychecks into the market, 

knowing that if their investments were protected and growing they would one day 

be able to afford to send me to school. That’s really the only reason why I had the 

chance to go to college—and the incredible opportunity to be here today with you. 

I believe that the SEC’s purpose is to protect everyday investors like my Mom and 

Dad. Because today’s markets are so complex, it can be easy to get lost in technical 

details and forget why those safeguards are so important. But my story shows why 

protecting America’s investors is at the heart of what the SEC does. Safe markets 

not only encourage investment and entrepreneurship and growth. Safe markets 

make it possible for two young middle-class parents to transform their lives—so that 

someday their son has the chance to sit before the United States Senate as a Presidential nominee. Safe markets are at the core of the American dream—something 

I have learned by living it. 

That’s why my work—in Government, as a teacher, and as a researcher—has focused on everyday investors’ confidence in our markets. At the Treasury Department during the financial crisis, I was proud to help develop rules that tie top managers’ pay more closely to performance and give investors a voice on executive compensation. When my research team at Columbia Law School showed that the SEC’s 

systems were inadvertently giving high-speed traders market-moving information 

before the public could see it on the SEC’s website, I worked with this Committee’s 

Staff to help make sure the SEC gave investors the level playing field they deserve. 

And when our team helped convince regulators to release additional information 

about stockbroker fraud, we were proud to help others use the data to expose the 

brokers most likely to defraud investors. 

If I have the honor of being confirmed, I intend to bring those tools to bear on 

the SEC’s crucial task. I will be a strong advocate for exploring how new technologies can make corporate disclosures more reliable and enforcement efforts more 

effective and efficient. I will encourage the Staff and my fellow Commissioners to 

draw on the SEC’s long history of favoring transparency as a means of maintaining 

investor confidence in our markets. And I will work to implement the corporate-governance protections that Congress has enshrined into law—so that investors, employees, and communities can be sure that our companies are working to produce 

the kind of long-term value creation that has been the hallmark of the American 

economy for generations. 

As I mentioned, the SEC’s three-part statutory mandate requires the agency to 

protect investors, maintain fair and efficient markets, and facilitate capital formation. I believe in all three of these noble goals, and in the thousands of SEC Staff 

across the Nation who work every day to achieve them. Whether protecting retirees 

from stockbroker fraud, making sure Americans get a fair price when they purchase 

shares of stock, or uniting an entrepreneur with the funding he or she needs to spur 

a life-changing invention, the daily, meat-and-potatoes work of the Commission and 

its Staff is crucial to the functioning of our economy. If confirmed, it would be my 

privilege to be a part of those efforts. 

75 

But I also believe it is important to remember why that work is so important. For 

me, that reason will always be my family’s story. You see, my parents’ confidence 

in our markets not only changed my life—it changed their lives, too. My father, the 

encyclopedia company clerk, retired as the Chief Accounting Officer of a public company. My mother left Dunkin’ Donuts, earned her teaching degree, and has been 

teaching elementary school for nearly 30 years. None of that would have been possible if my parents hadn’t felt they could safely save for their futures—and mine— 

in our markets. If I’m confirmed, you should know that helping to make stories like 

theirs possible is what will motivate me every day. That’s truly what makes the 

SEC so important—and it’s why I’m so honored to be here. 

Thank you again for the opportunity to appear before you today. I would be delighted to answer any questions you might have. 

76 


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Jackson, Jr., Robert Joseph 

ROBERT J. JACKSON JR. 

STATEMENT FOR COMPLETION BY 

PRESIDENTIAL NOMINEES 

Name: Jackson, Jr., Robert Joseph. 

Position to which nominated: Member, Securities and Excbange Commission. 

Date of Nomination: September 5, 2017. 

Date of .Birth: February 14, 1977. 

Place of Birth: Bronx, New York. 

Marital Status: I am not married. 

Name aod Ages of Children: I do not have any children. 

lnsrirution DateS Attended Degrees Received Dares of Degrees 

Uoiversilyof Seple!OOer 199510 Bachelor of Arls in Politics, December 1999 Pennsylvania December 1999 Philosophy, and Economics 

Uoiversilyof Bachelor of Science io Pennsylvania's Sepltmber 1995 10 Economics with a Conceollalion December 1999 Whanon School of December 1999 in finance Business 

Universily of Master of Business Pennsylvania's September 1998 to AdminiSilation with a May2000 Wharton School of May2000 Concenllalion io Finance Business 

Hamrd Kennedy September 2002 to Master of Public Policy May2005 School May2005 

Hamrd Law School September 2001 to Juris Doctor May2005 May2005 

Honors and Awards: List below all scholarships. fellowships. bonoruy degrees, military 

medals, bonoruy society memberships and any other special 

recognitions for outstanding service or achievement. 

In 2014, Ollumbia Law School appointed me to serve on the Dean's 

Search Olmmittee and the Lateral Appointments Committee. 

In 2013, the Harvard Law School Program in Olrpomte Governance 

appointed mea Senior Fellow of the Program. 
77 


10241740.eps

Hoaon and Awards: In 2012, Columbia Law School's students ho!Mmd me with the Willis 

I.M. Reese Prize for ExccUeoce in Tcacbing. 

Mtmbmbios: 

In 2010, Treasury Sccmary illtlOthy Gtithner awarded me the 

Department of the Treasury's Distinguished Service Award. 

In 2009, in light of my service at the Treasury Department following 

the fmancial crisis, Assistant Treasury Secreta!y for f"mancial 

Stability Timothy Massad honored me with the Dcpartmcot of lhe 

T rcaswy's Exceptiooal Service A ward. 

In 2006, Harvard Law School and the Olin Foundation appointed me 

a TemJCC M. Considine Researdl Fellow in Law and Ec:ooomics. 

In 2005, Harvard's Kennedy School awarded me lhe Taubman Prize 

for my thesis in CODllCCiion with my Masttr of Public Policy d~ 

In 2005, Harvanl Law School awarded my Juris Doctor cum laude. 

From 2002 to 2003, Harvanl's Kennedy Schon! appointed me a 

Teaching Fellow in its Marlcets and Marlcet Failure and Public 

Finance c:ounes. 

In 1999, the Uoclcrgmluate Division of the Wharton School of 

BusiJless awarded my Bachelor of Scieoce in Economics ~ witb 

a ('.()llCCI!l!llion in finance, JII1IIIIIQ Cllllllaude. 

ill 1999, the University of Pennsylvania awarded my Bachelor of Arts 

~ witb a concentration in Politics, Philosophy, and Economics, 

JIIIIIIIIQcum/audt. 

List below all memberships and offices held in professioual, fillternal, 

business, scholarly, civic, charitable and other organizations. 

Since March 2017, I have been a member of the Thirty Percent 

Coalition, a nonprofit organization committed to gender diversity in 

the corporate boerdroom. 

Since February 2016, I bal'e been am~ of the Board ofTrusteeS 

of the Collll!lbia Law~-

Since July 2013, I have been a Senior Fellow at the Harvard Law 

Scbooll'rogJam on Corporate Go,·emance. 

Since July 2010, I have been a member of the Board of Trustees of 

the Columbia Bus/nus Law Rtvitw. 
78 


10241741.eps

Jodson, Jr., Robm Josep/1 

Membtnhios: From August 2003 to May 2005, I was an Editor of the HOTWJTii Low 

Review, and was Articles C<K:hair from March 2004 to March 2005. 

Employmeut Record: List below all positions held since college, including the title or 

description of job, name of employmen~ location of worlc, and 

inclusive dates of employment. 

Professor of uw and Director, Program on Corporate uw and 

Policy, Columbia uw School (July 2010 to Prtstnt). Since July 

20 I 0, I bave seJVed as Professor of Law and Director of the Program 

on Corporate Law and Policy at Columbia Law School, located at 435 

West I 16th Slleet, New Yorlc, New York. My research and teacbing 

focus on empirical study of corporate governance and finance. 

Dirtd11r, Adristlry BI!Crd, RAND Corpordllll ~llltr for C11rport1U 

Ethics w Govtnwtct (JM/y 2010 Ill Prtstrlt). Since July 2010, I 

ba\-e seJVed as a Direclor on the AdviSOI)' Board of the RAND 

Corponlion's Cal~ for Corporate Elhic:s and Govanmce, wbicb is 

located at tn6 Main S~ne~, Santa Monica, c.Jifornia. 

Mt~~~btr, Momilt~ Dtz/11 Exfr«tiq, Vtllluns, L.LC. (JII/y JOU 

14 Prtstrtl}. Since July 2014 I ba\-e seJVed as a Me!OOer of this 

limited liability COipORlion, wbicb licenses cerlain intellectual 

property I a-eated wbile employed by Columbia Univmity. 

MtJJbtr llfi PrniJ111t, RJJJR LI..C. (July 2014 to PrtSIIII). Since 

July 2014 I bave saved as sole Member and President of this firm, 

through wbich I conduct consulting work related to coryorate law. 

A«Dmq.Adristlr, Unittd States Deportment llftht Treasury {March 

1009111 July 1010). I previously served as an Attorney-Advisor at the 

United States Department of the Treasury, advising on matte11 

relating to corporate governance at finns receiving federal assistance 

during the financial crisis. I also advised Kenneth Feinbefl in bis 

capacity as Special Master forT ARP Executive Compensation. 

Assllcillte, WIIChltll, Lipton, Rosen & KIIIT. (Dtcembtr 1007 111 

Mveh 2009). I was previously an Associate at the New York law 

finn Wachtel!, Lipton, Rosen & Katz, which is located at S I West 

52nd Street, New Volt, New York. My worlc focused on corporate 

governance and executive compensation. 

PIISidl/dllrtll Rtstllfeh FtJI11w, Harvtlrd uw School {Stpltmbtr 

2(J(J6 111 Dtttmbtr 2067). I was a researcher 11 Hamrd lAw Scboo~ 

located at I 563 Massachusetts A venue, Cambridge, Massacbusetts, 

focusing oo empirical study of the relatioosbip between executive pay 

and pcn011D311CC. I also SttVed as founding editor of the HaMrd Law 

Scbool Forum oo Corponte Governance and Finmcial Regulation. 
79 


10241742.eps

Jachon, Jr., Robm Jouplr 

Employment Record: lAw Cltrk, I flip Allllllya Ktmt, Unittd St1tes Court of ApptGis 

for tlrt Second Circuit (August 2005 to August 2006). I previllOJSly 

served as a Law Clerl< at the United States Coun of Appeals for the 

Secood Circui~ located at 40 Foley Square, New York, New York. 

My responsibilities included advising the Judge regarding cases 

before the Cotut 

SuMtMr ASS«illtt, Gibson, Dunn & Crutcher (M4y 2005 to August 

1005). I was a Summer Associate at the Washington, D.C. offices of 

this finn, located at 1050 Connec:ticut Avenue NW, Number 900, 

Washington, D.C. 

Law lnttm, Ullittd StattS IHpartMtnt of IIIStict Cou/1/trttrrorisllf 

Unit {Sepltlllbtr 2064 to May 2005). I pmiously served at tbe 

Department of Justice's Countertcnorism Uni~ located at 950 

Pamsylvania Avenue NW, Washington, D.C., 20530..0001, through a 

clinic8l program at Harvard Law Scbool. I prepwl memonoda and 

aualysis oo jUI)' insiJooioos used in the prosecution of tenorisu. 

s-ksocUUe, Wlld!tt/4 UptD/1, RoStn & X.tz (May 2014 w 

AugJUt 20fU). I was a Summer Associate at this finn, which is 

located at 51 Wes1 52Dd S~ New Y<llk, New Yen. My wen 

foeused oo corporate, tr1nsaCtional, and litigarioo mattm. 

s-ASS«illtt, Otary, Gottlitb, Slttrt & Hllffilton (Miy200J 

1o A11grst 1001). I was a Summer Associate at the Brussels, Belgium 

and Washington, D.C. offices of this f11111, focusing oo antitruSt 

matters. The Washington off~ees of this finn are located at 2000 

Pennsylvania Avenue t-'W, Number 3, Washington, D.C. 

Judicilll lllltm, Jlligt Robtrt D. Sack, Urtittd Stites Court of 

Appeals for the Stcond Circuit (May 2002 to August 2002). I served 

as a Judicial Intern at the United States Court of Appeals for the 

Seeond Cireuit, which is loeated at 40 Foley Square, New York, New 

York. My responsibilities included advising the Judge and his Law 

Clerks regarding cases before the Court. 

Associate, Mtrctr Managtllftnt Consulting (Junt 2000 to August 

2001). I was an Associate at this finn, which is now a subsidiary of 

Oliver Wyman, located at 1166 Siltth Avenue, New York, New York. 

My responsibilities included advising public companies regarding 

strategic and risk-related matters. 

l•iicW lnttr11, OffiCt of tht AdMillistl'tltil'l Assistw to the Cltltf 

JI/Siiu of the Unitd StJIJes (J111uary 2001to May2001). I served as 

an Intan in tbe office of James Duff, Admioisnlive Assistant to 

Cbief Justice William H. Rebnq~ at tbe Supmne Court of the 

United States,~ at One First St!eet NE, Washington, D.C. 
80 


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ED!Rlo>met~l Record: Assodiut, Bar, StWIIS & C11.lnc. (May 199910 Dtmrbtr 1999). I 

was an Associate at this in~t bank, whicb is now a subsidiJry of 

J.P. Morgan Cbase & Co. Inc., located at 270 Park Avenue, New 

York, New YOlk. I advised eompanies on mergers and acquisitions, 

initial public offerings and higb·yield debt financings. 

Govern !!ltD! Experia~ce: List any experience in or direct association with Federal, State, or 

local governments, including any advisory, eonsultative, honorary or 

other part time service or positions. 

Anomq-AJ.wr, Unitt/ SWtt Dtpar1111mt of the Trusury (Mmh 

1H9to Jtdy 1110). I pm.iously served as an Attorney· Advisor at tbe 

United States Ocpanment of the Treaswy, advising oo matun 

relaliug to c:orponte governance 11 films m::eiving federal assis1ance 

during tbe financial crisis. I abo advised Kenneth Feinberg in his 

capacity as Special Master forT ARP Executive Compensation. 

fA, Cl~rk, Jllllgt AmR{fll KtRrst, United Stllltt Court of Appttds 

for the Second Circuit (AugMSt100S to Augast 1006). I previously 

served as a Law Clerk at the United States Court of Appeals for the 

Second Circui~ located at 40 Foley Square, New York, New York. 

My responsibilities included advising the Judge regarding cases 

before the Court. 

lAw llllml, United Stllltt Dtparlllltlll of JIISiit:t CoallluttrrorisM 

Ullit (Squat.tr 11104 11 Mq 1065). I previously served at the 

Department of Justice's Counterterrorism Unit, locel at 950 

Pennsylvania Aveaue NW, Wasbingtoo, D.C., 20530-0001, through a 

clinical program at Hemrd Law Scbool. I prepaml memoranda and 

analysis on jury instructions used in the pro5CQIIioo of terroriSIS. 

JudicW Intern, Jllllgt Robtrt D. Sack, Unitt/ SIJI/tt Court of 

Apptw for tht Second Circuit (May 1002 to August 2001). I served 

as a Judicial Intern at tbe United States Court of Appeals for the 

Sccend Circui~ which is located at 40 Foley Square, New York, New 

York. My responsibilities included advising the Judge and his Law 

Clerks regarding cases before the Court. 

IMikW lllltt11, Oflice of tlrt Adlninistrtllil~ Assistalll to IN Chit/ 

JIISiice oft/It United Stllltt (IDIIIIDI'J' 1IJOO to May 1IJOO). lsen'ed as 

an Intern in tbe office of James Dull; Aclministrali\-e As:sislant to 

Cbief Justice William H. RdmquiSI, a1 the Supreme Court of tbe 

United States, lncated at One rl!SI Street NE, Wasbingtoo, D.C. 

Publlshtd Writiags: List tbe titles, publishers and dates of books, articles, repons or other 

published materials you have written. 
81 


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Published Wriliags: The Many Modem Sources of Business Law (with Colleen 

Hooigsberg), forthcoming in THE CORPORATE CONTRACT IN 

CHANGING TIMES (William Savil~ Steven Davidoff Solomon & 

Randall Thomas, eds.) (20 17). 

Is EU Merger Control Used for Protectionism? An Empirical 

Analysis (forthCODling. J. L EMPIRICAL 51\JD.), at 

bttps:l/papers.ssm.com/sol3/ papers.cfm?abslraet_id~30039SS. 

The Value ofTaktiJver Defenses: Evidellce from Exogenous Shocks to 

Closed-End Mlitual Funds (wilh Manijn Cmners and John Morley) 

(wolking paper, January 2011). 

Activist Directors ond lnformolion l..takage (with Robert E. Bishop 

and Josbua Mitts) (working paper, January 2011). 

Master Mergen & Aet{ldsitions,lSDE Scboo1 (Jan 17, 2011) (video). 

II bups:/lwww.youtube.com/walch? v-jBjVD2Y6vcE. 

What Happens When Loans 8tcomt Ugally Void? Evldtnct from a 

Nalllral Experiment (working paper December 2016) (wilh Colleen 

Honigsbetg and Ridwd Squile} (revise and resubmil, J.l. &: Ecoll.~ 

iNVEsTOR RESI'oNsiBIUTY RESEAWI CamR IHSl1TUTE Alil.'UAI. 

iNVEsTOR RESEARCH Cot.IP£rmoN, OJ-nbes 7, 20 16) (Judge). at 

bttps:Jfl!l'cil!stitute.~f-2016-irre-institute-resean:baWJrd.examine-oonlrovmial·investor·issue-ofo$hon.termi$lll/. 

The Rise of Corporate Governance (working paper October 2016) 

(with Alon Bebcbuk}. 

How Quickly do MarkeJs Learn? Private Information Dissemination 

in a Natural Experiment (working paper October 2016) (with Wei 

Jiang and Joshua Mitts) (revise and resubmit, J. FIN). 

Testimony Before the Federal Election Commission Forum on 

Corporate Politico/ Spending and Foreign Influence (June 23, 2016). 

transcript at bttp:llwww.fcx:.gov/memberslweinlraub/texi/Jackson.pdf. 

Brief of Sixteen Professors of Administrath>t Law and Financial 

Regulation as Amici Curiot to the United Slates Coun of Appeals for 

the D.C. Cimlit in Metlifo v. Financial $/ability Oversight Council 

(priDcipal coauthor, with Micbael S. Barr and Gillian E. Metzger). 

No. 16-5&06 (June 23, 2016). at https:llwww.metlife.eomlweWcaol 

sifiupdattiFSOC-amicus _Brief_ for _Ad _Law_ Professcnpd( 
82 


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Publisbtd WritiD!S: Tht LDttDt!gC/ub Distraction, WALL ST. J. (May 18, 2016), at 

htqrllwww.wsj.com'anicleslthe-leodingclulK!istraction-1463610960. 

The CROWN Dotabau: Research and Regulatory ApplicationJ, 

PUBUCCOMPANY ACCOUN11NO OVERSIGHT BoARD, (Aprii2S, 2016) 

(presentation with Colleen Honigsberg). 

System and Method for E:drocting Table Data from Text Documents 

Using Machine Ltorning (with Joshua Mins and Jing Zhang), United 

States Patent Application Publication No. US 2016/0104077 AI 

(Aprill4, 2016) (patent appli(ation~ 

Machine Ltorning E:aroction of Frte-Form Tatval Rules anti 

f'ru...'islons from Legal Doatmtnrs (~ith Joshua Mins1 United States 

Patent Appli(ation Publication No. US 201610103823 AI (April 14, 

2016) (patent application). 

201S MILLSTEIN GoVERNANCE FORUM: THE CROWN DATABASE 

(February 8, 2016) (Jceynote address), video at https://www.youtube. 

com/watch? v-VcqfNVKI3F4. 

Hindering the SEC From Shining a Light on Political Spending, 

HARVARD LAw SCH. fORUM ON CoRP. Gov. AND FiN. REG. 

(December 21, 20JS) (with Lucian Bebcbuk) (blog post1 at 

bttps://corpgov.law.barvard.edul 20 I S/1 W.l/bindtrins.Qe.see-fromshining...t-ligbt-ao-political-spendiny). 

Briq of N'IMtm (Mporate Law Profcson as Amicus Curiot to tht 

Supreme Court of tht United Slates in Fredmbs v. Caliroroia 

Tead!m Association (joined), No. 14-91S (Novanber 8, 2015), at 

bttps:/lpapcrs.ssrn.comlsol3/papm.cfiD?abstract _id =268n4J. 

Brief of Scholars of Camtitutionai and Corporate Law as Amicus 

Curiae to the Santa Clara County Superior Court of California in 

Horizon Pbanna v. Anido et al. (with Lucian A. Bebchuk and Gillian 

Metzger), No. I: I S.CV -28383S (November S, 20 IS}. 

Fifty-Eight Members of tht US House of Representatives Support tht 

Rult.making Pttition for Trrwpal'tiiCy in Corporate Politico/ 

Spendillg. HARVARD LAw Sal. FORlJ.I ON CORP. Gov. AND FIN. REG. 

(October 26, 201S) (with Lucian Bebcbuk) (blog post1 II 

https'l/corpgov.law.!wvanl.eOI /201S/1006/fifty-eight·m~rtb~house-or-reprcsentativcs-support-tbe-rulemaking-perition·ror111DSpareDCy-iJH:orpontC1JOiitical-spendiny). 

Jndividuallnveston and Mandatory Disclosure: Evidence from the 

JOBS Act, 93 WASH. U. L. REv. 293 (20JS)(witb Colleen Honigsberg 

and Yu-Ting Forester Wong). 

8 
83 


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.Pub!jshd Writiags: 1M 8-K Trotfurg Gap (with Alma Coben aad Joshua Mitts) (v.'Orkin8 

paper, September 201 5). 

Hillary Clinton Announces Support for SEC Rulemoking on 

Corporate Political Spending, HARVARD LAw SCH. FORUM ON CoRP. 

Gov. AND FIN. REO., (September 8, 2015) {with Lucian A. Bebchuk) 

(b1og post), a! https://corpgov.law.halvard.edu/2015/09/08/hillaryclinton·announces-suppon-for-sec-rulemaking-on-rorporale-politicalspendina/. 

Cost-Bmtjit AM/ysis and tht Courts, 18 LAw & CoNTEMP. PROBS. 

55 (2015). 

Forty-Four U.S. Smators Support tht Rulemaking Petition for 

Trampartncy in Corporate Political Spending, HARVARD LAw SCH. 

fORUM ON CORP. Gov. Ali'D FtN. Reo., (Sep((mber 2, 2015) (with 

Lucian A. Bellchult) (blog post), a! bttps://corpgovJaw.harvard.edu 

f2015109/02lforty-four-us-senators-suppon-the-rulemaking-petitioofor-ttansparency·in-(()rporate-political·spending/. 

Brief of Thirty-Eight Corporate and Securities Law Professors as Amicus Curiae to the United States Court of Appeals for the Third 

Circuit in Wai-Mart Stores, Inc. v. Trinity Wall Street Goined), No. 

1:14-CV-00405-LPS (Febnwy 11, 2015), a1 http://www. 

youngconaway.COIIY'filesluploacUBriefAmiciCuriae.pdf. 

1M SEC's Holiday Gift /Q Hig/1-Sp«J Trodm, COluMBIA LAw 

SCHOOLBWESKY BLOG (Dec:ember 11, 2014) (with Joshua Mitts), II 

bttp:l/clsbhx$ky.law.columbia.eduf2014112111/the-secs-boliday-gifl· 

(O.high·speed-lndersl. 

How the SEC Helps Speedy Troders (worlcing paper, November 

2014) (with Joshua Mitts), at bttps:l/papers.ssrn.com/sol31 

Delivery.cfm/SSRN _102532583 _ code213269.pdl?abstractid=2520 10 

5&1ype=2. 

Toward a Constitutional Review of the Poison Pill, 114 COWM. L. 

REv. 1549 (2014) (wilh Lucian A. Bebcbult). 

Wiry Commissiontr Gal/aghtr Is MisUlken about Disclosurt of 

Political Spmding. HARVARD LAw SOt. FORJJM ON CoRP. Gov. AMl 

FIN. Reo. (November 10, 2014) (wilh Lucian A. Bebchult) (blog 

post), at https:llcorpgov.law.harvard.edu/2014111/ltvwbycommissiooes-pllagher·is-mistaketHbout-disclosute-of-political· 

spending/. 

Letter to SEC Inspector General Cart W. Hoecker Regarding FOIA 

RcquesiS (October23, 2014). 
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Jacbo!l, Jr., Robm .Jostp/1 

Pablislled Writings: HSBC Student Series on Ethics and Accountability, Corporate 

Integrity and Transparency: Stories from the Frontline with Robert J. 

Jocl:son, Jr., BARUCH COU.EGE CENTER FOR CORPORATE itmGRlTY, 

(October 8, 2014), at http://zieklin.baruch.cuny.edu/ centerslzcci/zeci· 

eventslhsbc-student-series-on-tthies-and-aecountability. 

SEC Disclosure OJnference, SECDISCLOSE.ORG (September 24, 

20 14), video at httpS1/www.youtube.eomlwatcb?v-9o 7rub3giGU. 

The Million-Comment-Leiter Petition: The Rulemaking Petition on 

Disclosure of Political Spending Attracts More than J,(}()(),(}()() SEC 

OJmment Letters, HARVARD LAW SCH. FORUM ON CORP. Gov. AND 

FIN. REG. (September 4, 2014) (with Lucian A. Bebchulc) {blog post), 

at htlp$1/corpgov.law.barvard.edu/2014109J0411be..millionoQOIIllllellt· 

Jetter-petition-d!e-1111emaking-petitiOIHIIKiiscJosure.of.political· 

spending-attracts-more-than-J()()OOX).secoQ)QIJ])CQt·lettersl. 

The Jfldden Nllfllrt ofEx«:utive RetimMII Pay, IOO VA. I.. Rfv.479 

(2014) (wilh Colleen Honi~. 

CarporaJe Gowmanct cmd E'.:t«:utivt OJmptiiSOiiM: Evidtnu from 

Japan. 2014 COtuM. Bus. I.. Rfv.lll (2014)(with Olrlis Milhaupl~ 

T _, ProJucticn and Bank Govmtanct, BW£ VI: BLAIR AND 

SrouT M'D BEYOND (Juoe 24, 2014) (presentation). 

UCLA SCHOOL OF LAw, A ConftrtnCt cmd M'IC1'0-Sympasium on 

Competing Theories of OJrporatt Governance (April 12, 2014) 

(pRsentation). 

Our Debate on the Williams Act and Shareholder Activism: 

Takeaways for the SEC, COUJMBIA LAw SCHOOL BUJE SKY BLOO, 

(AprilS, 2014) {blog post). 

Toward a OJnstitutional Review of the Poison Pill: A Reply to 

Wachtel/ Lipton, HARVARD LAw SCI!. FORUM ON CORP. Gov. AND 

FIN. REG. (March 17, 2014) (with Lucian A. Bebchulc) {blog post), at 

httpS1/corpgnv.law.barvard.edu/2014/03/17/toward-a-coostitutional· 

review-of-tbe-poison-pill-a-reply-to-wacbtell-lipton/. 

Toward a OJnstitutional Review of tltt Poison Pill, HARVARD LAw 

SCH. FORUM ON CORP. Gov. AND FIN. REG. (March 4, 2014) (wilh 

Lucian A. Bebchulc) {blog post), at https~/corpgov law barvard 

.edul20 141031041toward-a-comtitutional·review-of·the-poison-piiV. 

10 
85 


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Jtrlsbo, Jr., R«;m '-Ph 

Published Writings: The Hidden Nature of E:ucutivt Retirement Pay, CoLUMBIA LAw 

SCHOOL BLUE SKY BLOO (February 19, 2014) (with Colleen 

Hooigsbtrg) (blog post), at http://clsbluesky.law.columbia.e.dul 

2014/02/19/the-hidden-naturwf-exccutive-retirtment-pay/. 

A New Science of Pension Fund Management, THE HUFFINOTON PosT 

(with Steve Cunall and Brad Bllber) (FebMry 15, 2014) (blog post), 

at http://www.huffingtonpost.com/steve-cunalVa-oew-science-of 

peosioo-_b_ 443582l.btmL 

Activistlnveston and the SEC: TM Case Agoirut • Modernizotion• of 

the Williams Act, Al<JN GUMP STRAUS HAUER & fELD LL.P, (January 

30, 2014) (presentation). 

Globol Allionce Workshop, FGV DtR£110 SP (Brazil). (Jamwy 2&, 

20 14) (video). at bttps:/lwww.youtube.com/wateb?v-rldl.ZOoqOFO. 

Cdumbia's Law and BIISinm Scllools Host Treasury Ojf~eia/s, 

E.tr=ragt Cartm ill Public Smi«, CoLuMBIA CLUB (January 22, 

2014) (intmcluculry runasts). 11 bttp:/lwww.law.columbia.e.du/ 

media_ inquiriesluews _ eveots/2014f)&Ouary201411reaswy-MDt. 

Cot.uMBIA LAW SalOOI. DATALAB, Tilt 8-K Trotling Gap 

(visualization of dala 011 insider lradin&) (2014), at 

bttp:/lbj l.law.colwnbia.eOO/Skgap. 

Co!.uMBIA LAw SCHOOL DATALAB, EDGAR Monitoring Htxl11Mp 

(visualization of da!a on SEC system delays) (2014). at 

http://bj l.law columbia.~tmap. 

The SEC Delays its Olruideration of Rules Requiring Disclosure of 

Corporate Political Spending, HARVARD LAW SCH. fORUM ON CoRP. 

Gov. AND ftN. REo., (December 2, 2013) (with lucian A. Bebchuk) 

(blog post), at bttps://co~pgov.law.harvanl.e.du/2013/ 2102/the-secdelays-its-consideration-of-rules-requiring-disclosUrt-of-col)lOratepolitical-spending/. 

Addressing Olngress on tM Need for Troruporency in Olrporote 

Political Spending, CoLUMBIA LAw SCHOOL BLUE SKY BLOO 

(October 30, 2013) (blog post), at 

http:l/clsbluesky.law.columbia.edu/2013/10130/addrcssing-coogress· 

on-tbe-nee.d-for·transparency·ino(()l)lORte-political-spending/. 

MM'HATTAN 1NsnniTE, Corttr for Llgal Policy and Prory Monitor 

Conferm«, (September 17, 2013) (paoelisl), video II 

https:/lwww.youtubt.oomlwateb?v-JIMb..rV7Pjk. 

II 
86 


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.l«i;son, Jr., Robm Jostp/t 

Published Writiags: Pre·Disc/c.sun Accumulations by Activist Invuton: Evidence and 

Policy, 39 J. CORP.!. I (2013) (with Lucian Bebcbulc, Alon Brav, and 

Wei Jiang). 

Call for Proposals: The Purpose, Use, and Potential M"uuse of Stock 

Prices in the Public Equity Markets, COWMBIA LAW SCHOOL BWE 

SKY BLOG, (August 12, 2013) (blog post), at http://clsbluesky.law. 

columbia.edu/2013108/12/call·for·proposals·the-purpose·use·and· 

potential-misuse-of-stock-prices-in-the·public-equity·marlcets/. 

Responding to Objections to Shining Light on Carporatt Political 

Spending (7): Claims About the Casts of Disdosure, HARVARD LAW 

SCH. FORUM ON CORP. Gov. Al\'0 FIN. REG. {JII!le 24, 2013) (with 

Lucian A. Bebchuk) (blog post), at 

hUps://oorpgov.law.harvard.edu/2013 ~-toobjectioos-to-sbining-light-on-oorponte-political·spellding·7~Jaims. 

about~f-(fiscloswt/. 

Sustainable lnvestmtnt RtstJJTCir /nitiatlvt {SlRJ) brvtStmenJ 

Perfonrrana Restmch PrtmuatitHJ, UC DAVIS GRAD. SCH. MOO, 

(June 17, 2013~ 11 http://pm.ucdavis.edu/ne\\-s·releaso\Jc.davUgraduate-school-management-prtStOI·susWoability·invesuneot· 

perfonnanc:e·resea. 

Responding to ObjectitH!s to Shining Light on Carporate Palitical 

Spending (6): The Claim IMt DisciCJIIU /lulu m Prohibited by tht 

Canstitution, HARVARD LAW SCH. FORUM ON CORP. Gov. A.'ID fiN. 

REG., (June 3, 2013) (with Lucian A. Bebchuk) (blog post~ at 

hUps://corpgov.law .. harvard.edu/2013/06/03/responding-toobjections-to-shining·light-on-oorporate-political·spending-6·theclaim-that-disclosure-rules·ate·prohibited·by-the-constirutiool. 

SEC Camment Leiter: Shining Light on Corporate Politico/ Spending, 

HARVARD LAw SCH. FORUM ON CORP. Gov. AMO FIN. REG. (May 20, 

2013) (with Lucian A. Bcbchuk) (blog post), at https://ooipgov.law. 

balvard.edu/2013/0S/20/sec-comment-letter-shining-light-on· 

oorporate-political·spendingl. 

Rulemaking Petition on Disclosure of Political Spending Attracts 

Support from More Than 500,()()0 Camment Letters Filed with tht 

SEC, HARVARD LAw SCH. fORUM ON CORP. Gov. Al\'0 FtN. REG., 

(May 13, 2013) (with Lucian A. Bebcbuk) (blog post), at 

httpS:I/corpgov.law.harvard. edu/2013/0S/13/rulemaking-petition-on· 

disclosure-<>f-political-speoding-anraas.suppon-from.mort-than· 

500000-oomment·letters. filed. with-the-sec/. 

12 
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Pablis!!ec! Writiags: Responding to Obj«rions to Shining Light on Cotpcrott Political 

Spending (5): Tilt Claim that Slrartlrolder Propo.S4ls Requuting 

Disclosure Do Not Rtctivt M4jority Support, HARvARD LAw Sell. 

FORUM ON CORP. Gov. A~'D FIN. Rro. (April29, 2013) (with Lucian 

A. Bebchuk) (blog post), at bttps:l/corpgov.law.barvard.ec!u 

12013104129/responding·to-objections·to-sbining·light-on-corporate· 

political·spending·S·the-claim·that·sllarebolder·proposals·requesting· 

disclosure-do-not·receive-majority·supportf. 

Responding to Objections to Shining Light on Corporate Politico/ 

Spending (I): Tilt Claim that Sucll Disclosure Would Givt a Politico/ 

Adwmtogt to Ullions, HARVARD LAw Sal. foRUM ON CORP. Gov. 

A.'«> FIN. REG. (Apnl2S, 20 13) ~>ith Lucian A. Bebchuk) (blog pos1), 

h!tpS:/ <:o~pgov.law.huvard.edu/2013104/25hespondi·to objectioasto-sbining·light-on-corpont~itical·spending-4-the-claim-thal· 

suciHiisclosure-v.-ould·gjve-a·political advanlag~to-unions/. 

Responding to Objections to Shining Light on Corporate Political 

Spending (J): Tilt Claim that Po/ilical Spending is Good for 

Shareholdm, HARVARD LAW SCH. FORUM ON COR!'. Gov. AND FIN. 

Rro. (April IS, 2013) (with Lucian A. Bellchuk) (blog post), at 

https://corpgov.law.lwvard.edu/20 131001 S/responding-toobjectioos·to-sbining·light-on-corporate-political·spending·3·theclaim-that-political·spending·is-good-for-sllareboldersl. 

Rlspanding lfl Objtelions 1t1 Shining Ugh/ on Corporate Politico! 

Spending (1): Claims of SpeciallnltrtJt lnjluence, HARVARD LAw 

SCil FORUM ON CORP. Gov. AND FIN. REG. (ApnliO, 2013) (with 

Lucian A. Bebcbuk) (blog po$1), at hnps:l/corpgov.law.lwvard.ed\N 

2013104110/Rspoodiog-to-objectioos-to-shining-light-on-corporate· 

political-speading-2-claims-of·special·interest·inlluencel. 

Responding to Objections to Shining Light on Corporate Political 

Spending {I): The Claim of Immateriality, HARVARD LAw SCH. 

FORUM ON CORP. Gov. Al\'D FIN. R£0. (April4, 2013)(with Lucian A. 

Bebchuk) (blog post), https://corpgov.law.harvard.edu/2013/041 

04/respondiog-to-objectioos-to-shining-light-oo-corporate-political· 

spending-1-tbe-c:laim-of·immateriality/. 

New Yorl OjficWJs Urgt SEC To Adopt Rules Requiring Public 

Companies to Disdou Politico/ Spending, COWMB!A LAw SCHooL 

BUJE SKY SLOG, (March 22, 2013) (blog posl), at 

hnp://clsbluesky.law.oolumbia.ecb'2013103171fnew·)'Oik-officiats. 

wge.sec-to-adopt-rules-requiring-public-<Ompaoies-to-disclosepolitical·spending/. 

t3 
88 


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Pub!!s•w Writiags: Lee Pacchia, Con Ftds Foru Companies to Disclose Political 

Spending?, BLOOMBaG LAw (January 31, 2013), (video) 11 

bttps:/lwww.yourube.comlwatcb?v=zBOaSgxqdRE. 

Shining Light on Corporate Political Spending, 10 I GEO. L.J. 923 

(2013) (with Lucian A. Bebchulc). 

The Cose for Transparency in Corporate Political Spending, 

CoWMBIA LAw ScHooL BLUE SKY BLOG (January 30, 2013) (blog 

posl), 81 bttp://clsbluesky.law.colwnbia.edai20 13JOt/3~for· 

uansparency-io-corporate-political·spendinw. 

Private Equity and Eucutivt Compensation, 60 U.C.L.A. L REv. 638 

(2QI3~ 

CoLUMBIA LAw SCHooL, 2012 WtWS L M. REEsE PlliZE fOR 

ExCEWNCEINTEACHtNG, Commencemtnl Address, (May 17, 2012). 

at bnp:/lwww.law.columbia.edwgrlduation/2012/reese-prize. 

Stock Unloading and Banker Incentives, 112 CoWM. L. R£v. 951 

(2012). 

Will the SEC Focllitate Shareholder Access to the Ballot Under Rule 

Uo-8?, HARVARD LAw SCH. FORUM ON CoRP. Gov. AND FIN. RiG., 

(April 29, 2012) (with GabrieUa Wer1maD) (blog post). at 

bdps:l/oorpgov.Jaw.haMrd.edW201W4/29/will-the-sec-facilitat~ 

slwdlolder..a:ess-to-the-ballot-cmder·rule-14a-&'. 

The Law and Economics of Bloc<kr Disclosure, I liARV. Bus. 1.. 

REv. 39 (Spring 2012) (with Lucian Bebchuk). 

The Allorney General/Federal Mortgage Seltlement and its 

Implications for Housing Finance, NATIONAL STATE ATTORIIEYS 

GENERAL PROGRAM, CoWMBIA LAw SCHOOL (February 23, 2012) 

(speaker), at http://www.law.colwnbia.edwattomeys-generallpolicy· 

areaslconsumer·protectionlbome--foreclosllle·predatol)'· 

lendinwoatioiW-IllOflgago-settlemenL 

Testimony Before the Senate Subcommittee oo Financial Instirutioos 

and Coosluner Prouaioo oo loccntive Compcosatioo at l.al&t 

FllWlCW loslitutioas, (February IS, 2012). 01 

lutps:/lwww.blnking.senate.gov/publid_ cacbclfilesf750d4Je6.31c7· 

4be0-9812ce8111 bn2ai23C6AEOOCC53D934925ll CC744028B5E. 

jacbontestimooy'll S 12.pdf. 

Monika Mi!Chell, Robert 1. Jackson: The £COI7()mics of Integrity, 

Gooo BUSINESS NEW YORK!, (November II, 2011), at 

https://www.yourube. comlwatch?v=BmNCkCMZo7E. 

14 
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hbti@ed Writings: Petition for SEC Rulemaking to ~ Discloswe of Corporate 

Political Spending 10 Public Company SbareboldCTS, File No. ~37, 

filed with the Securities and Exchange Commission (August 2011~ at 

https:ll_wwwJCC.govlrules/petitions/201 J/pelll4~37 pdf. 

Comment Letter to the Securities and Exchange Commission on 

Regulation of Incentives at Finonciallnstilutions (May 31, 2011), at 

bttps:/lwwwJCC.gov/commeniSis7·12·1 J/s71211-718.pdf. 

SEC Strtngthtns Sltareholden' Role in Corporate Politico/ Spt«h 

Decisi0111, HAlYARD LAw Sal. FORUM ON CORP. Gov. AND Fn;. R£0. 

(May IS, 2011) (blog posl), at bttps://corpgov.!Jw.lwvard.edu 

fl011.1lS/IS/see-$11tQglbeas-shardloldm-role-iD-corporato-polirical· 

speccb-decisions/. 

Aa:ountobilily Afttr Citiuns United, BRENNAN C00U FOR JUSTICE 

CONFERENCE (April 29, 2011) (paoetist) a1 bttps:llwww.brenn 

ancealer.of&'sitesldefaulr/filesleveniS/Accoulability%20After%20Citi 

zensr.20United%20panei%20ooe.pdf. 

Over the Horiron: Consumer Credit After the Crisis, Nn.. Assoc. OF 

ATlORI\'EY GENERALS (NAAG) PRESIDENTIAL INITIAnVE (April 12, 

2011) (presentation). 

Corporate Political Spttc/1: Wlto Decides? 124 HAlv. !.. Rtv. 82 

(2010) (with Lueiln Bebchuk~ 

CotporaJe Low and Political Spending, HARvARD LAw SOL FORUM 

ON COilr. Gov. AND FIN. Rro. (December I, 2010) (with Luci111 A. 

Bebchuk) (b1og posl}, at https://corpgov.!Jw.lwvard.edu 

n.o I 011210 1/corporate-!Jw-and-polirical-spending/. 

Larry Kudlow, Is this Really the End of Bailout Nation? KUDLOW'S 

MONEY PoLITICS (September 30, 2010) (television appearance), at 

bttp://kudlowsmoneypclilics.blogspol.comfJ.OI0/09/on-cnbcs· 

kudlow-report-tonigbt_30.html. 

Corporate Political Spt«h: Wlto Decides?, HAlYARD LAw Sat. 

fORUM ON CORP. Gov. AND FIN. Rro. (September 8, 2010) (with 

Lucian A. Bebchuk} (blog posl}, at https://corpgov.law.lwvard.edu 

f1.01Ml9108/corport!C-potirical-speech-w~Jo.4ec:ides/. 

San BebUDek, Fdnhtrg 1 Dtputy on Execvlil-e ComptiiSOii011, THE 

D£At Pll'EUNE (July 28, 2010), at https:llvimeo.c:onY13704814. 

Interview with Robtrt J. .Joclson, Jr., C SUITE INs !GilT (20 I 0), at 

hltp:/lwww.equilar.com/pdflc·suile/CSuilelnsigbt_ voll_ issue03.pdf. 

IS 
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hblyejl Writim: i'RlNcEroN UNTVUSITY WOODROW WILSON SOiOOL PROGRAM IN 

LAw AND PuBLIC AfFAIAS, Regulating Erecutive Ccmpmsation: 

Ought 111m to be a Law?, (September 29, 2009) (panelist), at 

https:/lwww.youtube.com/watcb?v=ySjhT055Lig. 

Hedge Fund lnVfJtor Activism and Takeovers, HARVARD LAw SOi. 

FORUM ON CoRP. Gov. AND FIN. Rro. (December II, 2007) (blog 

post), at hnps://corpgov.law.barvard.edu/2007112/11/hedge-fundinvtStor-activism..and-llkeovers/. 

Michot/ .ki!Sln's and Wtmu Erhard's Talk on lnlegrity, HARVARD 

LAw SO!. FORUM ON CoRP. Gov. M'D FIN. REG. (November 9, 2007) 

(blog post~ at httpS"J/CC!pgOV.IawJwvanl.edu/2007/llm/micllaeljenseos..and-wuner-atwd.s-talk-oo-intcgrityl. 

Ccn Third Parties & Held Liable for S«:wities Fraud? Gearing Up 

for Sloneridge, HARVARD LAW SO!. fORUM ON CoRP. Gov. AND FIN. 

Rro. (September 2S, 2007) (blog post), at hltps://corpgov.law. 

barvard.edu/2007/00/25/can-third-parties-be-held-liable-for5eC1Uities· fraud-gearing-up-rot. 

Does Delaware Ccmpete?, HARVARD LAW SOi. FORUM ON CoRP. 

Gov. AND FIN. REG. (September 24, 2007) (blog post~ at 

https://corpgov.IJw.harvard.edu/2007/00/24/does.«IJwm-eompeteJ. 

Y'mtagt Ctrpi141 and Crtdit ho/ectiM, IIARVARD LAW SO!. FORUM 

ON CoRP. Gov. M'D FIN. REG. (September 21, 2007) (blog post~ at 

https://oorpgov.law.harvlld.edu/2007m/211viDtage-apital-andcredit -procectioo/. 

Weisbach on Pay wilhout Performonce. HARVARD LAW SOi. FORUM 

ON CoRP. Gov. AND FIN. Rro. (September 12, 2007) (blog post), at 

hnps://corpgov.law.harvard.edu/2007/00/12/weisbach-on-paywithout-perfonnance/. 

Shareholder Activists Risk Destroying Boord Effectiveness, HARVARD 

LAw SOi. fORUM ON CORP. Gov. AND FIN. Rro. (June 22, 2007) 

(blog post~ at https://corpgov.lawJwvanl.edu/2007106 

122/Wreholder-activists-risk-destroying-board-effectiveness/. 

A FritNI/y Talt of Hot Dogs and Troim>Ttcls, HARVARD LAw SOi. 

fORUM ON CoRP. Gov. AND Fill. REG. Qune 22, 2007) (blog post~ at 

https://corpgov.law.harvlld.echlf2007106/19/a-fiieodly-tale-of-bot-

.and-trainwrecb/. 

16 
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Jad:son. Jr .. Robtrt ksqJ/1 

Pub!isbtd Writings: Dots Enjorctment lnttllSity Explain Financial Development?, 

HARVARD LAw SCH. FORUM ON CoRP. Gov. AND FIN. REG. (May 3, 

2007) (blog post), at https://corpgov.law.harvard.edu/2007/ 

05/03/does~nforcement-intensity-explain-financial-development/. 

Dots Political Stability Lead to Financial Development?, HARVARD 

LAW SCH. FORUM ON CORP. Gov. AND FIN. REG. (April 19, 2001) 

(blog post), at bttps://corpgov.law.harvard.edu/2007/04/19/does· 

political-stability-lead-to-financial-developmenrJ. 

Toward Ccmmon Sense and Common Ground?: Remarks from Vice 

Clumcellor StriM, HARVARD LAw SCH. FORUM ON CoRP. Gov. AND 

FIN. REG. {March 31, 2007) (b1og post), at 

bttps://corpgov.law.barvard. edu/200710513lilowanl<OClllllon·sense· 

anckollllllOII-glliUremalts·from·vi~11od. 

WLRK Memorandum em 17rt Caremarl: Chronicles, HARVARD LAw 

Sal. foP.tM ON CoRP. Gov. AA'D FIN. REG. (March 27, 2001) (blog 

post), a! https://corpgov.law.barvard.edu/2007103127/v.tnmC1110131ldunH>othe-caremalt-chronicles/. 

f.lnld Kmnor's Study em tltt Constqutnces of SOX. HAAvARD LAw 

Sal. FORUM ON CoRP. Gov. AND FIN. REG. (March 21, 2001) (blog 

post), at bttps://corpgov.law.barvard.edu/2007103121fas-arbanesoxley-driving-small·firmMUt-of·us·public-equity-nwkd. 

Clroncuy Addrems Deficient Board Proctduru in Approving 

Private Equity Transoctions, HARVARD LAw ScH. FORUM ON CoRP. 

Gov. AND ftN. REG. (March 20, 2007) (b1og post), a! 

hnps:l/corpgov.law.barvard.edu/2007/0312~cbancery-lddresses· 

deficient-board-procedures-in-approving-private/. 

A Ccntroversial New Proposal for Regulating Foreign Financial 

Services, HARVARD LAW ScH. FORUM ON CoRP. Gov. AI<D Fir<. REG. 

(February 8, 2007) (blog post), at 

bnps:J/corpgov.law.harvard.edu/2007/02108/ acontroversia1-newproposal-for-regu1ating-foreign-financia1-servi/. 

Initial Public Offerings Increase in 2006: Are We Entering a • Hot 

Period"?, HARVARD LAW SCH. FORUM ON CoRP. Gov. AND FlN. REG. 

(January 19, 2007) (blog post), at https://corpgov.law.harvard 

.edu/2007/01119/initial-public-offerings-increasc-in-2006-are-weeotering-a-bol-ped. 

A New Modtl of Adminbtrativt En.{orcemtllt, 93 VA. 1. REv. 1983 

(2007) (with David RosenbcrJ). 

17 
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Jackson. Jr., Robm ~h 

Pubtlsbtd Writings: Directors Ignore Majoriry-Shartholdu Ma/ftcJSonct at their Peril, 

HARVARD LAw SCH. FORUM ON CORP. Gov. AND FIN. REG. 

(December 22, 2006) (blog post), at https://corpgov.law.hamrd. 

edu/2006/12/22/directoJS·ignore-majority·shmholder-malfeasance.. 

at-their-periV. 

Improving Employment Outcomes Through the Massachusells Parole 

Board's Regional Reentry Center Jnitiati~-e: Policy Analysis ond 

Recommendations (working paper Deeembtr 2006) (with Jesse 

Jannetta), at https://pape~S.ssrn com/so 31DelivCI)'.cfinl 

SSRN _ID950890 _code 461540. pdf?abstractid:o950890&type-2. 

Comment lAter to the S«urities and Exchange Commission on 

Proposed Rtquirtments for Disclosing Executive Retinment Benefits, 

(April 14, 2006) (with Lucian A. Bebchuk and Jessie M. Fried), at 

bttps:/!www.sec.gov/ruleslproposcdls703061lbcbchuk5984.pdf. 

Nru, Rethinking RetroactiviJy, 118 HARV. L. REv. 1642 (2005). 

E:arutivt Pensions, 30 J. CORP. L. 102 (2005) (wilh Lucian 

Bcbc:huk), at haps://paperuw.com/so131DcliVCI)'.cfinl 

SSRN _ID694 766 _ code542089.pdt?abs1rlctid-694766&lype-2. 

Collll!lelll, Store Sentencing Guidtlines-Sixlh Amtndmtnt, 118 

HARv. L. REv. 333 (2004). 

Nine Justices, Ten Yean: A Slatisticol Retrospective, 118 HARV. L. 

REv. 510(2004). 

Appellate Procedure-Force of Ciltuit Precedent, 117 HARV. L. REv. 

719(2003). 

Political Affiliations: List membtJShips and offices held in and services rendered to all 

political parties or election committees durin8 the last I 0 years. 

I have never been a member of, nor held office in, any political party 

or election committee; I am a registered Independent. However, I 

served on an informal basis as an adviser to Secretary Clinton's 

economic-policy team in connection with her cand.idacy for President 

of the United States from late 2015 until November 2016. 1 did not 

have a formal title. My responsibilities included responding to 

questions from the Secretary's economic-policy team related to 

potential corporate-law and sccwitics-rcgulatioo implications of 

OCIUin campaign proposals. 

IS 
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10241756.eps

Jock:stNt, Jr •• llobnt.klsqlh 

Political Contributi0115: Itemize all political eontn'butioos of $500 or m~ to any individual, 

campaign organi281ion, political party, political action committee or 

similar entity during the last eight years and identify specific 

amounts, dates, and names of recipients. 

In October 2016, I co-hosted a fundraiseron behalf of the Hillary 

Victory Fund in connection with Secretary Clinton's run to serve as 

President of the United States. My total contributions to the Fund, 

including those associated with the fundraiser, were S I 0,023.34. 

In April2016, I contributed $500.00 to Josh Gottheimer for Congress 

in support of my college mend's run to serve as a Member of 

Congress for the Fifth District of New Jersey. Mr. Gottheimer was 

elected, and now serves as the Fifth District's Congressman. 

Futurt Emp!o\'DieDt I. Indicate whether you will sever all connections with your present 

employer, business fum, associJtioa or orpnizatioo if you are 

CXlllfinncd by the Seoale. 

As desaibed in the ethics~ t1w I have entmd into with the 

U.S. Searities and Exchange Commission's (SEC's) Designated 

Agency Ethics Official (DAE01 wbicb has been provided to the 

Commirue, if coafumed by the Senate I will accepc a tenured 

positioo at New YOlk Univenity School of Law (NYU) and 

immediately go on leave. Punuaut to the Slandard beoe6ts offered to 

professors, I will reeeive NYU housing. 

2. As far as can he foreseen, state whether you have any plans after 

completing government service to resume employmen~ affiliation or 

practice with your previous employer, business firm, association or 

organization. 

As desaibed in the ethics agreement that( have entered into with the 

SEC's DAEO, which has been provided to the Committee, I will be 

on leave from a tenured position at NYU. I will resume my position 

as a tenured member of the NYU faculty upon completion of my 

government service. 

3. Has anybody made you a commitment to a job after you leave 

government? 

As desaihed in the ethies agreement that I have entmd into with the 

SEC's DAEO, which has been provided to the Committee, I will be 

oo leave from a tenured positioo at NYU. I will resume my position 

as a tenured member of the NYU faculty upoo complelioo of my 

govcmment service. 

t9 
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10241757.eps

future Emplollllellt: 4. Do you expect to StrVe the full term for which you have been 

appointed? 

Ouatif~e tions: 

Pttential Conflicts 

oflnterest: 

Yes. 

Plesse find a Slatement of my qualifications to serve as a Member of 

the Securities and Exchange Commission anacbed as Annex A. 

I. Describe any financial arrangements or defened compensation 

agreements or ocher continuing dealings with business associates, 

clients or CUS100leiS who will be afftded by policies which you will 

influence in the position to which you have been nominated. 

None. 

2. List any investment5, obligations, liabilities, or other rela!ioosbips 

which might involve pocential conflicts of interest with the position to 

which you have been nominated. 

In connection with the nomination process, I have consulted with the 

Office of Government Elhics (OGE) and the SEC's DAEO to identify 

potential conflicts of interest. Any potential conflicts of interest will 

be resolved in accordance with the terms of the ethics agreement that 

I have entered into with the SEC's DAEO and that has been provided 

to the Committee. 

3. Desaibe any business relationship, dealing or financial transaclioo 

(other than taxpayina) which you ba-.-e bad during the lasllO )'ell$ 

with the Federal Government, whether for younelf, oo behalf of a 

client, or acting as an agent, that might in any way constitute or result 

in a possible conflict of interest with the position to which you have 

been nominated. 

In connection with the nomination process, I have consulted with the 

OGE and the SEC's DAEO to identify potential conflicts of interest. 

Any potential conflictS of interest will be resolved in accordance with 

the terms of the ethics agreemeot that I have entered into with the 

SEC's DAEO and that has been provided to the Committee. 

4. List any lobbying activity during the pastiO years in which you 

have enpged for the purpose of directly or indirectly influencing the 

passage, defcal or modificalion of any legislation at the national level 

of government or affeding the adminisllation and execution of 

national law or public policy. 

None. 

20 
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10241758.eps

.hc!Jon, Jr., Robert Joseph 

Pot~tisl CooOids 

2f..!!!m!l.: 

S. Explain how you will ~ve any cooflict of interest that may be 

disclosed by your rtSpOnses to the items above. 

In connection with the nomination process, I have consulted with the 

OGE and the SEC's DAEO to identify potential conflicts of inte~st. 

Any potential conflicts of inte~t will be ~olved in accordance with 

the terms of the ethics agreement !hat! have entertd into with the 

SEC's DAEO and that has been provided to the Committee. I am not 

aware of any other potential conflicts of interest 

Ciyi!. CriminaL aid I. Give the full delails of any civil or criminal proceeding io which 

Investiutory Actions: you were a defendant or any ioquiry by a Federal, State, or local 

agency io which you w~ the subject of the inquiry or iovtStigation. 

While serving at tbe Department of the Treasury in 2009, I JtQISed 

myself from matters related to Bank of America, whicll I bad 

previously represented in private p!IC1ice. I consulted with Treasury's 

DAEO to determine wbetber recusal was appropriate llld, following 

tbe DAEO's advice, I recu!ed IIlii did 1101 panicipate in any particular 

matter involving that firm. In Maltb 2010, a Member of CoogJess 

requested that the Speciallnspeaor General for the Troubled Asset 

ReliefPrognm review potential COI!flicls of ioteresiS 1111011& Treasury 

al!ooleys working in the Oflice of tbe Special Master for T ARP 

Executive Compensation. The Office of tbe lnspec1or Gcoeral began 

i1S review in April 2010, and in August 2011 that OtT~« informed 

Treasury that it bad completed the laSk !hal the Member bad 

requested and that no funher rtView was wamnted. 

In 2001, a Florida police officer mistakenly detained me in 

connection with an incident involving petit theft tiom a grocery store 

of items worth less than $10.00. Although I was briefly held and 

charged, the State immediately recognized its error, tonk the rare step 

of filing a "no action" dismissal shortly after my arrest, and privately 

conveyed its apologies to my counsel. In connection with my 

previous federal employment, including my employment with the 

Department of Justice, the federal judiciary, and the Department of 

the Treasury, research oo my background has been conducted by the 

Federal Bureau of Investigation, the Federal Marshals Service, and 

the Secret Service. In each case, I have disclosed these events and tbe 

State's swift correction of i1S error to investigators, and in each case, 

the events posed no issue to my clearance for federal employment 

Ch:j), CrimioaL ud 2. Give the full details of any proceeding, inquiry or investigatioo by 

Investigatory Actions: any professional association including any bet association in which 

you w~ the subject of lbe proceeding, inquiry Of invtStigatioo. 

I have never beeo the subject of any proceeding, inquiry or 

investigatioo by any prnfes:siooal mociatioo. 

21 
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10241759.eps

Jackson. Jr .. Robert Jrueph 

ANNEXA 

QUALIFICATIONS 

It is an extraordinary honor to be nominated to serve as a Commissioner of the Securities 

and Exchange Commission. If confirmed, I will bring long experiecce advancing IIanspareccy in 

financial markets to bear on the Commission's critical mission of protecting investors, 

maintaining fair markets, and facilitating capital formation. 

Since 2010, I have beec a Professor at Columbia Law School, where my resean:b focuses 

on finding evidecce-driven solutions to some of the most challenging issues in securities law. I 

am the Founding Dilector of ihe Law School's Datal.ab, which uses cuning-edge technology to 

study the reliability of corporate disclosures. In one recent project, our team used advanced 

computer science techniques to idectify high·speed trading activity on the SEC's filing 

systems-and worked to help the SEC modernize its approach to create a level playing field for 

investors. In another, we used similar tools to shine light on !Jading activity before the 

announcemect of major corporate evects. Both projects have helped regulators identify ways that 

technology can better protect investors. I have been gratified that our work has been the subject 

of commentary before several federal agencies, including the Federal Reserve and the SEC. 

I have also worked to bring tiansparency to markets and to the SEC itself. For example, I 

advocated for the disclosure of additional information about stockbroker fraud, leading to new 

resean:h that helped expose the brokers most likely to defraud investors. I also co-chaired a 

group of legal scholars that petitioned the SEC to require public companies to disclose whee they 

spend shareholder money on politics-a proposal that bas now drawn more regulatory 

commentary than any other petition in the Commission's history. 

My experience teaching corporate and securities law will also make me a more effective 

Commissioner if I am confumed. My students have been impol1allt partners in my work 

throughout my career, both as a researcher and in the classroom. I was honored when Columbia 

Law School and its studects awarded me the Willis Reese Prize for Excellence in T eacbing. And 

I am especially grateful to follow in the footsteps of my predecessors at Columbia, Harvey 

Goldschmid and William Carey, both of whom were exceptional law teachers-and also served 

with great distinction on the Commission. 

Before joining the Columbia faculty, I served as a senior policy advisor at the United 

States Department of the Treasury, working with Kenneth Feinberg, the Special Master for 

T ARP Executive Compensation. At Treasury, I oversaw the development of policies designed to 

give shareholders a say on executive pay, improve the disclosure of executives' bonuses, and 

make sure that financial institutions who received federal assistance during the financial crisis 

tied executive pay more closely to performance. If I am confumed, I plan to bring my experience 

conceiving, developing, and executing on policies that protect investors to bear on the SEC's 

work. And I believe this experience will help me and my fellow Commissioners idectify 

innovative ways to protect investors while ensuring that American capital markets remain the 

envy of the world. 

26 
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10241760.eps

Jackson, Jr., Rebut .lostph 

Prior to joining the Treasury Department, I was an attorney at the law finn Wachtel!, 

Lipton, Rosen & Katz. Before attending law sehool, I also served as a strategic advisor to public 

companies and as an invesbneot banker. I believe that my experience in private practi<»-and 

the opportunity to observe, firslhand, how securities law· can influence the behavior of 

corporations and investors alike-will give me important perspective on the SEC and its work. 

I also believe that my education, and particularly my training in law and finance, has 

prepared me to be an effective Commissioner. I earned law and public policy degrees from 

Harvard, an MBA in Finance from the Wharton School of Business, and two bachelor's degJCCS 

from the University of Pennsylvania. My interdisciplinary background, and the understanding of 

finaocial markets that comes with it, has been critical to my work as a teacher and scholar. And I 

believe that this training will allow me to engage with fellow Commissioners and the 

Commission's Staff on the increasingly complex questions raised by today's capital markets. 

It is my enormous privilege to be nominated to serve as a Commissioner on the Securities 

and Exchange Commission. If eonfinned, I will work tirelessly to bring all of my knowledge and 

experien<»-as a legal scholar, teaeher, policymaker, and practitioner-to bear on the 

Commission's crucial task. 

27 
98 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM DAVID J. RYDER 

Q.1. Under the advice of the Office of Government Ethics, you have 

agreed, if confirmed as Director of the Mint, to recuse yourself from 

any decisions involving your former employer, Honeywell. 

What types of contracts and other business arrangements does 

the Mint currently have with Honeywell? If you recuse yourself 

from a decision involving Honeywell, who will make those decisions 

in your place? 

A.1. It is my understanding that the Mint’s only business arrangement with Honeywell is a purchase order (about $22K) with Honeywell Safety Products for training at the United States Mint in 

Philadelphia. If confirmed, I will adhere to all applicable ethics 

laws, rules, and policies. Should I have a question concerning my 

ethical obligations, I will seek the counsel of appropriate ethics 

staff. Additionally, if a situation arises in which the Director of the 

Mint is recused, it is my understanding that the Deputy Director 

of the Mint would handle such matters. 

Q.2. As Senator Scott referenced during your nomination hearing, 

the Mint suspended its Mutilated Coin Redemption Program in November 2015 amid concerns about unlawful activity in the program. The Mint has since issued a proposed rule that would allow 

the Mint to add further precertification, documentation, and testing 

requirements for individuals or companies submitting mutilated 

coins for redemption. 

During the 2 years that the program has been suspended, companies have accumulated a significant backlog of mutilated coins that 

cannot be circulated or disposed of without the Mint. Do you believe the proposed rule will fully address the concerns that the 

Mint has expressed about the integrity of the program? Will the 

Mint work with individuals and companies that may have large 

backlogs to accommodate unusually large redemptions as the program restarts? 

A.2. On November 2, 2015, the Mint suspended the exchange program to assess the security of the program and develop additional 

safeguards to ensure the integrity of the United States coinage. A 

Notice of Proposed Rulemaking was published in the Federal Register on September 19, 2017, inviting the public to comment on proposed revised regulations for the program. I understand an important part of the rulemaking process that remains ongoing is reviewing public comments to further consider the impact of the regulation’s measures on addressing security risks while maintaining 

access to an effective program for participants. Although I have not 

been part of the rulemaking’s development or the upcoming process 

of evaluating potential comments, I do believe the Mint has taken 

important steps to strengthen the program. 

Furthermore, I recognize the importance of resuming the program to individuals and companies that have large backlogs. I support the Mint’s intent to expeditiously resume the program, and I 

look forward to working with you and your staff to ensure the Program remains a cost-effective way for the public to redeem damaged coins. 

99 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR ROUNDS 

FROM DAVID J. RYDER 

Q.1. Mr. Ryder, I appreciated meeting with you recently. I understand that you previously served as Director of the Mint under 

President George H.W. Bush, and additionally as the Deputy 

Treasurer. 

What do you believe has changed from working as Director under 

President H.W. Bush and now? Are there any new challenges that 

you believe the Mint is facing today? 

A.1. Circulating coin redesign has changed dramatically since 1992, 

which has contributed millions of dollars to the general fund. I believe that the Mint has also been improving their manufacturing 

processes which has resulted in fewer errors in coin manufacturing. 

For example, the Mint has reported that its Mint Quality Index 

(MQI) went from the low 70s in 2007 to a rating of 99.3 percent 

in 2014 for circulating coins at the Denver and Philadelphia facilities. Additionally, I believe the Mint’s customer service has improved dramatically in the commemorative and bullion sales area. 

One of my challenges will be the implementation of the Mint’s 

new 5-year strategic plan which focuses on: (1) the work place environment; (2) improving the Mint’s management and governance; 

and (3) integrating technology into operations and support lines. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM HESTER M. PEIRCE 

Q.1. Although materiality has long been the foundation of the 

SEC’s disclosure requirements, the SEC has, over time, supplemented this standard with specific bright-line rules. For example, 

the SEC requires disclosure of specified information related to executive compensation, corporate governance, and internal controls. 

Do you agree that bright-line rules can be useful to both companies 

and investors by supplementing the traditional materiality standard? 

A.1. As you note, materiality is the touchstone for companies’ disclosure under the securities laws. Bright-line rules can be useful in 

guiding companies’ disclosure efforts, but materiality should be the 

controlling principle for the SEC in formulating bright-line disclosure rules and disclosure guidance. 

Q.2. Speaking at NYU’s School of Law earlier this year, Chair 

Clayton said, ‘‘I am not comfortable that the American investing 

public understands the substantial risk that we face systemically 

from cyber issues and I would like to see better disclosure around 

that.’’ Two days later, the Equifax breach proved him right. 

If confirmed, would you commit to working with Chair Clayton 

and the other Commissioners to revise cyber risk disclosure requirements, including considering a specific 8-K reporting item for 

cybersecurity breaches that expose personally identifiable information? 

A.2. I share your and Chairman Clayton’s concern that investors 

need to understand the material cybersecurity risks that companies 

face. If confirmed, I commit to working with Chairman Clayton, my 

fellow Commissioners, and the staff of Corporation Finance to conVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00103 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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sider whether companies need additional guidance for cybersecurity 

reporting and what form such guidance should take, including potentially a specific Form 8-K reporting requirement. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY 

FROM HESTER M. PEIRCE 

Q.1. It is my understanding that Initial Coin Offerings (ICOs) and 

crypto-currencies have raised billions thus far in 2017. This represents an exponential growth in recent years. 

I was glad to see the SEC begin to closely examine this market, 

and I applaud the SEC for its recent issuance of the Investigative 

Report regarding the DAO. The Investigative Report was an important step in bringing some clarity to the ICO market in explaining 

how securities laws apply to ICOs depending on the ‘‘facts and circumstances.’’ 

Although the DAO report was helpful, I worry that a continued 

lack of clarity in ICO regulation will stifle innovation and, most importantly, leave investors at risk. 

Should the SEC do more to bring clarity to the ICO market? 

A.1. The SEC’s 21(a) report on the DAO was a useful first step in 

providing clarity in the ICO market. As the report noted, the facts 

and circumstances surrounding an ICO determine whether and 

how securities laws are implicated. As it gains more experience 

with ICOs, the SEC should look for additional opportunities to provide clarity—perhaps through a guidance document—to the market 

about conducting ICOs in compliance with the securities laws. To 

the extent the SEC brings enforcement actions in this area, it 

should identify with specificity how a particular ICO violated the 

securities laws to give market participants clear examples of what 

they should not do. 

Q.2. Aside from enforcement actions, what can the SEC do to provide certainty to the ICO market? Would a proposed rulemaking 

make sense? 

A.2. A proposed rulemaking might make sense. Alternatively, the 

SEC could consider issuing a concept release, conducting public 

roundtables, or otherwise soliciting input from a broad array of 

market participants and other interested parties before undertaking a rulemaking. If I am confirmed, I look forward to working 

with my fellow Commissioners and the SEC staff to assess appropriate next steps regarding ICOs. The SEC also should work with 

the CFTC to help to clarify when ICOs implicate each agency’s regulatory regime. 

Q.3. The SEC is about to implement the initial operating stage of 

the Consolidated Audit Trail (CAT). Exchanges will soon begin reporting to what will be a massive database, which will include a 

significant amount of highly sensitive information. In its second 

phase, CAT will begin receiving personally identifiable information 

(PII) of brokerage customers. The recent breach of the SEC’s 

EDGAR database, however, calls into question the security of the 

SEC’s information technology. 

Will you commit not to collect any PII until you are confident 

that CAT is not susceptible to a breach? 

101 

1See, e.g., Government Accountability Office, ‘‘Information Security: SEC Needs To Improve 

Controls Over Financial Systems and Data’’ (GAO Report No. 14-419 April 2014), at p.5 (‘‘Although SEC had issued policies and implemented controls based on those policies, it did not consistently protect its network boundary from possible intrusions; identify and authenticate users; 

authorize access to resources; ensure that sensitive data are encrypted; audit and monitor actions taken on the commission’s systems and network; and restrict physical access to sensitive 

assets.’’); Office of Inspector General, ‘‘SEC, Federal Information Security Management Act: Fiscal Year 2013 Evaluation’’ (Report No. 522 Mar. 31, 2014), at p.i (describing a number of areas 

in which previously identified weaknesses in security controls had not been corrected and thus 

‘‘could adversely affect the confidentiality, integrity, and availability of the agency’s information 

and information systems’’); Office of Inspector General, ‘‘SEC, Report of Investigation into Misuse of Resources and Violations of Information Technology Securities Policies Within the Division of Trading and Markets’’ (Case No. OIG-557 Aug. 30, 2012), p.11 (in an investigation of 

security breaches in the Automation Review Policy Program (ARP), the SEC office charged with 

overseeing computer networks at self-regulatory organizations, finding that ‘‘staff spent hundreds of thousands of dollars on computer equipment and software that had no checks in place 

to ensure that the equipment and software purchased were needed or used to further the ARP 

program mission’’ and that ‘‘a significant portion of the equipment and software purchased was 

never used in the ARP program’’). 

A.3. If I am confirmed, I commit to working with my fellow Commissioners, the SEC staff, and the self-regulatory organizations 

participating in CAT to ensure that, to the extent PII needs to be 

collected, it is not susceptible to a breach. 

Q.4. We usually think of outside hackers when we think of data security, but in numerous cases, individuals trusted with access to 

confidential data are actually the source of leaks—Chelsea Manning and Reality Leigh Winner come to mind. How should the SEC 

control access to CAT data within the agency? Should it allow other 

agencies or researchers access to CAT data? 

A.4. I am concerned about both outside and inside compromises of 

the CAT data. My concerns stem in part from prior incidents at the 

SEC 1 and in part from the reality that mistakes happen even 

when people are well-intentioned. If I am confirmed, I will work 

with my fellow Commissioners and the SEC staff to understand the 

protections that are in place for dealing with CAT data, including 

who is entitled to access the data and how. Intergovernmental data 

sharing is important, but should be preceded by similar questions 

about who the agency will allow to access the information and how. 

If nongovernmental researchers are permitted to have access to the 

data, additional protections will be necessary, including eliminating 

PII. Before researcher permissions are granted, the SEC should 

carefully consider the purpose of allowing such access and whether 

it justifies the additional risk of leakage. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS 

FROM HESTER M. PEIRCE 

Q.1. In brief, what is the SEC currently doing right, what needs 

to change, and how do you plan on prioritizing your time, should 

you be confirmed? 

A.1. Chairman Clayton has set the SEC on the right course by laying out and taking initial steps with respect to important priorities, 

including facilitating capital formation, combating retail investor 

fraud, and better identifying and protecting against cybersecurity 

risks. To pursue these priorities, the SEC will need to shed some 

bad past habits, including a tendency to limit investor opportunities and unduly constrain access to the capital markets in the 

name of investor protection. The SEC should work to refocus discloVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00105 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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sure requirements so that companies are providing the material information that investors need to make informed investment decisions. The SEC also should work to modernize its rulebook, 

which—after more than 80 years—has grown fat and unwieldy. 

If I am confirmed, I will work with the Chairman to improve capital formation, expand investor opportunities, combat retail fraud, 

strengthen cybersecurity risk management, and tend to the day-today business of the SEC. I expect my priorities to include bread 

and butter issues like EDGAR, the efficacy of the SEC’s compliance 

and enforcement programs, oversight of FINRA and the PCAOB, 

and consideration of potential changes to the rules governing retail 

financial professionals and the rules governing market structure. 

As I noted at the hearing, if I am confirmed, my priorities may 

change in response to market changes or information I learn from 

my fellow Commissioners or the SEC staff. 

Q.2. Do you believe that private capital being put into underperforming companies can improve the company’s performance? 

A.2. Private capital, along with the expertise that often accompanies it, can play an important role in assisting underperforming 

companies. 

Q.3. Do you believe that curbing more private investment would 

help underperforming companies? 

A.3. Unwarranted restrictions on the ability of companies to raise 

capital in the private markets diminish the likelihood that companies will survive and thrive. An effective regulatory framework can 

help to ensure that companies have access to a healthy supply of 

private capital and the managerial and operational expertise that 

goes along with it. 

Q.4. Do you agree that private capital being put into companies 

leads to more transparency and communications with existing 

shareholders? 

A.4. Private providers of capital can and often do condition their 

provision of capital on the institution of best practices regarding 

transparency and shareholder communications. 

Q.5. Do you agree that corporate CEOs are more responsive to the 

market today than they were in the past? 

A.5. Among other things, the proliferation of real-time information 

about companies, the increasing speed with which that information 

is incorporated into market prices, and compensation plans linking 

CEO pay to company performance likely have increased corporate 

CEOs’ responsiveness to the market. 

Q.6. Do you believe that restricting or making it harder for private 

capital to invest in American companies is a good idea? 

A.6. Placing unwarranted restrictions on the ability of American 

companies to access private capital is not a good idea from the perspective of those companies, investors, and the general public. 

Along with our public markets, private markets are an important 

source of capital for companies of all sizes. If I am confirmed, I 

plan to work to help both private and public markets function effectively to help support the dynamism of American companies, the 

103 

health of the American economy, and the prosperity of American 

employees and investors. 

Q.7. Do you believe that private capital should be flexible and 

adaptive to quickly changing circumstances? 

A.7. Private capital should be flexible and adaptive to quickly 

changing circumstances. One of the important features of well-functioning capital markets is that providers of capital are able to react 

rapidly to developments at particular companies and in the broader 

economy. A proper regulatory framework can facilitate such flexibility. 

Q.8. Do you think that the current IPO market is at its peak? 

What could we be doing to facilitate more entrants into the public 

markets? What are some determinative factors that companies 

evaluate when making a decision to enter into the public markets? 

Do you think that some of these factors have served as preclusive, 

often determinative factors for a company deciding not to enter the 

public marketplace? How do public companies affect job creation 

and economic growth? 

A.8. Whether the IPO market is at its peak depends on a number 

of factors, including general economic conditions, the reasonableness of the existing and prospective regulatory framework governing public companies, expectations about the cost of shareholder 

litigation, and the degree to which public capital is cheaper than 

private capital. In deciding whether to go public, companies consider these factors along with their own current need for capital, 

expectations about future growth, and an assessment of the prospects for enhanced stock liquidity. If companies determine that the 

cost of being public, including anticipated costs due to future regulatory changes, outweighs the benefits of easier access to capital 

and greater liquidity for shareholders, companies will not take the 

step of going public. Reluctance of companies to go public has serious implications for our economy, investors, and workers. Ready access to capital markets enables companies to obtain the capital 

they need to innovate, hire workers, and contribute to economic 

growth. 

While some factors that affect the decision to go public are beyond the control of regulators and legislators, the SEC and Congress can take further steps to streamline the process for going 

public, eliminate requirements that do not protect investors, address concerns about market structure to ensure that the markets 

work for issuers of all sizes, and commit to a reasonable, effective 

regulatory regime for public companies. 

Q.9. Do you think that the SEC should have a formalized retrospective review process, much like prudential regulators have, by 

which the SEC can take a holistic look at its rules and regulations 

and decide which ones are outmoded, ineffective, burdensome, etc., 

or similarly decide which ones need to be changed and modernized? 

A.9. Retrospective review is an important part of maintaining an 

effective regulatory framework. If I am confirmed, I would be 

pleased to work with Congress to develop a statutory retrospective 

review process similar to that of the prudential regulators, but the 

SEC already has the ability to develop an effective process interVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00107 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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nally. The SEC has shown an increasing commitment to economic 

analysis, and retrospective review should be part of that commitment. As part of ongoing efforts to further improve economic analysis, the SEC could make a practice of including metrics in its 

rules that can serve as the basis for future retrospective review. 

Moreover, the SEC’s plan to revisit Regulation NMS, among other 

rulemakings, will help to set an agency precedent for retrospective 

review. 

Q.10. How do you plan on working with the CFTC to address harmonization issues? 

A.10. Harmonization efforts by the SEC and CFTC in the derivatives markets are important. Domestic harmonization, in turn, will 

facilitate better international cooperation. SEC–CFTC relations 

have not always been smooth, but Chairmen Clayton and Giancarlo 

have exhibited an interest in building interagency cooperation. If I 

am confirmed, I look forward to working with the CFTC to harmonize rules governing swaps and security-based swaps, efficiently 

oversee dually registered entities, monitor the markets, and develop effective regulatory frameworks for new technologies that potentially implicate both regulatory regimes. I already have the 

pleasure of knowing Chairman Giancarlo, Commissioner Quintenz, 

and CFTC nominee Stump and look forward to getting to know 

Commissioner Behnam. 

Q.11. With regard to cyber infrastructure and enforcement actions, 

what do you think the SEC is doing right and what would you 

change? 

A.11. Chairman Clayton appropriately has expressed a strong commitment to cybersecurity at the SEC and in regulated entities and 

public companies. His early, public prioritization of this issue sent 

an important message to regulated entities and public companies. 

If confirmed, I will be better able to assess what the SEC is doing 

in terms of cyber enforcement. The SEC should create a collaborative environment to facilitate efforts by the private sector, the 

SEC, and other Government agencies to identify and address 

cyberthreats. If the SEC fails to address its own problems in cybersecurity, I am concerned that regulated entities will likewise cut 

corners. 

Q.12. The Treasury Capital Markets report touched on potential 

changes to best execution and potential changes to market structure issues, particularly in the context of Reg. NMS. Can you give 

me your thoughts on what you view as potential areas for reform 

within the context of Reg. NMS? 

A.12. Regulation NMS attempted to reshape the equity markets according to a particular view of how those markets should work. In 

doing so, the SEC more deeply entrenched itself in decision making, constrained the options of issuers and investors, and added 

new layers of complexity to the markets. Potential reforms could 

make it easier for trading venues to tailor themselves to meet the 

needs of particular issuers or investors, rather than the current 

one-size-fits-all approach. If confirmed, I look forward to working 

with my fellow Commissioners, SEC staff, the Equity Market 

Structure Advisory Committee, and this Committee to identify 

105 

ways in which market structure regulation is not working and consider potential reforms to ensure that our markets serve the full 

range of investors and companies. 

Q.13. Some have argued that our market structure systems have 

become increasingly complex and that the layered regulations have 

created incentives to game the system. Can you help me understand your views on reforming our domestic market structure and 

can you commit to this body that you will work with the Committee 

in tackling some of the languishing issues that have been pervasive 

in market structure over the last 10+ years? 

A.13. Our equity markets are the best in the world, but reforms 

would help to ensure that they stay that way. Mindful of the fact 

that the Chairman sets the rulemaking agenda, I look forward to 

working on such reforms with my fellow Commissioners and with 

this Committee. I share your concern about the system’s complexity 

and the gaming such complexity breeds. I also am concerned about 

the role that SEC regulation plays in determining how, where, and 

when orders are executed. Many problems we see in today’s markets seem to have their origin in well-intentioned SEC attempts to 

structure the markets. In contemplating reforms, the needs of investors and companies should dictate. 

Q.14. IT modernization enables financial services firms to protect 

constituent financial information. In an environment of increasing 

cybersecurity threats, how will you use your role at the SEC to promote IT modernization across the financial services sector and at 

the SEC? 

A.14. If I am confirmed, I will work with Chairman Clayton, my 

fellow Commissioners, and the SEC staff to understand and address weaknesses in the SEC’s information technology infrastructure, policies, and practices. Getting the SEC’s house in order will 

send an important message to financial firms to do the same. The 

SEC’s compliance examiners also play an important role in monitoring how financial firms are doing and where weaknesses may 

lie. If confirmed, I look forward to working with the SEC staff to 

ensure that the oversight program fosters healthy IT modernization practices. 

Q.15. How will you ensure that regulations set by the SEC do not 

impede progress on IT modernization? 

A.15. IT-intensive regulatory initiatives such as Regulation NMS, 

the Volcker Rule, and the Department of Labor’s fiduciary rule 

likely divert industry resources away from IT modernization initiatives. I plan to take such opportunity costs into account in assessing future regulatory changes. In addition, it is important for the 

SEC to write rules in a way that ensures regulated entities have 

the flexibility to shift to newer and better ways of doing things. In 

the past, SEC rules have sometimes inadvertently cemented historical information technology by being overly prescriptive. 

Q.16. With regard to corporate disclosures, what standard should 

be used to determine whether or not something is disclosed? 

A.16. The appropriate standard for corporate disclosure is materiality. Corporations should disclose information ‘‘if there is a substantial likelihood that a reasonable shareholder would consider it 

106 

1TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976). 

2 Id. at 448. 

1https://www.politicopro.com/financial-services/story/2017/10/corporate-penalties-havedropped-at-sec-since-trump-took-office-163857 

important’’ in making an investment decision. 1 That standard 

avoids ‘‘bury[ing] the shareholders in an avalanche of trivial information.’’ 2

Q.17. On February 24, 2017, President Trump signed an Executive 

Order on Enforcing the Regulatory Reform Agenda, part of which 

focused on identifying regulations that are ‘‘outdated, unnecessary, 

and ineffective.’’ Given recent technological advances, one area of 

particular focus should be regulations requiring paper-based communications as the default delivery method in communicating with 

investors and consumers. Such regulations are prime examples of 

regulations that were first adopted decades ago and have failed to 

evolve with the times. 

If confirmed, will you work to ensure that the SEC identifies and 

modifies outdated regulations regarding paper-based communications? 

A.17. If confirmed, I will work to eliminate or modernize outdated 

regulations. Without prejudging the issue about paper-based communications, the subject of an outstanding proposal, I intend to 

work to ensure that technology can be used appropriately and consistent with investor protection to meet disclosure requirements. 

Q.18 Do you believe the recent action by the SEC regarding MiFID 

II was appropriate? If you do not, how would you have addressed 

this issue? 

A.18. While I have not had the opportunity to consult with the 

staff that worked on the MiFID II resolution, I was pleased to see 

that the SEC took concrete steps to provide guidance and legal 

clarity on a matter of such importance. If I am confirmed, I look 

forward to working with my fellow Commissioners, the SEC staff, 

and international counterparts on a longer-term resolution, should 

it be necessary. 

Q.19. Do you think that the U.S. and the SEC should import 

standards from other countries? 

A.19. The SEC should draw lessons from other countries’ regulatory successes and failures, but the SEC needs to develop regulations that work for the American markets. Moreover, wholesale importation of foreign standards does not comport with the Administrative Procedure Act. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR MENENDEZ FROM HESTER M. PEIRCE 

Q.1. A preliminary report released this week found the SEC collected $127 million in corporate civil penalties in 15 cases from 

February through September 2017, in comparison to $702 million 

in 43 cases from February through September 2016. 1

Are you concerned that these numbers may reflect a shift in enforcement priorities? 

107 

A.1. I am committed to a strong enforcement program—one that 

sends a clear message that rules will be enforced impartially, swiftly, objectively, and fairly. It is, however, very difficult to assess the 

effectiveness and priorities of the SEC’s enforcement program by 

looking only at a single statistic, such as the number of cases in 

which corporate penalties were assessed or the amount of penalties. The nature and complexity of cases are also important, and 

these factors might not reflect a shift in enforcement priorities. For 

example, an enforcement action that stops a retail fraudster in her 

tracks before she can harm a lot of investors is an important matter, but might yield relatively small penalties. 

Q.2. If confirmed, what recommendations will you make to Chair 

Clayton to strengthen the ability of the enforcement division to 

hold accountable those that violate Federal securities laws? 

A.2. If confirmed, I will recommend that Chairman Clayton empower the Enforcement Division to pursue enforcement matters— 

regardless of whether they generate big headlines—that go to the 

core of investor protection and market integrity. Retail and accounting fraud matters can be difficult to investigate, but are important. I also will recommend that the Chairman not allow routine compliance matters to take valuable enforcement resources 

away from pursuing intentional violations. I also will work with 

the Chairman foster a culture within the SEC that encourages staff 

to raise concerns and suggest changes. Because much of the enforcement work is conducted outside Washington, DC, I will also 

recommend that Chairman Clayton build strong relationships with 

the regional offices to ensure that all of the agency’s enforcement 

resources are being used productively. 

Q.3. In response to a question from Chairman Crapo, you identified 

cybersecurity as a top priority. If confirmed, what recommendations will you make to Chair Clayton related to cybersecurity both 

at the Commission itself and in the securities markets at large? 

A.3. Cybersecurity must be an SEC priority. The recently revealed 

breach at the SEC is a stark reminder that the SEC has valuable, 

personally and commercially sensitive information. Unfortunately, 

this last breach was not the SEC’s first problem in the cybersecurity area. As indicated by Chairman Clayton’s September 20, 2017, 

public statement on cybersecurity, he takes these issues extremely 

seriously. I will support the Chairman’s efforts, including by recommending that the SEC act more quickly than it has in the past to 

implement recommendations by the SEC’s Inspector General and 

the Government Accountability Office to address cybersecurity 

weaknesses. To be able to do this, the SEC will need to recruit and 

retain information security experts. The establishment of a culture 

at the SEC that encourages employees at all levels to be on the 

lookout for problems can help to ensure that problems are identified and elevated promptly within the SEC. 

As you note, cybersecurity is an issue not just for the SEC, but 

for the securities markets as a whole. By taking aggressive action 

to address its own problems, the SEC can set a powerful example 

for the securities markets. I also will recommend that the Chairman work collaboratively with regulated entities and other regulators to identify and combat cyberthreats. 

108 

2See, e.g., Government Accountability Office, ‘‘Information Security: SEC Needs To Improve 

Controls Over Financial Systems and Data’’ (GAO Report No. 14-419 April 2014), at p.5 (‘‘Although SEC had issued policies and implemented controls based on those policies, it did not consistently protect its network boundary from possible intrusions; identify and authenticate users; 

authorize access to resources; ensure that sensitive data are encrypted; audit and monitor actions taken on the commission’s systems and network; and restrict physical access to sensitive 

assets.’’); Office of Inspector General, ‘‘SEC, Federal Information Security Management Act: Fiscal Year 2013 Evaluation’’ (Report No. 522 Mar. 31, 2014), at p.i (describing a number of areas 

in which previously identified weaknesses in security controls had not been corrected and thus 

‘‘could adversely affect the confidentiality, integrity, and availability of the agency’s information 

and information systems’’); Office of Inspector General, ‘‘SEC, Report of Investigation into Misuse of Resources and Violations of Information Technology Securities Policies Within the Division of Trading and Markets’’ (Case No. OIG-557 Aug. 30, 2012), p.11 (in an investigation of 

security breaches in the Automation Review Policy Program (ARP), the SEC office charged with 

overseeing computer networks at self-regulatory organizations, finding that ‘‘staff spent hundreds of thousands of dollars on computer equipment and software that had no checks in place 

to ensure that the equipment and software purchased were needed or used to further the ARP 

program mission’’ and that ‘‘a significant portion of the equipment and software purchased was 

never used in the ARP program’’). 

Q.4. In response to a question from Senator Reed regarding resources and cybersecurity, you said ‘‘it will be much easier to assess that [resources] when I am actually there.’’ I am concerned 

that the SEC does not have the resources it needs to appropriately 

protect itself from cybersecurity threats. 

What specific steps will you take to investigate whether the SEC 

has sufficient cybersecurity resources? 

A.4. If I am confirmed, I will talk with the Chairman, my fellow 

Commissioners, and staff in the Office of Information Technology 

to understand what resources are devoted to cybersecurity now, 

how cybersecurity resources have been used in the past, and what 

projected needs are for the future. Past reports suggest that some 

of the SEC’s problems may be due to mismanagement of resources, 2 so I would want to understand whether resource management has improved since the period covered by those reports. An 

objective outside analysis of the SEC’s cybersecurity infrastructure 

could be useful in understanding what the SEC’s resource needs 

might be in coming years. I also hope to get a better understanding 

of how other similarly situated agencies are managing cybersecurity threats. 

Q.5. If you conclude that the SEC does not have sufficient cybersecurity resources, will you make that finding clear to both Chair 

Clayton and Members of Congress? 

A.5. Yes. 

Q.6. I remain concerned that the current lack of transparency 

around short selling enables manipulative trading behaviors that 

harm growing companies and discourages long-term investment. I 

raised this concern to former SEC Chair Mary Jo White in a letter 

in January 2017. In my view, the current lack of transparency of 

short positions has a trifold impact on the securities market—it deprives investors of information critical to making meaningful investment decisions; it denies issuers of insights into trading activity and inhibits their ability to interface with investors; and it 

withholds crucial information from the market, ultimately impeding efficiencies and diluting transparency. There are currently two 

petitions for rulemaking pending before the SEC requesting that it 

promulgate rules to require disclosure of short positions in parity 

with the existing required disclosure of long positions (File No. 4- 

109 

689 and File No. 4-691). In your opinion, should the SEC act on 

these pending rulemaking petitions or consider any alternative options, in order ensure fair disclosure of short positions? 

A.6. To avoid pre-judging the issue, I cannot speak to the particular petitions. If I am confirmed, however, I look forward to 

working with my fellow Commissioners and SEC staff to assess 

transparency concerns associated with short selling and potential 

avenues for addressing those concerns without unduly curtailing 

socially beneficial short selling. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER 

FROM HESTER M. PEIRCE 

Q.1. The Citizens United v. FEC ruling allowed, among other 

things, corporations to contribute independent political expenditures. Public companies are active participants in our elections, yet 

their shareholders do not know the role that they play because the 

SEC has been reluctant or handcuffed from requiring firms to disclose their political contributions. 

Do you believe shareholders have a right to know whether a company they’ve invested in is making contributions in their best interest? 

A.1. I understand that some shareholders and other interested persons have expressed an interest in corporate political contributions. 

Under current securities law, however, companies are not required 

to disclose information regarding political contributions unless that 

information is material. 

Q.2. What should be the threshold for determining when a company discloses their political spending? 

A.2. Materiality is the appropriate standard for all corporate disclosures. Companies should disclose political contributions that are 

important to a reasonable investor’s investment decision. 

Q.3. What policy levers does the SEC have to promote long-term 

value creation? 

A.3. The SEC has several policy levers relevant to long-term value 

creation. Adjustments to the regulatory framework governing capital formation can ensure that innovative and growing companies 

can obtain the capital they need to create long-term value. The 

SEC’s disclosure regime can promote long-term value creation by 

providing investors the information they need to assess companies’ 

long-term value. Adjustments to the regulatory regime governing 

market structure can ensure liquid markets for the shares of companies of all sizes, which in turn helps those companies to attract 

investors and build long-term value. 

Q.4. Do you believe companies are engaging in too many stock 

buybacks and dividend payments and not spending enough on corporate growth? 

A.4. I share a desire to see corporate growth, but assessing whether there are too many buyouts and dividends would require a caseby-case, fact-specific assessment. Manipulative buyouts, of course, 

should not occur at all. Buybacks and dividends, if properly and legally used, can contribute to corporate growth. For example, a comVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00113 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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pany without productive uses for cash might conclude that it 

should return cash to shareholders through a stock buyback or dividend. The shareholders can then invest that money in companies 

with productive uses for it. Other companies might contribute to 

corporate growth by choosing to refrain from buybacks and dividends in order to invest in new projects. 

Q.5. Is there a way to center less attention on quarterly earnings? 

A.5. Some market participants and companies cite quarterly earnings pressure as a reason that companies cannot focus on long-term 

value. I am aware of some private sector efforts to find ways for 

companies to expressly embrace a long-term view. If confirmed, I 

look forward to working with my fellow Commissioners and SEC 

staff to consider whether regulatory or statutory changes are necessary and appropriate to allow such efforts to move forward. 

Q.6. The disclosure of innumerable hacks over the past few years, 

recently punctuated by hacks of the SEC and Equifax, has made 

clear that we all need to raise our cybersecurity game. Given the 

important role broker-dealers play in the formation and distribution of capital in the United States, do you think it’s appropriate 

for FINRA, in its examination of broker dealers, to perform cybervulnerability assessments of registered broker dealers? 

A.6. Broker-dealers’ cybersecurity is an important matter given 

their central role in the capital markets. FINRA looks at registered 

broker-dealers’ cybersecurity policies, practices, and risk management. If confirmed, I look forward to working with my fellow Commissioners, the SEC’s FINRA inspection office, and FINRA to understand the scope of FINRA’s existing cyber assessments and 

whether additional oversight of broker-dealers’ cyber vulnerabilities 

by FINRA or the SEC is necessary. 

Q.7. On Oct. 15, 2014, the Treasury market flash rally occurred, 

where the yield on the benchmark 10-year U.S. Treasury traded in 

a 37-basis-point range (0.37 percent), only to close six basis points 

below its opening level. Principal trading firms (PTFs) account for 

a majority of trading in inter-dealer Treasury markets, which represent half of all trading in Treasuries. Due to a loophole, PTFs, 

including many that use algorithmic strategies, have not been required to register as brokers. This allows them to escape oversight 

and reporting requirements. Will you commit to ensuring that 

PTFs are required to register as brokers? 

A.7. If confirmed, I will consult with my fellow Commissioners, 

SEC staff, and the Department of Treasury to consider whether, in 

light of recent market developments, a rulemaking to extend 

broker-dealer registration and reporting requirements to principal 

trading firms in the Treasury markets is appropriate. 

Q.8. Under current law, Regulation ATS’s basic regulatory standards for exchanges and other financial markets are designed to ensure market resilience, integrity and adequate operational risk controls. But trading venues that facilitate the exchange of Government securities are excluded from Regulation ATS. And by excluding them from Regulation ATS, they are also excluded from Regulation SCI’s cybersecurity requirements. Will you commit to closing 

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1 ‘‘FINRA Plays ‘Gotcha’ With Brokers, Short-Changes Investors: Hester Peirce’’, Think Advi- sor (Mar. 17, 2017) (online at http://www.thinkadvisor.com/2017/03/17/finra-plays-gotchawith-brokers-short-changes-inve?slreturn=1509052996). 2 Hester Peirce, ‘‘The Financial Industry Regulatory Authority: Not Self-Regulation After All’’, 

Mercatus Center 19 (Jan. 2015) (available at https://www.mercatus.org/system/files/PeirceFINRA.pdf). 3 Id. 

4Greg Iacurci, ‘‘SEC Nominees Jackson and Peirce Blast FINRA’s Transparency During Hearing’’, Investment News (Oct. 24, 2017) (online at http://www.investmentnews.com/article/ 

20171024/FREE/171029976/sec-nominees-jackson-and-peirce-blast-finras-transparency-during). 5Mark Schoeff, Jr., and Bruce Kelly, ‘‘FINRA: Who’s Watching the Watchdog?’’: Investment 

News (Sept. 2, 2017) (online at http://www.investmentnews.com/article/20170902/FEATURE/ 

170909996/finra-whos-watching-the-watchdog). 

the loophole that permits Government-securities trading venues to 

avoid these basic requirements? 

A.8. It is crucial that our Government securities markets function 

well and are resilient. The SEC’s 2015 proposal on Regulation ATS 

asked for comment on whether regulatory changes are appropriate 

for Government-securities trading venues If confirmed, this issue 

may come before me in connection with the adoption of changes to 

Regulation ATS. In considering the appropriate regulatory framework (including cybersecurity requirements) for Government-securities trading venues, I will review relevant comments and consult 

with my fellow Commissioners, SEC staff, the Department of 

Treasury, and banking regulators. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN 

FROM HESTER M. PEIRCE 

Q.1. You have written extensively on the problems at the Financial 

Industry Regulatory Authority (FINRA). You previously said that 

you’re ‘‘not sure that FINRA serves anyone well in its current 

form,’’ and that ‘‘investors feel they’re not getting the protection 

they need.’’ 1 And yet, despite the SEC having the tools to oversee 

it, ‘‘in practice FINRA operates with substantial independence from 

the SEC.’’ 2 As you put it, ‘‘FINRA rules do not typically attract 

close attention from the SEC’s commissioners.’’ 3

Given your statements on FINRA and the lack of oversight from 

the SEC, can you commit to reversing that trend and conducting 

formal reviews of all FINRA actions going forward? 

A.1. As you note, I have concerns about FINRA’s accountability. If 

I am confirmed, therefore, I will actively review FINRA actions. 

Q.2. Will you commit to initiating a review of FINRA’s investor 

protection practices? 

A.2. Investor protection is central to FINRA’s role. I look forward 

to working with my fellow Commissioners and SEC staff to review 

FINRA’s investor protection practices. 

Q.3. At your hearing, you stated that you ‘‘worry about transparency’’ at FINRA. 4 FINRA meets behind closed doors and is not 

required to release information to the public unless it deems it necessary. FINRA is not subject to the Freedom of Information Act, its 

hearings are not public, and ‘‘there is virtually no public information currently available about how FINRA specifically uses [its] 

revenues[.]’’ 5

Do you think FINRA should be subject to the same transparency 

and due process requirements that Government agencies are subVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00115 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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6 Jay Clayton, ‘‘Public Comments From Retail Investors and Other Interested Parties on 

Standards of Conduct for Investment Advisers and Broker-Dealers’’, Securities and Exchange 

Commission (June 1, 2017) (online at https://www.sec.gov/news/public-statement/statementchairman-clayton-2017-05-31). 

ject to? If not, which requirements should and should not apply to 

FINRA? 

A.3. Self-regulatory organizations (SROs) have traditionally not 

been subject to the same transparency and due process requirements as Government agencies. Given FINRA’s quasi-governmental 

nature, I and others have asked whether FINRA’s transparency 

and due process requirements should look more like those applicable to Government agencies. I have not reached a definitive conclusion on how FINRA’s transparency and due process requirements 

should be reformed. As I mentioned at the hearing, I am hopeful 

that some positive change may come from within FINRA in response to the review that CEO Robert Cook initiated. If I am confirmed, I look forward to exploring with my fellow Commissioners, 

SEC staff, Members of this Committee, investors, member firms, 

and other interested parties whether the SEC or Congress also 

need to act to increase transparency and procedural protections at 

FINRA. 

Q.4. If confirmed, will you review transparency and due process at 

FINRA? If necessary, will you work with both your fellow Commissioners and the Congress to reform FINRA? 

A.4. If confirmed, I intend to work with my fellow Commissioners 

and the SEC staff to look at transparency and due process at 

FINRA. If necessary, I will work with my fellow Commissioners 

and Congress on reforming FINRA. 

Q.5. Despite refusing to disclose most of their finances, FINRA 

pays it several of its seven of its executives more than $1 million 

per year. Given its failure to protect investors, do you think it is 

appropriate for FINRA to pay its executives several times more 

than typical Government regulators? 

A.5. I am aware of concerns about the high salaries of FINRA executives, particularly because these salaries are paid by brokerdealers and, ultimately, investors who have little input in setting 

them. The SEC is not in a position to set salaries at FINRA, but, 

should I be confirmed, I will work to hold FINRA accountable for 

how well it is fulfilling its role as the frontline regulator of brokerdealers. A piece of this consideration is likely to be how effectively 

FINRA is spending its resources. 

Q.6. On June 1, 2017, the SEC solicited public comments from retail investors and other interested parties on revising its standards 

of conduct for investment advisers and broker-dealers. In this request for comments the SEC asked ‘‘If the commission were to proceed with a disclosure-based approach to potential regulator action, 

what should that be?’’ 6

Do you believe that the financial incentives that create conflicts 

of interest in the retail investment market that harm investors can 

be eliminated by enhanced disclosure alone? 

A.6. A key part of investor protection is ensuring that investors 

have access to the information they need to make investment deciVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00116 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
113 

sions, including decisions about working with a financial professional. Disclosing conflicts of interest can help investors to choose 

an appropriate financial professional, even if some conflicts remain. 

Q.7. If not, what steps will you take to directly tackle problematic 

incentives that lead to conflicts of interest that harm investors? 

A.7. As you noted, Chairman Clayton recently sought comment 

from retail investors and others about revising the standards of 

conduct for financial professionals. I look forward to reviewing 

these comments, working with my fellow Commissioners and SEC 

staff in the Divisions of Investment Management and Trading and 

Markets, and consulting with the Department of Labor, the SEC’s 

Investor Advocate, the Investor Advisory Committee, and State 

regulators to consider whether regulatory changes are needed and 

what those changes should look like. Among other issues that I will 

consider are the role that incentives play in the provision of retail 

financial services. 

Q.8. If so, how do you design a disclosure regime that eliminates 

problematic financial incentives? 

A.8. If I am confirmed, until I have consulted with my fellow Commissioners, relevant staff, the Investor Advisory Committee, the 

Department of Labor, State regulators, and other interested parties, I cannot commit to supporting a particular regulatory approach in this area. 

Q.9. If the commission proceeds with a disclosure-based approach 

to potential regulator action, what user tests will the commission 

conduct to prove that all investors, not just the most sophisticated, 

fully understand and appreciate the nature and extent of the conflicts of interest and make a truly informed decision as a result? 

A.9. As your question suggests, investor testing can be an important tool for the SEC in designing disclosures so that retail investors are able to understand them and readily find in them the information that is critical to making good investment decisions. If 

confirmed, I look forward to drawing on the work the Office of the 

Investor Advocate’s Policy Oriented Stakeholder and Investor Testing for Innovative and Effective Regulation (POSITIER) initiative. 

The empirical research produced and aggregated as part of this initiative is likely to be relevant to rulemaking efforts regarding the 

provision of retail financial products and services and many other 

SEC rulemaking initiatives. The research also will help the Commission to explore how different types of investors understand and 

respond to disclosures and how other types of regulation affect investors. 

Q.10. Will you consult the extensive economic analysis the Department of Labor put together for their rulemaking on the fiduciary 

standard, including analysis on the incidence and cost of conflicts 

of interest in the financial services industry and on how these financial conflicts influence adviser recommendations? 

A.10. If confirmed, as part of considering any potential rulemaking 

in this area, I will consult the Department of Labor’s work in connection with its fiduciary rulemaking, including its economic analysis. 

114 

Q.11. What will you do to ensure that broker-dealers do not call 

themselves advisers? How can investors distinguish between sellers 

and advisers if sellers are allowed to call and market themselves 

as advisers? 

A.11. I am aware of concerns that the use of the ‘‘adviser’’ title by 

broker-dealers is a source of investor confusion. If I am confirmed, 

I look forward to working with my fellow Commissioners and the 

SEC staff to consider how this source of confusion can best be addressed. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR DONNELLY FROM HESTER M. PEIRCE 

Q.1. In previous conversations with Mr. Jackson and Ms. Peirce, 

we have discussed my concerns that the wave of stock buybacks in 

recent years has been at the expense of the long-term health of 

companies, their workers, and their communities. 

Are you concerned that the increase of stock buybacks in recent 

years has been at the expense of investments in American workers? 

A.1. I share your desire to see companies investing in American 

workers, and the SEC should monitor stock buybacks. To the extent that a company is repurchasing its shares to return cash that 

it cannot productively use, buybacks can drive funds to companies 

that are eager to hire workers. One important way the SEC can 

help to protect American workers is to ensure that companies of all 

sizes can raise money in our capital markets, which they can then 

use to hire workers, expand production, and invest in research and 

development. If capital markets are healthy, share buybacks may 

occur less frequently and any associated layoffs will take less of a 

human toll as new and expanding companies will have the funds 

to hire laid-off workers. 

Q.2. What actions can or should the SEC take to better monitor 

stock buybacks and to increase transparency? What about requiring more immediate disclosure (as opposed to quarterly, as currently required)? 

A.2. Particularly given the large number of stock buybacks in recent years, the SEC should monitor stock buyback activity for compliance with the safe harbor conditions of rule 10b-18, if relevant, 

and to ensure that repurchases are not fraudulent or manipulative. 

If confirmed, I look forward to consulting with my fellow Commissioners and SEC staff regarding whether the current disclosure 

about stock buybacks is adequately meeting investors’ needs or 

whether more frequent disclosure would be appropriate. 

Q.3. Mr. Jackson, your written testimony includes this excerpt: ‘‘I 

will work to implement the corporate-governance protections that 

Congress has enshrined into law—so that investors, employees, 

and communities can be sure that our companies are working to 

produce the kind of long-term value creation that has been the 

hallmark of the American economy for generations.’’ I agree that 

companies should produce long-term value creation, but unfortunately ‘‘short-termism’’ has become a disease; Wall Street pressure 

results in corporate management making decisions based on the 

next quarter as opposed to the next decade. 

115 

Ms. Peirce, do you share similar concerns about ‘‘corporate shorttermism’’? What actions can or should the SEC take to combat this 

problem and encourage long-term value creation? 

A.3. I am aware that many market observers and market participants have expressed concern that short-termism is driving decisions that are not value-maximizing in the long-term. While I believe that market prices generally reflect the long-term value of 

companies, it is important to ensure that the capital markets work 

for investors and companies with a long-term focus. One way the 

SEC can do this is by ensuring that disclosures are focused on 

items material to issuers’ long-term value. I look forward to exploring—with my fellow Commissioners, SEC staff, investors, issuers, 

and this Committee—additional regulatory and statutory changes 

that would make it easier for companies to explicitly and purposefully embrace a long-term approach. 

Q.4. Mr. Jackson, in our meeting, I mentioned the Carrier layoffs 

and the heart-wrenching video where a corporate executive told 

hundreds of workers their jobs were going to Mexico. In response, 

I crafted the End Outsourcing Act to keep jobs in America by restricting tax breaks and Federal contracts for companies that ship 

jobs to foreign countries. It is difficult, however, to track when and 

where outsourcing occurs. I believe the SEC can take modest steps 

in this regard by requiring public corporations to disclose countryby-country employment. This would help investors determine which 

companies employ American workers and better understand where 

outsourcing has occurred. 

To both witnesses, do you support requiring corporations to disclose employment on a country-by-country basis to help increase 

transparency of outsourcing and American employment? 

A.4. I share your concern about the elimination of jobs in this country. The most important step the SEC can take to help to address 

this problem is to ensure that our capital markets are functioning 

properly so that we have a dynamic economy in which companies 

compete vigorously for workers all across this country. My assessment of an SEC mandate to disclose workers’ locations, as with 

other disclosure requirements, would turn on its materiality. In addition, the details of how such a mandate is structured would be 

relevant to my decision of whether to support such a mandate. In 

considering such a mandate, I would want to consult with my fellow Commissioners and staff in the Division of Corporation Finance 

and Division of Economic and Risk Analysis. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ 

FROM HESTER M. PEIRCE 

Q.1. I am very concerned about legislative proposals to dramatically increase the threshold for submitting shareholder proposals. 

Shareholder proposals are an important way for shareholders to 

communicate with management. They have been instrumental in 

improving corporate governance, such as requiring that independent directors make up at least a majority of corporate boards. 

Shareholders submit proposals on emerging risks, such as cybersecurity and consumer data protection. 

116 

1https://www.sec.gov/files/446-a.pdf 

I also worry that the SEC may respond to pressure from companies that do not like dealing with shareholder proposals and raise 

the threshold on its own. 

Do you think shareholders should have a voice in the companies 

they own? 

A.1. Shareholders should have a voice in the companies they own. 

Although most contours of shareholders’ interactions with companies are governed by State law, the SEC’s Division of Corporation 

Finance is actively engaged in the shareholder proposal process. 

The process can be costly to shareholders and the SEC. If, in light 

of these burdens, the SEC revisits shareholder proposal thresholds, 

that reconsideration must be undertaken with the benefit of the 

SEC staff’s expertise and input from, interested parties, including 

the shareholders whom any changes would affect. 

Q.2. Do you think it would a problem if the threshold for submitting proposals was set so high that it blocked all but the biggest 

and wealthiest shareholders from submitting proposals? 

A.2. It is important that any changes in this area balance the beneficial role that shareholder proposals can play in informing companies of small and large shareholders’ concerns with the costs that 

shareholder proposals can impose on nonproposing shareholders. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR CORTEZ MASTO FROM HESTER M. PEIRCE 

Q.1. If confirmed, what specific steps would you take to bolster individual executive accountability, consistent with what Chairman 

Clayton has advocated for? 

A.1. Holding individuals accountable for their violations of the securities laws is a key part of protecting investors, maintaining fair, 

orderly, and efficient markets, and facilitating capital formation. If 

confirmed, I plan to explore with my fellow Commissioners and 

staff in the Division of Enforcement on a case-by-case basis whether the facts and law dictate that individuals should be charged instead of or in addition to corporations. 

Q.2. Ms. Peirce, you worked at the SEC starting in 2002, and then 

for a Commissioner from June 2004 to August 2008. As you know, 

during that time, tremendous risk built up in the financial system. 

Large investment banks like Lehman Brothers and Bear Stearns 

accumulated hugely risky positions that went unchecked by the 

SEC. For example, the SEC’s Inspector General in 2008 found eleven separate failings at the Commission related to Bear Stearns, including 1: 

• Allowing Bear Stearns’ concentration in toxic mortgage-backed 

securities to surge past even the firm’s internal limits; 

• Allowing leverage to go virtually unchecked under what was 

known as the Consolidated Supervised Entity (CSE) program, 

a voluntary regulatory regime; and 

• Allowing internal audit staff, rather than external auditors as 

required by SEC rules, to perform critical oversight work. 

117 

2See, e.g., Stephen Matteo Miller, ‘‘The Recourse Rule, Regulatory Arbitrage, and the Financial Crisis’’, (Mercatus Center at George Mason University Working Paper, Aug. 3, 2017). 3https://www.usnews.com/debate-club/are-banks-becoming-too-big-to-jail/for-real-reform-wemust-move-past-too-big-to-jail-hype 4 Ibid 

5 Ibid 

Key regulators from that time period—from Christopher Cox at 

the SEC, to Hank Paulson, the Treasury Secretary, to Alan Greenspan, the past Fed Chair—have all acknowledged that voluntary 

supervision and industry ‘‘self-regulation’’ didn’t work. Has your experience at the SEC during the build-up to the financial crisis 

made you look at the world any differently? If confirmed, how will 

you internalize the lessons of this time period and apply them to 

your new tenure at the SEC? 

A.2. My experience at the SEC has made me look at the world differently. Being inside a regulatory agency allowed me to understand the breadth of the challenges that regulators face and the potential for regulatory mistakes to harm the markets, the economy, 

and individual Americans. The crisis taught me the importance of 

asking questions about trends in the market—why are firms engaging in a particular type of activity and what will happen if market 

conditions change? One of those important lessons from the crisis 

period is that well-intended regulations can have devastating unintended consequences. 2 A seemingly small change in the law can 

lead to dramatic changes in asset holdings and risk taking. Regulation can homogenize firms’ risk profiles, which then causes widespread, uniform vulnerability to shocks to the financial system. Another important lesson that was all too evident during the financial 

crisis is that when firms are able to shift the consequences of poor 

risk management to taxpayers, they are less careful than they 

would be if they were responsible for their own mistakes. The crisis 

also taught lessons about the danger of Government-granted monopolies, such as the credit rating agencies. 

If I were to be confirmed, these lessons would be at the front of 

my mind in crafting regulation and monitoring the market for potentially harmful activity. I will be cognizant of the interaction between regulation and industry decision-making and advocate for 

necessary modifications to rules to ensure that they are achieving 

their intended objectives without inserting new risks into the system. 

Q.3. Ms. Peirce, you have, in your previous writing, dismissed the 

notion that some financial executives got off the hook for wrongdoing that occurred in the lead-up to the financial crisis. 3 You 

wrote, ‘‘lost in the blind bloodlust targeted at financial institutions 

and their employees is an appreciation for the complexity of many 

of the laws and regulations they face.’’ 4 You also noted, ‘‘in my experience, Government attorneys don’t need any encouragement— 

beyond the prospect of resume bling—to bring big cases.’’ 5

In my view, State and Federal prosecutors were often outgunned 

and outspent, and many times, executives would invoke systemic 

importance or ‘‘collateral consequences’’ as to why prosecutors 

118 

6 Ibid 

shouldn’t bring cases. Do you still hold your view that the notion 

of ‘‘Too Big to Jail’’ was mere ‘‘hype?’’ 6

A.3. No person or corporation—regardless of influence or market 

power—is above the law. Strong enforcement is a key part of ensuring the integrity of our securities markets. Financial institutions and their employees should be held responsible for violations 

of the law. Too often, however, the discussion around enforcement 

issues is not focused on facts and law, but on emotion. If I am confirmed, I will work to ensure that the SEC takes an objective approach to enforcement matters, fosters a culture of compliance with 

its rules, diligently and consistently punishes securities law violators, and uses its enforcement resources efficiently. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM ROBERT J. JACKSON, JR. 

Q.1. Although materiality has long been the foundation of the 

SEC’s disclosure requirements, the SEC has, over time, supplemented this standard with specific bright-line rules. For example, 

the SEC requires disclosure of specified information related to executive compensation, corporate governance, and internal controls. 

Do you agree that bright-line rules can be useful to both companies 

and investors by supplementing the traditional materiality standard? 

A.1.Yes. As I have previously written, the Commission’s disclosure 

rules have consistently evolved over time in response to changing 

investor interests, market dynamics, and Congressional mandates. 

As your question points out, the Commission’s rules regarding executive compensation, for example, were developed in response to 

significant investor interest in those matters. 

It is an essential part of the SEC’s task to ensure that the Commission’s disclosure rules continue to evolve appropriately in order 

to make sure that investors have the information they need in 

order to evaluate the companies that they own. If confirmed, I will 

work with my fellow Commissioners and the Staff to ensure that 

these rules keep pace with investors’ needs. 

Q.2. Speaking at NYU’s School of Law earlier this year, Chair 

Clayton said, ‘‘I am not comfortable that the American investing 

public understands the substantial risk that we face systemically 

from cyber issues and I would like to see better disclosure around 

that.’’ Two days later, the Equifax breach proved him right. 

If confirmed, would you commit to working with Chair Clayton 

and the other Commissioners to revise cyber risk disclosure requirements, including considering a specific 8-K reporting item for 

cybersecurity breaches that expose personally identifiable information? 

A.2. Yes. Recent events have taught us that the threat that American investors and consumers face from cybersecurity breaches is 

far more serious than we might have imagined even just a few 

years ago. 

119 

Like Chairman Clayton, I am concerned that our disclosure 

rules, and in particular the rules governing current reports on 

Form 8-K, have not kept pace with these developments—and do not 

make clear to public companies the urgency of disclosures related 

to cybersecurity breaches. If confirmed, I will work with the Chair, 

my fellow Commissioners, and the Division of Corporation Finance 

to update these rules in a fashion that makes clear the importance 

of cybersecurity risk to public-company investors. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY 

FROM ROBERT J. JACKSON, JR. 

Q.1. It is my understanding that Initial Coin Offerings (ICOs) and 

crypto-currencies have raised billions thus far in 2017. This represents an exponential growth in recent years. 

I was glad to see the SEC begin to closely examine this market, 

and I applaud the SEC for its recent issuance of the Investigative 

Report regarding the DAO. The Investigative Report was an important step in bringing some clarity to the ICO market in explaining 

how securities laws apply to ICOs depending on the ‘‘facts and circumstances.’’ 

Although the DAO report was helpful, I worry that a continued 

lack of clarity in ICO regulation will stifle innovation and, most importantly, leave investors at risk. 

Should the SEC do more to bring clarity to the ICO market? 

A.1. I share the concern that this rapidly growing market deserves 

immediate and close attention so that the SEC can help protect investors in this area. Like you, I was glad to see the SEC carefully 

examining the ICO market in its Investigative Report—and like 

you, I agree that the Investigative Report should only be the beginning of the SEC’s work to protect investors in these markets. 

As an outsider to the Commission, I cannot say what steps the 

SEC can or should take to bring more clarity to this market. I can 

say, however, that the Commission should consider whether its existing rules provide sufficient guidance regarding these markets 

and, if not, what further guidance can be provided without impeding the innovations that are occurring in this important area. If 

confirmed, I would work with the SEC’s Staff, my fellow Commissioners, and this Committee to ensure that the SEC takes all of the 

steps necessary to protect the investors participating in the ICO 

market—and to ensure that the innovations that can help unite entrepreneurs with willing capital are encouraged rather than impeded. 

Q.2. Aside from enforcement actions, what can the SEC do to provide certainty to the ICO market? Would a proposed rulemaking 

make sense? 

A.2. Again, as an outsider to the Commission, it is difficult for me 

to say what particular steps the SEC should take to address the 

issues in this important new area. The Commission should, however, be considering whether the evidence the SEC currently has 

about the use of these offerings, the likelihood of fraud, and the potential for continued growth in this area suggests that a rulemaking is necessary to protect investors. If confirmed, I would look 

120 

forward to working with my fellow Commissioners and Staff on 

more fully understanding ICOs’ evolving place in our markets and 

whether and when a rulemaking would be appropriate. 

Q.3. The SEC is about to implement the initial operating stage of 

the Consolidated Audit Trail (CAT). Exchanges will soon begin reporting to what will be a massive database, which will include a 

significant amount of highly sensitive information. In its second 

phase, CAT will begin receiving personally identifiable information 

(PII) of brokerage customers. The recent breach of the SEC’s 

EDGAR database, however, calls into question the security of the 

SEC’s information technology. 

Will you commit not to collect any PII until you are confident 

that CAT is not susceptible to a breach? 

A.3. The Consolidated Audit Trail was developed in order to make 

sure that the flash crash of 2010—a period of trading in which 

prices and volume swung uncontrollably, introducing volatility into 

markets around the world—never happens again. To do that, the 

SEC must have a detailed understanding of trading activity. That’s 

why the CAT project is so important to the SEC’s mission. To ensure fair and orderly markets, the Commission needs to know 

much more about trading patterns and the risks they might pose 

for our markets. 

I absolutely share your concern that any breach of any SEC system, and in particular the CAT, would have significant consequences for the safety and stability of our capital markets. That’s 

particularly true if such a breach were to occur after the CAT 

began to store PII of American investors. And that’s why, during 

my hearing, I indicated that the SEC’s own cybersecurity would be 

among my top priorities as a Commissioner. 

Before coming to any conclusions regarding the CAT and its storage of PII, however, I would need more information regarding the 

years-long development of the CAT inside the SEC. In particular, 

I would need to better understand why the SEC’s Staff concluded 

that having PII would be helpful in understanding the risks that 

gave rise to the flash crash—and what evidence and research 

might support that conclusion. 

However, as we discussed during the hearing, I do wonder to 

what degree PII is necessary to fulfill the objectives of the CAT. I 

understand that the Staff has been working on this technology for 

a number of years, and if confirmed, I would seek to understand 

the rationale for the design decisions of the CAT—and how that design can both protect investors and any PII that the system collects. 

Q.4. We usually think of outside hackers when we think of data security, but in numerous cases, individuals trusted with access to 

confidential data are actually the source of leaks—Chelsea Manning and Reality Leigh Winner come to mind. How should the SEC 

control access to CAT data within the agency? Should it allow other 

agencies or researchers access to CAT data? 

A.4. I share your concern that losing control of CAT data—whether 

through an outside hacker or a Government leaker—is unacceptable. As I mentioned at my hearing, the security of the SEC’s own 

121 

1Salman v. United States, No. 15-628, 137 S. Ct. 420 (2016); see also United States v. 

Martoma, 869 F.3d 58 (2d Cir. 2017). 2See Securities and Exchange Commission, supra note 6. 

3See Securities and Exchange Commission, ‘‘Proposed Rules: Selective Disclosure and Insider 

Trading’’, Release Nos. 33-7787, 34-42259, IC-24209, 17 CFR §230 (January 10, 2000). 

data would be among my highest priorities as a Commissioner—for 

just that reason. 

While I am familiar with the general specifications of the CAT, 

as an outsider I do not have sufficient information regarding the 

operational details of the system, including the internal controls 

and information-sharing policies that the Staff have already developed. If confirmed, I will work with the SEC’s Staff and this Committee to gain deeper knowledge of what data will be gathered, 

analyzed, and stored as part of the CAT process—and make sure 

that any protocols governing sharing such information with outsiders serve the paramount goal of protecting information entrusted to the SEC. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE 

FROM ROBERT J. JACKSON, JR. 

Q.1. How can the SEC better define the scope of lawful trading-related activity defined in its rulemakings? Where is clarity most 

necessary? 

A.1. As I mentioned during the hearing, Congress and the SEC 

should be working to be sure the law of insider trading is keeping 

pace with our markets. For two generations, American insider trading law has been developed by judges on a case-by-case basis. 

While there are benefits to this approach, there are downsides, too. 

One is that the law develops slowly—too slowly, some have argued, 

to keep pace with insider trading in today’s markets. 

With respect to an area in which clarity would be most helpful, 

recently courts have questioned the type of proof the Government 

must have with respect to the benefits an insider must receive in 

connection with leaks of material nonpublic information to traders. 1 Uncertainty with respect to such a fundamental question is, 

in my view, a serious problem. The SEC can and should frequently 

clarify its view of the meaning of the insider trading laws. The 

Commission has not updated those rules for nearly 20 years, and 

in my view it is time for the Commission to look at these matters 

again. 2

Q.2. How can the SEC increase its use of informal guidance to provide better clarity about the scope of unlawful trading-related activities? Where is clarity most necessary? 

A.2. There are a wide range of tools available to the SEC for making its view of insider-trading law clear to the markets. One, of 

course, is working with Congress to develop legislation that more 

clearly establishes the rules of trading in your own company’s 

stock. Another—and one the SEC has used historically, but not recently—is to engage in formal rulemaking that clarifies the SEC’s 

view of insider-trading law in light of recent developments in the 

courts. 3 Another, as your question notes, is by providing guidance 

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4 Alma Cohen, Robert J. Jackson, Jr., and Joshua Mitts, ‘‘The 8-K Trading Gap’’ (Columbia 

Law and Economics Working Paper) (2015). 5Mary Jo White, Chairman, Securities and Exchange Commission, ‘‘The Importance of Independence’’ (Sommer Lecture at Fordham Law School) (Oct. 3, 2013). 

to companies and others regarding the SEC’s expectations with respect to insider-trading activity. 

My research has previously pointed to time periods, and especially the periods before major corporate announcements, where 

companies and insiders should consider prohibiting trading activity. 4 In this and other areas, companies could benefit from guidance from SEC Staff regarding the questions raised by insider-trading activity. This kind of clarity would help investors, companies, 

and insiders understand what the SEC expects of them when executives trade in their company’s stock. If confirmed, I would look 

forward to working with the Staff and your office to ensure that 

market participants know what the law of insider trading requires—and can expect that law to be vigorously enforced. 

Q.3. I’d like to learn more about your approach to securities regulations. Is there a risk that regulations can give large incumbent 

firms a competitive advantage over smaller farms? If so, what can 

be done to mitigate this risk? 

A.3. Yes: there is always some risk that regulatory intervention 

can give large, incumbent firms an advantage over smaller firms, 

just as there is always risk that a failure by regulators to intervene 

might leave investors unprotected from fraud. Indeed, as an empirical scholar of law and economics, I have a deep appreciation for 

the fact that the laws and regulations we promulgate often have 

both intended and unintended effects—and that regulators must 

pay attention to both. 

The best way to address this problem is for regulators developing 

new rules to pay careful attention to the needs of smaller businesses in developing those rules. That’s why, if I am confirmed, I 

so look forward to helping to stand up the SEC’s new Office of the 

Advocate for Small Business Capital Formation, which will better 

help Commissioners understand the perspective of smaller firms 

when developing new rules. 

Q.4. Is it appropriate—in the words of former Chair Mary Jo 

White—to ‘‘effectuate social policy or political change through the 

SEC’s powers of mandatory disclosure’’? 

A.4. Disclosure is at the heart of the SEC’s mission to protect investors, and the Commission’s disclosure rules have consistently 

evolved over time in response to changing investor interests, market dynamics, and Congressional mandates. In the remarks you 

refer to in your question, Chair White questioned whether certain 

mandates in the Dodd–Frank Act reflected an undesirable incorporation of ‘‘social policy’’ or ‘‘political change’’ into the securities 

laws. 5

The SEC is an administrative agency, charged with enforcing 

and implementing the law that Congress and the President see fit 

to enact. It is not for particular Commissioners, even a Chair, to 

speculate about the motivations behind the statutory mandates 

that Congress has chosen. Regardless of a Commissioner’s view of 

the wisdom of Dodd–Frank—or any law, for that matter—the 

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6Louis D. Brandeis, ‘‘Other People’s Money—And How Bankers Use It’’, 22 (1914). 

7See Securities and Exchange Commission Office of The Investor Advocate, ‘‘Core Functions’’ 

(2017) (describing the Office’s efforts to assist retail investors and study investor behavior). 

SEC’s obligation is to implement the will of the Congress. If confirmed, I intend to urge the Chairman and my fellow Commissioners to follow the law. 

Q.5. Is there a danger that disclosure requirements become so voluminous that they become unhelpful to investors? If so, what can be 

done to avoid this problem? 

A.5. Making information easier for investors to digest is an important part of the SEC’s mission. But it’s important to distinguish 

those efforts from simply reducing the amount of information available to investors. For generations, the Commission has followed 

Justice Brandeis’s famous maxim that ‘‘sunlight is said to be the 

best disinfectant.’’ 6 In my view, that rule has served investors well. 

Nevertheless, a great deal can and should be done to make sure 

investors have the tools necessary to find the information they 

need to evaluate the companies they own. In particular, technology 

may allow us to rethink how we structure our disclosure regime in 

a way that ensures investors have better access to high-quality information without letting firms avoid disclosing inconvenient material facts. 

In addition, in order to better structure disclosures in a way that 

serves investors, we need to learn more about how different types 

of investors—from smaller retail investors to large mutual funds 

and pension funds—consume the information that companies give 

them. A series of recent initiatives, including some led by the Office 

of the Investor Advocate, have begun to shed important light on 

those questions. 7 If confirmed, I would look forward to working 

with the Staff and my fellow Commissioners to better understand 

how investors consume the information companies give them. And 

I would look forward to working with your office to ensure that disclosures are as helpful to investors as possible. 

Q.6. What role, if any, does the SEC have as a prudential regulator? 

A.6. The SEC’s primary regulatory priorities are set forth in the 

agency’s principal enabling statutes. Those priorities include the 

protection of investors, the maintenance of fair and orderly markets, and to facilitate capital formation. 

However, as we learned from the financial crisis—an event that 

devastated millions of American families and even today undermines investor confidence in our markets—modern financial institutions often cut across regulatory boundaries. When they do, gaps 

in regulatory oversight can have devastating consequences for our 

markets. For that reason, it’s important for the SEC to engage, 

where appropriate, with prudential regulators such as the Federal 

Reserve Board of Governors, Federal Deposit Insurance Company, 

and Office of the Comptroller of the Currency. If confirmed, I would 

work with Chairman Clayton and those regulators to make sure 

that the kind of devastation American families suffered during the 

last financial crisis never happens again. 

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8See, e.g., Randal J. Brotherhood, Note, Rule 13e-3 and the ‘‘Going Private Dilemma: The 

SEC’s Quest for a Substantive Fairness Doctrine’’, 58 Wash. U.L.Q. 883 (1980) (describing the 

SEC’s initial proposal to have the Commission itself evaluate the substantive fairness of a goingprivate transaction, and the Commission’s eventual decision to require only disclosure of the 

issuer’s views regarding the fairness of such transactions). 

Q.7. Is it ever appropriate for the SEC to engage in the ‘‘merit review’’ of investment choices, where the SEC would elevate its evaluation of a particular investment over the evaluation of a private 

investor? 

A.7. In general, the SEC has long eschewed reviewing the merits 

of any particular investment choice. For example, in 1979, the 

Commission famously declined to engage in reviewing the fairness 

of any particular going-private transaction. 8 Instead, in that case 

and many others, the Commission has relied on a disclosure-based 

regulatory framework that depends on investors and issuers to 

evaluate the merits of investment decisions. That approach has 

generally served the Commission, and our Nation, well. 

But it’s essential to that approach that the SEC’s disclosure rules 

evolve in light of changing investor interests, market dynamics, 

and external events in order to make sure that these rules give investors the information they need to make their own judgments 

about the substantive merits of any particular investment choice. 

If confirmed, I intend to work with my fellow Commissioners and 

the Staff to ensure that our disclosure rules keep pace with investors’ needs in order to best support the SEC’s disclosure-based approach to securities regulation. 

Q.8. In 2014, former SEC Commissioner Dan Gallagher said that 

‘‘issues specific to small business capital formation too often remain 

on the proverbial back burner. This lack of attention doesn’t just 

harm small business; it also harms investors and the public at 

large.’’ Do you agree? 

A.8. Yes. Congress and the SEC should always be thinking about 

how best to unite small businesses with the investors they need to 

grow their enterprises and our economy. Facilitating capital formation and the ability to access that capital has been one of the great 

catalysts of American entrepreneurship. Making sure that small 

businesses have a voice at the SEC is critical to the Commission’s 

mission. 

Q.9. How will you work to improve small business capital formation and respond to our economy’s near-historic low levels of firm 

creation? 

A.9. There are many explanations for recent changes in the number of public companies, and I think all of them are especially relevant to small businesses. For example, the capital-markets fees 

that a company must pay to go public are far higher in the United 

States than in other markets, giving entrepreneurs—and especially 

the kinds of small companies that lack market power over investment bankers—pause before listing their shares. And extensive acquisition activity over the past two decades has worked to combine 

thousands of public companies, reducing the number of listings on 

American exchanges, and putting smaller companies who choose to 

stay independent at a disadvantage. The SEC should consider all 

of these developments when examining how to make sure small 

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business owners get the capital they need—and have incentives to 

create the companies that will power our economy for generations 

to come. 

In addition, recent legislation, and especially the JOBS Act, has 

been directed toward ensuring that entrepreneurs have access to 

the capital they need. The SEC’s rules related to JOBS Act mandates are still relatively new, however, and it is too soon to tell 

whether they are working—and how they might be improved to 

help small businesses grow and better protect investors. 

The SEC will need to understand how markets and investors 

have responded to the JOBS Act before taking those steps. If confirmed, I would look forward to working with my fellow Commissioners and the Staff to make sure that the JOBS Act and related 

SEC rules do everything possible to unite entrepreneurs with the 

capital they need to grow our economy—while making sure investors are protected. 

Q.10. The SEC Small Business Advocate Act of 2016 created the 

Office of the Advocate for Small Business Capital Formation. If 

confirmed, will you work closely with this advocate and seriously 

consider the Office’s recommendations? 

A.10. Yes. As I mentioned during the hearing, I think this Office 

will give small businesses a critical voice at the SEC, and if confirmed I will carefully consider its recommendations. 

Q.11. The SEC Small Business Advocate Act of 2016 also created 

the Small Business Capital Formation Advisory Committee, which 

will issue recommendations on improving small business capital 

formation. Unfortunately, the SEC has traditionally largely ignored 

these sort of recommendations, such as those of the annual Government-Business Forum on Small Business Capital Formation. While 

the SEC is required to respond to the recommendations of the Advisory Committee, it is not required to follow them. If confirmed, 

will you strongly consider supporting the recommendations of the 

Advisory Committee? 

A.11. Yes. The Commission’s Advisory Committees should always 

play a critical role in Commissioners’ deliberations. The reason is 

that those Committees often bring perspectives—whether experience as a shareholder, on the board of a public company, or running a broker-dealer entrusted with Americans’ retirement savings—that Commissioners should consider before making any decisions. 

Because my research and work has always emphasized the facts 

on the ground—the real effects that law has on investors and companies—I expect to give great weight to the recommendations of 

these Committees if I am confirmed. In particular, the Small Business Capital Formation Advisory Committee and its recommendations will provide invaluable insight into the needs and concerns of 

small and emerging companies seeking capital. If confirmed, I look 

forward to working with my fellow Commissioners and the Staff to 

make sure that these voices are heard. 

Q.12. Does anything need to be done to improve the use of costbenefit analysis at the SEC? If so, will you commit to advocating 

for these steps? 

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9See, e.g., Bus. Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011). 

10 Bob Pisani, ‘‘Here’s What Really Terrifies Wall Street About the SEC Hack’’, CNBC.COM 

(Sep. 21, 2017). 

A.12. Yes. I believe that understanding the costs and benefits of 

any particular regulatory or deregulatory choice is critical to the 

SEC’s mission. Common sense demands that policymakers do 

whatever they can to understand the implications of their policy 

choices before they make their decisions. And so does the law: the 

courts have made clear that the SEC has an obligation to analyze 

costs and benefits to the degree possible in connection with 

rulemakings. 9

As I noted at the hearing, however, I believe it is equally important for policymakers to be candid and clear about the limits of 

cost-benefit analysis. All of the potential costs and consequences of 

a decision—in law and in life—simply cannot be known in advance, 

and that fact should not be used as a basis for the SEC to fail to 

fulfill its mission. As an empirical scholar of law and economics, I 

am very familiar with the benefits—and limits—of cost-benefit 

analysis. If confirmed, I look forward to working with the Division 

of Economic and Risk Analysis to better understand its approach 

to cost-benefit analysis and to ensure that such analysis continues 

to play an important role in the SEC’s work. 

Q.13. I’d like to discuss more about cybersecurity at the SEC. 

What—if anything—does the SEC need to do to improve its operational cybersecurity in light of recent events at the SEC? 

A.13. I share the concern that recent news of a breach of the SEC’s 

EDGAR system could reflect significant issues with the SEC’s operational cybersecurity. Without understanding the facts behind that 

and other recent developments, I am not in a position to assess the 

current State of the SEC’s cybersecurity. 

However, as I mentioned at the hearing, if confirmed the SEC’s 

cybersecurity would be among my highest priorities as a Commissioner. The Commission cannot fulfill its mission—nor can it expect 

public companies to take cybersecurity seriously—unless its operational cybersecurity is beyond reproach. If confirmed, I would look 

forward to working with my fellow Commissioners, the Staff, and 

Congress to make sure the SEC has the resources and subject-matter experts it needs to get this right. 

Q.14. The Consolidated Audit Trail (CAT) has been called the ‘‘Fort 

Knox of Wall Street.’’ 10 What value do you see in fully implementing the CAT? 

A.14. The Consolidated Audit Trail was developed in order to make 

sure that the flash crash of 2010—a period of trading in which 

prices and volume swung uncontrollably, introducing volatility into 

markets around the world—never happens again. To do that, the 

SEC must have a detailed understanding of trading activity. That’s 

why the CAT project is so important to the SEC’s mission. To ensure stable and fair markets, the Commission needs to know much 

more about trading patterns and the risks they might pose for our 

markets. 

The data that the CAT will make available to the SEC would 

help the Commission keep pace with the rapid changes in our markets. It will help us understand what caused the flash crash—and 

127 

how to prevent one in the future. In addition, combining these data 

with recent advances in data science will help both policymakers 

and private companies craft measures that will improve the functioning of markets. I look forward to working with my fellow Commissioners and the Staff on this important initiative. 

Q.15. Are you worried that a breach of the CAT could compromise 

the confidential investment strategies of trading firms, particularly 

if the trade information could be reverse engineered or pose a 

broader systemic risk? 

A.15. Yes. I am concerned that any breach of any SEC system, and 

in particular the CAT, would have significant consequences for the 

safety and stability of our capital markets. 

As your question points out, one of those consequences might be 

the revelation of trading strategies with systemic consequences for 

our markets. Another unacceptable consequence could be that personally identifiable information (PII) might be compromised. That’s 

why, during the hearing, I indicated that the SEC’s own cybersecurity would be among my top priorities as a Commissioner. And 

that’s why these questions will be among the first I will ask Chairman Clayton if I am confirmed. 

Q.16. Should the SEC explore alternatives to maintaining PII in 

the CAT? For example, would the SEC be able to fulfill its policy 

aims by requesting PII from individuals only when it is necessary 

for the SEC to fulfill its oversight duties? 

A.16. As an outsider it is difficult for me to know whether and why 

SEC Staff concluded that it was necessary for the CAT to collect 

PII. In particular, I cannot say why the Staff concluded that having 

PII would be helpful in understanding the risks that gave rise to 

the flash crash of 2010—and what evidence and research might 

support that conclusion. 

However, as we discussed during the hearing, I do wonder to 

what degree PII is necessary to fulfill the objectives of the CAT. I 

understand that the Staff has been working on this technology for 

a number of years, and if confirmed, I would seek to understand 

the rationale for the design decisions of the CAT—and how that design can both protect investors and any PII that the system collects. 

Q.17. In response to questions for the record from Senator Tillis 

during his confirmation process Chairman Clayton stated that 

‘‘ . . . we should be mindful that cybersecurity risks are continuously evolving, and regulation in this area should take into account 

its dynamic nature, including that, in such circumstances, specific 

requirements may be appropriate but also have the risk of becoming outdated . . . .’’ Do you agree? Is there a risk that Regulation 

SCI could create some cybersecurity risk by introducing an incentive for companies to focus more on complying with the regulation, 

instead of leveraging private sector resources to implement innovative cybersecurity techniques? If so, what steps should the SEC 

take to mitigate this risk? 

A.17. Cybersecurity risks are a constantly evolving threat and pose 

a fundamental risk to our markets. That’s why, at the hearing, I 

described addressing those risks as among my top few priorities if 

128 

I am confirmed as a Commissioner. And that’s why I believe that 

the SEC should consider augmenting Regulation SCI in light of recent developments like Equifax. In particular, those changes should 

encourage exchanges to make the investments necessary to protect 

themselves and investors from the risk of a cybersecurity breach. 

I am aware of the concern that certain parts of Regulation SCI 

might hinder exchanges from making use of the latest technologies 

to protect themselves from cyberthreats. As an outsider to the 

Commission and its work, I am not yet able to assess the evidence 

underlying that concern—and what the SEC might do about it. If 

confirmed, I look forward to learning more about the Staff’s experience in administering Regulation SCI. And I would be delighted to 

work with you and your office to ensure that Regulation SCI gives 

exchanges the incentives they need to protect investors from 

cyberthreats. 

Q.18. Some have proposed expanding the number of entities that 

should comply with Regulation SCI while others have proposed increasing transparency over which market centers are complying 

with Regulation SCI. What considerations would you take into account when evaluating this question? 

A.18. Without commenting on any particular question that might 

come before me as a Commissioner if I am confirmed, I want to be 

clear about what will motivate me when addressing issues like 

these. When it comes to cybersecurity, my priority will be the protection of our investors and our markets from cyberthreats that undermine the stability and growth of our economy. 

As an outsider to the Commission and its work, I cannot say 

whether expanding the reach of Regulation SCI or permitting widely-disclosed departures from those standards will achieve that goal 

in any particular case. To know the answer to that question, the 

SEC will need to study the risk to the broader economy of exchanges having inadequate cybersecurity defenses, the costs associated with exchanges adapting to new cybersecurity regulations, 

and especially the risks that consumers will face if firms handling 

sensitive personal data have lax cybersecurity protections. If confirmed, would I look forward to learning more about the Staff’s experience on these questions. And I would look forward to working 

with you and your office to make sure investors and markets are 

protected from cybersecurity threats. 

Q.19. Should the SEC update its cybersecurity disclosure guidelines for public companies? 

A.19. Yes. I agree with Chairman Clayton that cybersecurity is an 

area where there is not enough disclosure. I’m particularly concerned that the rules governing current reports on Form 8-K have 

not kept pace with these developments—and do not make clear to 

public companies the urgency of disclosures related to cybersecurity 

breaches. 

Our markets, and the American public, need swift and clear disclosure when their personal information is compromised in cybersecurity breaches. If confirmed, I will work with the Chairman, my 

fellow Commissioners, and the Division of Corporation Finance to 

update these rules in a fashion that makes clear the importance of 

cybersecurity risk to public-company investors. 

129 

Q.20. How should the SEC ensure that any cybersecurity disclosure guidelines for public companies require only timely and material disclosure instead of that which is extraneous and untimely? 

A.20. The best way to make sure our disclosure rules serve investors is to make sure they are updated to reflect the reality investors face in modern markets. Cybersecurity issues are a dynamic 

and evolving threat, and require dynamic rules to make sure investors get the information they need about those threats—which is 

why I favor reassessing whether these rules adequately address cybersecurity. 

The materiality standard, which governs disclosures of this type, 

requires us to ask whether a reasonable investor would think the 

information relevant to the total mix of information they consider 

when making investment decisions. Use of this standard has, for 

decades, helped ensure that corporate disclosures are relevant and 

timely. If confirmed, I look forward to working with my fellow Commissioners to ensure that critical cybersecurity risks are promptly 

disclosed to investors and the American public. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS 

FROM ROBERT J. JACKSON, JR. 

Q.1. In brief, what is the SEC currently doing right, what needs 

to change, and how do you plan on prioritizing your time, should 

you be confirmed? 

A.1. The breadth and depth of the SEC’s mission—protecting investors in the largest, deepest capital markets in the world—reflects 

an enormous privilege and responsibility. As an outsider to the 

agency, it is clear that the SEC has taken important steps to improve its effectiveness in the years since the financial crisis. But, 

as we discussed during the hearing, there is still a great deal of 

work to do. If I am confirmed, I would focus my time on the following three priorities. 

The first is cybersecurity. As I mentioned during the hearing, I 

think recent events both at the SEC and public companies have 

taught us that we have a long way to go in making sure that our 

securities regulators have the tools and technologies they need to 

keep up with the changing marketplace. The SEC cannot fulfill its 

mission if it cannot assure investors that both its own systems, and 

the systems of the public companies it regulates, are protected from 

cybersecurity breaches. I hope to work closely with Chairman Clayton, my fellow Commissioners, and the Staff to make sure that the 

information that Americans entrust to the SEC and to public companies is better protected. 

Second, I would focus on finishing the rules required by Dodd– 

Frank. The SEC’s failure to do so in the 7 years since the passage 

of that law has harmed investors, companies, and the morale of the 

SEC Staff itself. It has also exposed investors to risks that Congress has ordered be addressed, for example by failing to make 

sure that public companies have clawback policies in place that require executives to give back pay they were awarded by mistake. 

If confirmed, I would urge the Chairman and my fellow Commissioners to follow the law and finish these rules. 

130 

1See, e.g., Lucian Bebchuk and Robert J. Jackson, Jr., ‘‘The Law and Economics of 

Blockholder Disclosure’’, 2 Harv. Bus. L. Rev. 39 (2012). 2See, e.g., Leo E. Strine, Jr., ‘‘Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System’’, 126 Yale L.J. 

1870 (2017). 3See, e.g., Ronald J. Gilson and Jeffrey N. Gordon, ‘‘The Agency Costs of Agency Capitalism: 

Activist Investors and the Revaluation of Governance Rights’’, 113 Colum. L. Rev. 863 (2013). 

Finally, I would focus on holding individuals accountable for financial fraud. In particular, the SEC should be thinking about how 

to modernize the law of insider-trading to deal with the changes 

that have occurred in securities markets over the last two decades. 

The SEC should also work with FINRA to ensure that investors 

have better information on the stockbrokers most likely to commit 

fraud. Making sure that individuals who engage in insider trading 

or investor fraud pay the price is critical to the SEC’s mission, and 

more can and should be done on that front. 

Q.2. Do you believe that private capital being put into underperforming companies can improve the company’s performance? 

A.2. As I have previously written, there is significant evidence that 

investors like these can help hold corporate management’s feet to 

the fire, especially at underperforming companies—and that this 

work can be good for all investors and the economy more generally. 1 There is also evidence, however, that these investors can 

engage in counterproductive tactics that undermine long-term 

value creation. 2

Capturing the benefits of private capital—the corporate accountability and growth that have so often been associated with such investments—while minimizing the costs of those tactics is critical to 

ensuring the growth of the American economy. If confirmed, I 

would very much look forward to working with my fellow Commissioners, and your office, to ensure that our securities laws are up 

to that task. 

Q.3. Do you believe that curbing more private investment would 

help underperforming companies? 

A.3. No. Private investment in underperforming companies is an 

important source of accountability. Corporate management knows 

that, if the firm performs poorly, a private investor may well intervene and demand better performance on behalf of all shareholders. 

This knowledge—even, and perhaps especially, for managers who 

are never the target of such an investment—encourages executives 

to do everything they can to ensure that the company performs 

well. 

Q.4. Do you agree that private capital being put into companies 

leads to more transparency and communications with existing 

shareholders? 

A.4. Private investors often encourage other investors to pay attention to particular issues that are undermining the company’s performance. 3 Because private investors usually cannot force change 

at public companies by themselves, they must persuade other 

shareholders that their ideas are best for the company. That process can often improve transparency and communication among all 

of the company’s shareholders—as well as the company’s manageVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00134 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
131 

4 Robert J. Jackson, Jr., ‘‘Private Equity and Executive Compensation’’, 60 UCLA L. Rev. 638, 

658 (2013) (documenting the relationship between CEO incentives to maximize firm value and 

long-term private-equity investments in companies that the investor has taken public). 

ment, who also has an opportunity to persuade investors that their 

strategy is right for the company over the long term. 

Q.5. Do you agree that corporate CEOs are more responsive to the 

market today than they were in the past? 

A.5. Yes: recent corporate governance reforms, including those regarding director independence, executive pay, and shareholder proposals have encouraged CEOs to be increasingly responsive to 

shareholders. But let’s be clear: there is still a great deal of work 

left to do. As I indicated during the hearing, it is not my sense that 

what corporate America is suffering from is too much accountability. 

Q.6. Do you believe that restricting or making it harder for private 

capital to invest in American companies is a good idea? 

A.6. No: in general, the benefits that private investors offer—by 

holding corporate managers’ feet to the fire and making sure they 

are working hard for all investors—are critically important to the 

health of American companies and the broader economy. Making it 

harder for private investors to do that work is unlikely to be beneficial for the investors who depend on the growth of the economy 

to fund their child’s education and their retirements. 

However, it is also important to acknowledge that these investors 

can engage in counterproductive tactics—like using undisclosed derivative positions to attack unsuspecting companies and their constituents—that deserve immediate attention from the SEC. If confirmed, I look forward to working with the Chairman, my fellow 

Commissioners, and the SEC’s Staff to ensure that American investors continue to receive the benefits of private investment in their 

companies—while reducing the costs of some investors’ counterproductive behavior. 

Q.7. Do you believe that private capital should be flexible and 

adaptive to quickly changing circumstances? 

A.7. Yes. One of the many benefits of private investments in public 

companies is that private capital can often respond quickly to the 

changing needs of the company and the economy. As I have previously noted in my research, these benefits are especially valuable 

when private capital is invested in companies over the longer 

term. 4 In those cases, the presence of private capital can help 

make sure that corporate management is working toward the kind 

of long-term value creation upon which investors, employees, and 

our economy rely. 

Q.8. Do you think that the current IPO market is at its peak? 

What could we be doing to facilitate more entrants into the public 

markets? What are some determinative factors that companies 

evaluate when making a decision to enter into the public markets? 

Do you think that some of these factors have served as preclusive, 

often determinative factors for a company deciding not to enter the 

public marketplace? How do public companies affect job creation 

and economic growth? 

132 

5For example, as I have noted in my research, the rules governing current disclosure on Form 

8-K—that is, the rules that govern the rapid updates that investors depend upon to learn about 

new corporate developments—have not been carefully examined for more than a decade. See, 

e.g., Alma Cohen, Robert J. Jackson, Jr., and Joshua Mitts, ‘‘The 8-K Trading Gap’’ (Columbia 

Law and Economics Working Paper) (2015); see also Securities and Exchange Commission, Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date, Release Nos. 33-8400, 

34-49424, 17 CFR §228 (Aug. 23, 2004). 

A.8. There are a wide range of reasons why many companies today 

are choosing not to go public, and all of them deserve the SEC’s 

attention. For example, we now have deeper and more robust private capital markets than ever before, which allows companies to 

stay private for far longer than they once could. For another, the 

capital-markets fees that a company must pay to go public are far 

higher in the United States than in other markets, giving entrepreneurs pause before listing their shares. And the pressure public 

companies face to meet quarterly earnings estimates, rather than 

to grow the company over the long term, no doubt can encourage 

some companies to stay private rather than go public. 

Public companies are critical to job creation and the long-term 

economic growth of our Nation, and I am committed to ensuring 

that we are doing all we can to encourage companies to go public 

in American markets. Chairman Clayton has made clear that this 

issue is a priority for him, and I look forward to working with the 

Chairman and my fellow Commissioners to help encourage companies to raise capital in our public markets—and make sure that investors are protected in the process. 

Q.9. Do you think that the SEC should have a formalized retrospective review process, much like prudential regulators have, by 

which the SEC can take a holistic look at its rules and regulations 

and decide which ones are outmoded, ineffective, burdensome, etc., 

or similarly decide which ones need to be changed and modernized? 

A.9. I believe that the Commission should consistently review its 

rules to make sure that those rules give investors the information 

they need about the companies they own. To the degree that SEC 

rules are outmoded, ineffective, or burdensome, modernizing those 

rules is a critical task, and several rules have gone far too long 

without needed updates. 5

As an outsider to the Commission and its work, it is difficult for 

me to say whether formalizing the retrospective review process 

would be beneficial. To know the answer to that question, the SEC 

should investigate, among other things, why so many key rules 

have gone so long without modernization or revision and what Staff 

resources are available for that work. If confirmed, I would look 

forward to working with the Staff and my fellow Commissioners to 

answer those questions—and to make sure our rules are keeping 

up with the demands of modern markets and investors. 

Q.10. How do you plan on working with the CFTC to address harmonization issues? 

A.10. Because the SEC’s and CFTC’s work has so often overlapped—especially in light of the activities in today’s markets that 

cut across traditional regulatory boundaries—coordination and harmonization among the agencies’ rules is critical to maintaining fair 

and orderly markets. I am aware that the Staff of both agencies 

have worked extensively to take steps toward better harmonization 

133 

6See, e.g., Commodity Futures Trading Commission, ‘‘Harmonization of Compliance Obligations for Registered Investment Companies Required To Register as Commodity Pool Operators’’, 

RIN 3038-AD75, 17 CFR Part 4 (Aug. 12, 2013). 7 Commodity Futures Trading Commission and Securities and Exchange Commission, ‘‘A 

Joint Report of the SEC and the CFTC on Harmonization of Regulation’’ (Oct. 16, 2009). 8See, e.g., Alma Cohen, Robert J. Jackson, Jr., and Joshua Mitts, ‘‘The 8-K Trading Gap’’ (Columbia Law and Economics Working Paper) (2015). 

in the past, including with respect to the regulation of investment 

advisers, 6 and have also reviewed the joint report on harmonization that both agencies prepared in the wake of the financial crisis. 7

Although this work has been important, I understand that there 

is more to be done to address the sometimes-overlapping regulations governing the work of the SEC and CFTC. If confirmed, I 

would look forward to working with my fellow Commissioners, the 

Staff, your office, and Commissioners at the CFTC to ensure that 

the agencies provide consistent and clear guidance to market participants. 

Q.11. With regard to cyber infrastructure and enforcement actions, 

what do you think the SEC is doing right and what would you 

change? 

A.11. As an outsider to the agency and its work, I am not in a position to assess the SEC’s cybersecurity infrastructure. As we discussed during the hearing, however, I am deeply concerned by the 

recent revelations regarding the cybersecurity breach of the SEC’s 

EDGAR system—so much so that I have placed securing the SEC’s 

systems among my top few priorities. If I am confirmed, the first 

question I will ask Chairman Clayton is exactly what happened 

that made the SEC’s systems vulnerable to such a breach—and 

what we need to do to make sure it never happens again. 

With respect to enforcement, while taking care not to speculate 

regarding particular enforcement actions that may come before me 

if I am confirmed as a Commissioner, I want to be clear: the SEC 

can and should make far better use of data science to make its enforcement efforts more efficient and effective. My previous research 

has used those technologies to show how the SEC could more easily 

identify potential cases. 8 I believe that these techniques could help 

us to better understand the circumstances and larger trends behind 

where we’ll find bad actors—and make it easier for us to hold them 

accountable. 

Q.12. The Treasury Capital Markets report touched on potential 

changes to best execution and potential changes to market structure issues, particularly in the context of Reg. NMS. Can you give 

me your thoughts on what you view as potential areas for reform 

within the context of Reg. NMS? 

A.12. Fundamentally, the SEC’s role in the regulation of capital 

markets more generally—and trading venues in particular—is to 

make sure that American investors get the level playing field they 

deserve, and pay a fair price when they buy shares of public companies. Regulation NMS was an important step toward reducing 

trading costs and increasing liquidity in our equity markets, both 

important goals. 

But Regulation NMS is now over a decade old, and I am aware 

of the concerns that the rule has added complexity to our capital 

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9See, e.g., SEC Equity Market Structure Advisory Committee, ‘‘Recommendations Regarding 

Modifying Rule 605 and Rule 606’’ (Nov. 29, 2016). 10See Jay Clayton, Chairman, Securities and Exchange Commission, Remarks at the Economic Club of New York (July 12, 2017). 

markets—and that these markets are now characterized by fragmentation that harms investors. In light of the rapid changes in 

these markets, it may well be time for the SEC to reassess the degree to which these rules continue to be sufficient to protect investors. The Equity Market Structure Advisory Committee has provided important guidance to the Commission in this respect. 9 If 

confirmed, I would look forward to working with my fellow Commissioners, the Staff, and your office to explore the degree to which 

Regulation NMS needs to be modernized. 

Q.13. Some have argued that our market structure systems have 

become increasingly complex and that the layered regulations have 

created incentives to game the system. Can you help me understand your views on reforming our domestic market structure and 

can you commit to this body that you will work with the Committee 

in tackling some of the languishing issues that have been pervasive 

in market structure over the last 10+ years? 

A.13. Yes: If confirmed, I will work with the Committee to tackle 

any market-structure issues that are keeping our market venues 

from offering American investors a fair price. As your question 

points out, our markets are rapidly evolving, and that is especially 

true in the area of market structure, where frequent updates to 

SEC rules may be needed to ensure our law keeps pace with the 

markets. In particular, I am aware of the concern that legal 

changes and other factors have led to fragmentation that harms investors. In light of the rapid changes in these markets, it may well 

be time for the SEC to reassess whether these rules continue to be 

sufficient to protect investors. 

Separately, although a great deal of time and regulatory attention has been given to the structure of our equity markets, millions 

of Americans—especially those at or near retirement—also rely on 

the structure of our debt markets to give them the best possible 

price for their investments. Although these debt markets are crucial to American families, they have received relatively scant attention. That is why I was delighted to see Chairman Clayton announce his interest in forming a Fixed Income Market Structure 

Advisory Committee. 10 If confirmed, I would work with the Chairman and my fellow Commissioners to make sure that American investors can rely on the structure of our debt markets to help them 

prepare for and fund their retirement plans. 

Q.14. IT modernization enables financial services firms to protect 

constituent financial information. In an environment of increasing 

cybersecurity threats, how will you use your role at the SEC to promote IT modernization across the financial services sector and at 

the SEC? 

A.14. I share your concern that, in a world with increasing cybersecurity threats, SEC rules must evolve in a way that promotes information-technology modernization. That’s why I agree with Chairman Clayton that cybersecurity is an area where there is not 

enough disclosure—and, as your question suggests, that is espeVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00138 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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cially true at financial-services firms entrusted with millions of 

Americans’ financial information. 

In particular, I’m concerned that our disclosure rules, and especially the rules governing Form 8-K, have not kept pace with these 

developments—and do not make clear to public companies the urgency of disclosures related to cybersecurity breaches. If confirmed, 

I will work with the Chair, my fellow Commissioners, and the Division of Corporation Finance to update these rules in a fashion that 

makes clear the importance of cybersecurity risk to public-company 

investors. 

Regarding IT modernization at the SEC itself, I share the concern that recent news of a breach of SEC systems reflects significant issues with the SEC’s operational cybersecurity. Without understanding the facts behind that and other recent developments, 

I am not in a position to assess the current State of the SEC’s information-technology resources. However, as I mentioned at the 

hearing, if confirmed the SEC’s cybersecurity would be among my 

highest priorities as a Commissioner. The Commission cannot fulfill its mission—nor can it expect public companies to take cybersecurity seriously—unless its own house is in order. 

Q.15. How will you ensure that regulations set by the SEC do not 

impede progress on IT modernization? 

A.15. I share your concern that SEC rules in this area must encourage, rather than impede, corporate investments in the kind of 

information-technology infrastructure that can protect Americans’ 

data from cybersecurity threats. That includes not only the disclosure rules you referred to in your previous question, but also Regulation SCI—which, some have argued, may inadvertently discourage exchanges from adopting the latest technology to defend 

against cyberthreats. 

As an outsider to the Commission and its work, I am not yet able 

to assess the evidence underlying that and other concerns in this 

area—and what the SEC might do about it. Factors the SEC 

should be focused on, however, include the risk to the broader economy of cybersecurity breaches, the costs associated with adapting 

to new cybersecurity regulations, and the risks consumers face if 

those handling sensitive personal data have lax cybersecurity protections. If confirmed, I look forward to learning more about the 

Staff’s experience in administering these rules. And I would be delighted to work with you and your office to ensure that all of the 

SEC’s rules—including those governing Form 8-K and Regulation 

SCI—give American companies the incentives they need to protect 

investors from cyberthreats. 

Q.16. With regard to corporate disclosures, what standard should 

be used to determine whether or not something is disclosed? 

A.16. As I mentioned during the hearing, the concept of materiality 

is the touchstone of our Federal disclosure rules. This standard— 

which asks whether particular information would be relevant to 

the total mix of information a reasonable investor would use when 

making an investment decision—has served American investors 

and public companies well for generations. 

As I have written before, the best way to know whether something is material—that is, whether it’s important to investors—is 

136 

11See Securities and Exchange Commission, Executive Compensation Disclosure, Release No. 

33-6940, 57 FR 29,582 (1992) (listing the shareholder-proposal activity related to executive pay 

at several large, public companies as a basis for promulgating disclosure rules on executive compensation). 

to ask investors. That’s certainly what the Commission has done in 

the past. For example, the SEC’s rules regarding executive compensation were developed in response to significant investor interest in those matters. 11 Our markets have evolved rapidly over the 

past 10 years, and I’m concerned that the Commission’s disclosure 

rules haven’t kept pace with investors’ needs. 

It is an essential part of the SEC’s task to ensure that the Commission’s disclosure rules continue to evolve in order to make sure 

that investors have the information they need to evaluate the companies that they own. If confirmed, I will urge Chairman Clayton, 

my fellow Commissioners, and the Staff to update our disclosure 

rules to give investors that information. 

Q.17. On February 24, 2017, President Trump signed an Executive 

Order on Enforcing the Regulatory Reform Agenda, part of which 

focused on identifying regulations that are ‘‘outdated, unnecessary, 

and ineffective.’’ Given recent technological advances, one area of 

particular focus should be regulations requiring paper-based communications as the default delivery method in communicating with 

investors and consumers. Such regulations are prime examples of 

regulations that were first adopted decades ago and have failed to 

evolve with the times. 

If confirmed, will you work to ensure that the SEC identifies and 

modifies outdated regulations regarding paper-based communications? 

A.17. I believe that the Commission should consistently review its 

rules to make sure that those rules give investors the information 

they need about the companies they own. To the degree that SEC 

rules are outmoded—as many rules requiring paper-based communications may be today—modernizing those rules is a critical task. 

While I would not want to comment on any specific proposal that 

may come before me as a Commissioner if I am confirmed, I would 

look forward to working with SEC Staff, fellow Commissioners, and 

this Committee to identify any outdated regulations—including 

regulations mandating paper-based communications—that may no 

longer serve investors. 

Q.18 Do you believe the recent action by the SEC regarding MiFID 

II was appropriate? If you do not, how would you have addressed 

this issue? 

A.18. I understand that the Division of Investment Management 

and the Division of Trading and Markets recently issued time-limited no-action letters in this area. Because these matters may well 

be raised before the full Commission in the future, I hesitate to 

comment specifically on questions that may come before me as a 

Commissioner. 

Nevertheless, I want to be clear: it is crucial that American investors know who pays for research on public company stocks and 

what those researchers’ financial incentives are. The European approach to this problem—that is, MiFID II—reflects one way to give 

investors that information. But it is not the only way to make sure 

137 

1See, e.g., Alma Cohen, Robert J. Jackson, Jr., and Joshua Mitts, ‘‘The 8-K Trading Gap’’ (Columbia Law and Economics Working Paper) (2015). 

that investors know who is producing equity research and who is 

paying for it. If confirmed, I look forward to working with the Staff 

in both the Division of Investment Management and the Division 

of Trading and Markets to understand the reasoning behind their 

recent letters—and their thinking about longer-term solutions in 

this area. 

Q.19. Do you think that the U.S. and the SEC should import 

standards from other countries? 

A.19. When considering how best to develop new legal standards, 

my approach is often to draw on as much data and experience as 

possible. While the experience of other countries can be helpful in 

this respect, it is always important to keep in mind that one size 

does not fit all—and that American markets are truly unique. We 

are fortunate to have the largest, deepest and most diverse capital 

markets in the world. Lessons from other jurisdictions may be useful in informing the way we think about our own law, but at bottom American securities law must be the right fit for American investors and companies. 

Nevertheless, it is essential that U.S. regulators engage with 

international counterparts and make sure our positions are made 

clear on a wide range of regulatory questions that apply across national boundaries. The SEC, through its Office of International Affairs, has an important voice in international standard-setting bodies, and if confirmed I look forward to working with Staff, my fellow Commissioners, and our international counterparts to help 

make sure that American investors’ interests are protected in capital markets around the world. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR MENENDEZ FROM ROBERT J. JACKSON, JR. 

Q.1. In your testimony, you highlighted enforcement and prosecution of insider trading as top priorities. If confirmed, what recommendations will you make to Chairman Clayton to strengthen 

the ability of the enforcement division to hold accountable those 

that violate Federal securities laws? 

A.1. I believe that holding corporate executives accountable when 

they violate the law is critical to maintaining trust in our financial 

system. There are two specific enforcement-related areas that deserve attention at the SEC. 

First, if confirmed I will work with Chairman Clayton and the 

Division of Enforcement on using data science to make the process 

of identifying and litigating securities-fraud cases more efficient. 

My previous research has used those technologies to show how the 

SEC could more easily identify potential cases. I believe that these 

techniques could help us to better understand the circumstances 

and larger trends behind where we’ll find bad actors—and make it 

easier for us to hold them accountable. 1

Second, as I noted during the hearing, I think it is time for the 

Commission and the Congress to consider whether the law of insider trading in particular is keeping pace with our markets. One 

138 

2See Securities and Exchange Commission, Proposed Rules: Selective Disclosure and Insider 

Trading, Release Nos. 33-7787, 34-42259, IC-24209, 17 CFR §230 (January 10, 2000) (noting 

that those rule proposals, like those that could be advanced by the SEC today, ‘‘clarif[ied] two 

unsettled issues under current insider trading law.’’). 3Salman v. United States, No. 15-628, 137 S. Ct. 420 (2016); see also United States v. 

Martoma, 869 F.3d 58 (2d Cir. 2017). 4See Securities and Exchange Commission, supra note 6. 

reason that so few corporate insiders are held accountable is that 

the burdens of proof the Government faces in these cases were designed by common-law judges decades ago. The last time the SEC 

proposed updates to its rules in this area—updates that were designed to address uncertainty created by the courts—was nearly 20 

years ago. 2 The scope and nature of corporate fraud has changed 

a great deal since then, and it may well be time for the SEC and 

Congress to clarify and strengthen our insider trading laws. 

Q.2. In response to Chairman Crapo’s questions, you raised the law 

of insider trading and you highlighted a concern that recent events 

may have caused investors to wonder whether the SEC is ‘‘really 

the cop on the beat we need to make sure that investors are getting 

a fair deal.’’ Can you expound on this? In your opinion, does Congress need to codify insider trading law or make other changes to 

our Federal securities laws to ensure the SEC has the necessary 

authority to hold wrongdoers accountable? 

A.2. Yes: Congress and the SEC should be thinking about updating 

the law of insider trading. For two generations, American insider 

trading law has been developed by judges on a case-by-case basis. 

There are many well-documented benefits to this approach, including drawing on the extraordinary wisdom of the judges who sit on 

our Nation’s Federal bench. One downside of this regime, however, 

is that the law develops slowly—too slowly, some have argued, to 

keep pace with modern markets. 

In particular, a recent series of cases have raised questions regarding the Government’s burden of proof with respect to the benefits an insider must receive in connection with leaks of material 

nonpublic information to traders. 3 Uncertainty with respect to 

such a fundamental question of an insider’s obligations to investors 

is, in my view, a serious problem. The SEC can and should frequently clarify its view of the meaning of the insider trading laws. 

As noted above, the Commission has not done so for nearly 20 

years, and in my view it is time for the Commission to look at 

these matters again. 4

Q.3. The concept of ‘‘materiality’’ is defined by the SEC as information that a reasonable investor could find important in determining 

whether to buy or sell securities. Can you explain how you think 

about the definition of materiality and whether you see emerging 

‘‘material’’ areas—namely environmental, social, and governance 

topics—where the SEC should be increasing disclosure? 

A.3. My view is that one way to know whether something is material—that is, whether it’s important to investors—is to ask investors. That’s certainly what the Commission has done in the past. 

For example, the SEC’s rules regarding executive compensation 

were developed in response to significant investor interest in those 

139 

5See Securities and Exchange Commission, ‘‘Executive Compensation Disclosure’’, Release No. 

33-6940, 57 FR 29,582 (1992) (listing the shareholder-proposal activity related to executive pay 

at several large, public companies as a basis for promulgating disclosure rules on executive compensation). 6 ‘‘Sharkrepellent Dataset of Factset Research Systems, Inc.’’, Proxy Proposals, available at 

https://www.Sharkrepellent.net. 7Thomas Singer, ‘‘Environmental and Social Proposals in the 2017 Proxy Season’’, Harv. F. 

on Corp. Gov. and Fin. Reg. (Oct. 26, 2017). 

matters. 5 Our markets have evolved rapidly over the past 10 

years, and I’m worried that the Commission’s disclosure rules 

haven’t kept pace with investors’ needs. 

In particular, as your question suggests, investors have recently 

expressed extensive interest in matters that companies are often 

not disclosing. For example, information regarding a company’s 

spending on politics has been the most common subject of shareholder proposals over the last decade. 6 As recent events have made 

clear, companies have not consistently taken the view that cybersecurity breaches demand prompt disclosure. And shareholder proposals asking companies to disclose the risks related to climate 

change are receiving ‘‘historically high levels of support.’’ 7

It is an essential part of the SEC’s task to ensure that the Commission’s disclosure rules continue to evolve in order to make sure 

that investors have the information they need to evaluate the companies that they own. If confirmed, I will urge Chairman Clayton, 

my fellow Commissioners, and the Staff to update our disclosure 

rules to give investors that information. 

Q.4. I worked to include a provision in the Dodd–Frank Wall Street 

Reform and Consumer Protection Act to require publicly listed companies to disclose in their annual filing the ratio of their CEO’s 

total compensation to their median worker’s compensation. In August 2015, after 5 years of delays, I was pleased to see the SEC 

finally adopted a rule implementing §953(b) of Dodd–Frank. 

If confirmed, will you commit to ensure that this rule is properly 

implemented? Will you work to ensure that provisions included by 

the Commission to facilitate compliance do not inadvertently open 

loopholes for companies looking to evade this requirement? 

A.4. Yes. I have long shared your concern that the Commission 

took far too long to implement the rules required by Dodd–Frank, 

including the provision requiring disclosure of the ratio between 

the CEO’s compensation and that of the median employee. As I 

noted at the hearing, Dodd–Frank is the law of the land—and has 

been for 7 years. It is time that the SEC and public companies 

comply with the law, and I’m delighted that this Spring American 

companies will finally disclose these ratios to the public. 

As companies prepare to file those disclosures this Spring—and 

every year going forward—it will be critical to ensure that the Division of Corporation Finance carefully monitors compliance with the 

rule, and directs companies to give clear, concise and candid information. If confirmed, I will absolutely work to make sure investors 

get that kind of information. 

Q.5. In light of the sweeping good faith efforts flexibility provided 

to companies by the Commission’s September 2017 interpretive 

guidance, will you commit to supporting enforcement actions 

140 

8See, e.g., Ryan Vlastelica, ‘‘Vanguard Calls for More Diverse Corporate Boards, Better Climate-Change Disclosures’’, Marketwatch (Sept, 1, 2017). 

against companies that fail to provide disclosures in compliance 

with the requirements of the rule? 

A.5. Yes. Without commenting on any particular matter that may 

come before me as a Commissioner if I am confirmed, I can say 

without reservation that I would support enforcement actions 

against companies that fail to comply with the law—including the 

requirement that firms disclose the ratio between the CEO’s and 

their median worker’s pay. 

Disclosure rules like these, and the transparency they give investors, have been at the heart of the SEC’s mission for generations. 

We have to take these rules seriously, and that means aggressively 

enforcing the securities laws when companies or individuals fail to 

comply with SEC rules. 

Q.6. As you know, the SEC adopted a rule in 2009 requiring publicly traded companies to disclose more information on director selection and diversity. Many, including former SEC Chair White, 

have expressed concerns that the current rule may be inadequate 

and that shareholders need more comprehensive information to 

make informed investment and voting decisions. 

How does the disclosure of specific details about the diversity of 

corporate boards assist shareholders in making informed investment and voting decisions? 

A.6. As your question points out, disclosure regarding the diversity 

of corporate boards is not only the right thing to do, but it’s the 

law: the SEC has required such disclosure for years. The reason is 

that investors have long argued that understanding a company’s 

approach to boardroom diversity—and the benefits it can bring— 

helps make sure the board has the expertise and perspectives it 

needs to run the firm well. 8

I share former Chair White’s concern that existing SEC rules on 

this issue have proved inadequate. Women and minorities are astonishingly underrepresented on the boards of U.S. public companies, to the dismay of investors and employees alike. At a minimum, the SEC should make sure that companies are giving investors basic information about how the companies they own have considered diversity when assembling their directors. If confirmed, I 

will absolutely work with the Division of Corporation Finance to 

make certain that our rules give investors that information. 

Q.7. One of the problems identified with the 2009 rule is the Commission’s decision not to define diversity. Do you think the failure 

to define diversity in the rule undermines the value of the information provided in the current disclosure regime? 

A.7. While I understand that the Staff declined to define diversity 

in order to allow issuers to use the definition most suited to its 

business model, time and experience have shown that the lack of 

guidance in this area has left both companies and investors without the information they need regarding boardroom diversity. In 

fact, the SEC Advisory Committee on Small and Emerging Companies recommended nearly a year ago that the SEC provide guidance on this issue, and the SEC’s failure to do so has made it unVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00144 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
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9Securities and Exchange Commission Advisory Committee on Small and Emerging Companies, Recommendation Regarding Corporate Board Diversity (February 16, 2017). 10 Note, ‘‘The Glass Boardroom: The SEC’s Role in Cracking the Door Open so That Women 

May Enter’’, 2013 Colum. Bus. L. Rev. 801 (2013). 11Mary Jo White, Chairman, Securities and Exchange Commission, ‘‘Focusing the Lens of 

Disclosure To Set the Path Forward on Board Diversity’’, Non-GAAP, and Sustainability (Jun. 

27, 2016). 12Securities and Exchange Commission Advisory Committee on Small and Emerging Companies, supra note 13. 

necessarily costly for investors and companies to comply with the 

law. 9

More importantly, the Commission’s failure to enforce its own 

rule in this area has raised real questions among issuers and investors about the SEC’s commitment to board diversity. Nearly 5 

years, ago an empirical study of these disclosures revealed that 

more than half of them failed to comply with the most basic aspects 

of the SEC’s rule on disclosure related to boardroom diversity. 10 If 

the Commission wants its commitment to boardroom diversity— 

and the rule of law—to be taken seriously, it must do a better job 

of consistently enforcing its disclosure rules in this area. If confirmed, I will work with my fellow Commissioners and the Staff of 

the Division of Corporation Finance to ensure that companies and 

boards can expect diversity-disclosure rules to be enforced to the 

letter of the law. 

Q.8. In January 2016, former Chair White instructed staff to review existing company disclosures to determine whether the SEC 

should require companies to provide more specific details about 

their diversity practices. In June 2016, former Chair White announced that staff was preparing a recommendation to the Commission to propose amending the rule to require companies to include in their proxy statements more meaningful disclosures on 

their board members and nominees. 11 The current status of that 

project is unclear. 

In December, the SEC’s Advisory Committee on Small and 

Emerging Companies recommended the SEC amend the disclosure 

to require issuers to describe, in addition to any policy they may 

have with respect to diversity, the extent to which their boards are 

diverse. 12 If confirmed, will you commit to investigating this issue 

and taking steps to determine whether the SEC should revise its 

rule on director selection and diversity? 

A.8. Yes. Given the consistent complaints from investors that the 

rule is not working, the statements from former Chair White to 

that effect, and, as your question notes, the recommendation from 

the Advisory Committee on Small and Emerging Companies, I am 

puzzled that this project has not moved forward, and concerned 

that it was not featured on the SEC’s most recently announced regulatory agenda. 

If confirmed, among my first questions for Chairman Clayton 

would be to ask why the Commission has not yet moved forward 

on this long-awaited project. I hope very much to work with the 

Chairman and my fellow Commissioners to ensure that investors 

receive the information they need to understand boardroom diversity in the companies they own. 

Q.9. In your testimony, you highlighted the importance of completing outstanding Dodd–Frank rulemakings, and particularly 

142 

those that relate to executive compensation and clawback policies. 

I agree that this should be a top priority for every single member 

of the Commission. 

Can you explain how failure to complete these rulemakings 

harms the market, disadvantages investors, and may encourage 

senior executives to make excessively risky decisions? 

A.9. The Commission’s failure to complete Dodd–Frank’s mandated 

rules 7 years after its passage has been harmful to investors and 

companies. It reflects a troubling failure to follow the law at the 

Commission that I hope will be quickly rectified by Chairman Clayton and, if I am confirmed, my fellow Commissioners. 

For 7 years, neither investors nor public companies has had any 

ability to know whether and when these rulemakings will actually 

become law. The result is that both parties spend enormous 

amounts of shareholder money to predict whether and when they 

will have to comply with these rules. That’s good for lobbyists and 

lawyers, but hardly anyone else, and especially not the investors. 

As I mentioned at my hearing, ordinary, everyday investors are 

still waiting for basic, common-sense protections like rules requiring clawback of erroneously awarded executive pay to take effect. 

Without such rules, executives continue to have the incentives they 

had before the financial crisis to take excessive risk. I cannot see 

why those rules have not been implemented 7 years after Dodd– 

Frank’s passage. 

If confirmed, I will urge Chairman Clayton and my fellow Commissioners to finish the rules mandated by the Dodd–Frank Act. If 

the Commission wants public companies to take its commitment to 

the rule of law seriously, the SEC must be prepared to follow the 

law itself. Dodd–Frank is, I know, a controversial law. But it is the 

law, and the SEC is required to follow it. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER 

FROM ROBERT J. JACKSON, JR. 

Q.1. The Citizens United v. FEC ruling allowed, among other 

things, corporations to contribute independent political expenditures. Public companies are active participants in our elections, yet 

their shareholders do not know the role that they play because the 

SEC has been reluctant or handcuffed from requiring firms to disclose their political contributions. 

Do you believe shareholders have a right to know whether a company they’ve invested in is making contributions in their best interest? 

A.1. The bedrock principle of securities-disclosure rules is the materiality standard. That standard asks us to consider what a reasonable investor would think affects the total mix of information 

about the stock that they are choosing to buy and sell. One way 

to evaluate that standard is to see whether investors express interest in particular kinds of information through the shareholder-proposal process. For decades, that is how the SEC has helped ensure 

143 

1See, e.g., Securities and Exchange Commission, Executive Compensation Disclosure, Release 

No. 33-6940, 57 FR 29,582 (1992) (developing executive-compensation disclosure rules, in part, 

in response to shareholder proposals on that subject at large public companies). 2See, e.g., Lucian A. Bebchuk and Robert J. Jackson, Jr., ‘‘Shining Light on Corporate Political Spending’’, 101 Geo. L.J. 923 (2013). 3See id. (citing 17 CFR §229.404(a) (2012) (exempting from the SEC’s disclosure rules for related-party dealings transactions with a value of $120,000 or less)). 

that disclosure rules are evolving to keep pace with changes in 

market conditions and investor interests. 1

As I have written previously, the case for rules requiring public 

companies to disclose their spending on politics is strong. 2 Over 

the past decade, requests for information about political spending 

have been the most common subject of shareholder proposals at 

large public companies, so it is clear that investors have a great 

deal of interest in these matters. Moreover, under current law, 

public companies are not required to give shareholders detailed information on political spending. Thus, to the degree that public 

companies are spending shareholder money on politics in a way 

that diverges from investors’ interests, standard mechanisms for 

corporate accountability and oversight can work only if investors 

have the information they need to evaluate political spending at 

the companies they own. 

Q.2. What should be the threshold for determining when a company discloses their political spending? 

A.2. As I have previously written, the development of any rules in 

this area would raise a series of regulatory questions that would 

require close consultation with the SEC’s Staff. As an outsider to 

the Commission and its work, it is difficult for me to say whether 

and how the evidence currently available to the Staff suggests that 

there should be a particular threshold for determining when a company must disclose their spending on politics. 

Nevertheless, as I have indicated in previous research on this 

subject, a de minimis exception to rules in this area might appropriately balance the benefits of disclosing corporate spending on 

politics with the costs of disclosing small amounts of spending that 

are unlikely to be important to investors. As I have said before, the 

SEC’s existing regulatory framework for such exceptions, such as 

SEC rules on disclosure of related-party transactions, may serve as 

a sound starting point for such an exception. 3

Q.3. What policy levers does the SEC have to promote long-term 

value creation? 

A.3. There are at least three tools at the SEC’s disposal to encourage companies to focus on long-term value creation. The first is an 

area I have written about a great deal: executive pay. 

Current practice requires most public-company executives to hold 

their stock-based pay for only 3 years, so it is unsurprising that 

those executives often pursue short-term stock-price increases rather than long-term value creation. As I mentioned during the hearing, it is time for corporate executives complaining about shorttermism to put their money where their mouths are. SEC rules 

should encourage executives to hold their stock for far longer periods than they currently do. This would give executives powerful incentives to invest for the long term. 

144 

4See, e.g., Patrick Bolton and Frederic Samama, ‘‘L-Shares: Rewarding Long-Term Investors’’ 

(ECGI Finance Working Paper) (2012). 5See Securities and Exchange Commission, ‘‘Purchases of Certain Equity Securities by the 

Issuer and Others’’, Release Nos. 33-8335; 34-48766; IC-26252, 17 CFR §228 (2003) (providing 

a safe harbor from certain securities-law liability for stock buybacks affected in a particular 

manner). 6See Dhammika Dharmapala, C. Fritz Foley, and Kristin J. Forbes, ‘‘Watch What I Do, Not 

What I Say: The Unintended Consequences of the Homeland Investment Act’’ (NBER Working 

Paper No. 15023) (2009); see also Thomas J. Brennan, ‘‘Where the Money Really Went: A New 

Understanding of the AJCA Tax Holiday’’ (Northwestern Law and Economics Working Paper) 

(2014). 

Second, the SEC should consider taking steps that would allow 

companies and investors to choose voting structures that favor 

shareholders who commit to hold shares for the long term. 4 The 

SEC should consider how to encourage and enable public companies and their investors to choose these voting arrangements if 

they see fit. Those arrangements, if appropriate for the particular 

company and investor base, could help ensure companies favor the 

interests of long-term investors over short-term speculators. 

Finally, SEC rules governing stock buybacks—which allow corporations to return cash to investors today rather than invest for 

the long term—have not been updated since 2003. That was a very 

different time for our markets, our economy, and our country. 5

Given the importance of this issue to making sure that public companies invest for the long term, I believe these rules now deserve 

another look. Better disclosure of stock buybacks would require 

managers to explain the basis for their decision to investors and to 

the public, and allow markets to price the buyback properly. That 

kind of disclosure is absolutely worth considering, and if confirmed 

I would look forward to working with your office on this issue. 

Q.4. Do you believe companies are engaging in too many stock 

buybacks and dividend payments and not spending enough on corporate growth? 

A.4. On several occasions in recent years, companies have foregone 

long-term R&D investments, operational expansion, and strategic 

opportunities in order to return money to shareholders. Shareholders and stakeholders alike are right to question if authorizing 

buybacks or dividends payments help or harm the long-term health 

of the company and the economy. 

As noted above, one way for the SEC to address this issue is to 

modernize its disclosure rules governing stock buybacks. I believe 

that doing so is especially important in light of the possibility that 

new legislation may soon encourage public companies to return 

cash now held overseas to the United States. The last time Congress enacted a corporate tax holiday, in 2004, American companies 

used a significant amount of that money for a wave of stock 

buybacks. 6 If tax law changes again to permit corporate cash to 

come home, I want to be sure that companies are prepared and required to explain to investors what they plan to do with that 

money—especially if they are going to use it for buybacks. 

Q.5. Is there a way to center less attention on quarterly earnings? 

A.5. Yes: the SEC has several tools at its disposal to help companies focus on long-term value creation rather than quarterly earnings. For one thing, SEC rules should encourage corporate executives to put their money where their mouth is and hold their stockVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00148 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
145 

based pay for lengthier periods of time. Managers who cannot sell 

their stock holdings in the next quarter—but instead have to wait 

for years to cash in on their holdings—have far fewer incentives to 

manage to quarterly earnings. 

Second, the SEC should consider allowing companies and investors to choose voting structures that favor shareholders who commit to hold shares for the long term. Those arrangements, if appropriate for the particular company and investor base, could help ensure that companies favor the interests of long-term investors over 

short-term speculators. 

I share your broader concern about short-term pressures that 

compel companies to focus on meeting quarterly earnings targets. 

I’m concerned when companies are distributing earnings as dividends or driving up stock prices through buybacks while cutting 

back on R&D, capital expenditures, and other investments. If confirmed I would look forward to working with the Staff, my fellow 

Commissioners, and your office to encourage corporate management to focus on the long term. 

Q.6. The disclosure of innumerable hacks over the past few years, 

recently punctuated by hacks of the SEC and Equifax, has made 

clear that we all need to raise our cybersecurity game. Given the 

important role broker-dealers play in the formation and distribution of capital in the United States, do you think it’s appropriate 

for FINRA, in its examination of broker dealers, to perform cybervulnerability assessments of registered broker dealers? 

A.6. I absolutely share your concern that broker-dealers—who are 

entrusted with the personal financial information of millions of 

American families and play critical roles in our securities and derivatives markets—must take every possible step to protect themselves against cybersecurity threats. And I agree that all regulators—including the SEC and FINRA—must prioritize responding 

to a rapidly evolving cyberthreat. 

As an outsider to the SEC, FINRA, and their work, I am not in 

a position to know whether FINRA should initiate an examination 

program of the kind described in your question. The SEC should, 

however, be asking whether FINRA’s current examination programs encompass this type of review, what existing data FINRA 

and the SEC has about brokers’ vulnerability to cyber-related 

threats, and what steps the SEC or FINRA can take to make sure 

that investors have as much information as possible about the broker’s cybersecurity preparedness. If confirmed, I would look forward to working with SEC and FINRA Staff, my fellow Commissioners, and your Office to make sure FINRA takes whatever steps 

are necessary to protect broker-dealer customers from cybersecurity 

threats. 

Q.7. On Oct. 15, 2014, the Treasury market flash rally occurred, 

where the yield on the benchmark 10-year U.S. Treasury traded in 

a 37-basis-point range (0.37 percent), only to close six basis points 

below its opening level. Principal trading firms (PTFs) account for 

a majority of trading in inter-dealer Treasury markets, which represent half of all trading in Treasuries. Due to a loophole, PTFs, 

including many that use algorithmic strategies, have not been required to register as brokers. This allows them to escape oversight 

146 

7See U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, 

Federal Reserve Bank of New York, Securities and Exchange Commission, and Commodity Futures Trading Commission, The U.S. Treasury Market on October 15, 2014 (July 13, 2015). 

and reporting requirements. Will you commit to ensuring that 

PTFs are required to register as brokers? 

A.7. The Treasury market plays a vital role in our financial markets and economy, providing a risk-free benchmark to investors 

around the world and financing the critical work of our Government. Like so many modern markets, the Treasury market has 

seen a number of significant technological changes over recent 

years, including the increased prominence of PTFs. 

I am familiar with the Joint Staff Report on the events of October 15, 2014, produced by the staff of the Treasury, Federal Reserve Board of Governors, Federal Reserve Bank of New York, 

SEC, and CFTC, and I share your concerns regarding data and 

oversight gaps of PTFs. 7 If confirmed, I look forward to working 

with the Staff, fellow regulators, and Congress to ensure there is 

appropriate oversight and transparency in the Treasury market 

and, more broadly, that the financial regulatory community 

prioritizes preserving confidence in the world’s deepest and most 

liquid market. 

Q.8. Under current law, Regulation ATS’s basic regulatory standards for exchanges and other financial markets are designed to ensure market resilience, integrity and adequate operational risk controls. But trading venues that facilitate the exchange of Government securities are excluded from Regulation ATS. And by excluding them from Regulation ATS, they are also excluded from Regulation SCI’s cybersecurity requirements. Will you commit to closing 

the loophole that permits Government-securities trading venues to 

avoid these basic requirements? 

A.8. Because of the importance of the Treasury market to the functioning of the financial markets that millions of Americans depend 

upon each day, I share your concerns about trading venues that 

focus on Government securities. Participants in these venues must 

have advanced cybersecurity protections to ensure that these crucial markets are not susceptible to cyberthreats. 

As an outsider to the Commission and its work, I am not familiar 

with the Staff’s full basis for concluding that exchanges of this type 

may be excluded from Regulation SCI’s cybersecurity requirements. 

When determining whether that exclusion is appropriate, however, 

the Commission should focus on other cybersecurity requirements 

that may apply to these trading venues, the degree to which the 

exclusion exposes these markets and investors to unacceptable 

risks of data breaches, and existing cybersecurity protections in 

place at these venues. 

If confirmed, I will work with my fellow Commissioners and the 

Staff to understand why these venues have been excluded from the 

reach of Regulation SCI. And I would look forward to learning 

more about the Staff’s experience in administering Regulation SCI 

in evaluating whether further efforts are needed to promote the resilience and integrity of trading venues. 

147 

1 Jay Clayton, Chairman, Securities and Exchange Commission, ‘‘Public Comments From Retail Investors and Other Interested Parties on Standards of Conduct for Investment Advisers 

and Broker-Dealers’’ (June 1, 2017). 2See Securities and Exchange Commission, Comments on Duties of Brokers, Dealers, and Investment Advisers, Release Nos. 34-69013, IA-3558, File No. 4-606. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN 

FROM ROBERT J. JACKSON, JR. 

Q.1. On June 1, 2017, the SEC solicited public comments from retail investors and other interested parties on revising its standards 

of conduct for investment advisers and broker-dealers. In this request for comments the SEC asked ‘‘If the commission were to proceed with a disclosure-based approach to potential regulatory action, what should that be?’’ 1 Do you believe that the financial incentives that create conflicts of interest in the retail investment 

market that harm investors can be eliminated by enhanced disclosure alone? 

A.1. I share the concern that retail investors must be protected 

from money managers who act contrary to their fundamental duties to their customers. When American investors entrust their savings to one of these institutions—whether an investment adviser or 

broker-dealer—they need to know that those who manage their 

money have clear obligations to their customers. 

Disclosure lies at the heart of our securities laws, and has often 

served as an effective first line of defense when protecting American investors from those who would defraud them. But it is not 

the only tool in the SEC’s toolkit, and I am deeply skeptical that 

disclosure alone can eliminate conflicts of interest in the retail investment market. 

My general approach to questions of this type is to let the facts— 

evidence from the behavior of retail investors and their advisors— 

tell us what kinds of regulatory approaches are most likely to succeed. In this case, a considerable body of research—some commissioned by the SEC—makes clear that disclosure is often necessary 

but not sufficient to address conflicts of interest in the retail investment market. 2 The evidence tells us that the complexity of financial products and compensation structures often makes disclosure ineffective for many retail investors. And the data also suggest 

that disclosures may be least effective for the investors who need 

protection the most. 

As I noted at the hearing, I believe that the SEC has an important role to play in this area. But it is critical that, whatever steps 

the Commission takes, American families who entrust their savings 

to others can rest easy in the knowledge that those who manage 

their money have an obligation to protect their clients from conflicts. 

Q.2. If not, what steps will you take to directly tackle problematic 

incentives that lead to conflicts of interest that harm investors? If 

so, how do you design a disclosure regime that eliminates problematic financial incentives? 

A.2. It is important to me that I be careful to avoid comment on 

a matter that may come before me if I am confirmed as a Commissioner. Moreover, as an outsider, I have not been privy to the ongoing work at the SEC on matters related to financial advisers’ duties 

148 

to their clients—and, thus, am not in a position to comment on 

what particular regulatory approaches the SEC might be considering. 

However, it is critical to create a regulatory structure that ensures that firms do not reward advisers for working against their 

clients’ best interests. If confirmed, I would look forward to working with my fellow Commissioners and this Committee to create 

those kinds of protections. 

Q.3. If the commission proceeds with a disclosure-based approach 

to potential regulator action, what user tests will the Commission 

conduct to prove that all investors, not just the most sophisticated, 

fully understand and appreciate the nature and extent of the conflicts of interest and make a truly informed decision as a result? 

A.3. As an outsider, I have not been privy to the ongoing work at 

the SEC on matters related to financial advisers’ duties to their clients—and, thus, am not in a position to comment on what particular regulatory approaches the SEC might be considering. I have 

also not had the benefit of consultation with the Staff now working 

on this issue—or the opportunity to ask them about the user tests 

they might be considering to ensure that disclosures are designed 

to protect investors. 

But let me be clear: any disclosure-based approach in this area 

should be grounded in evidence that proves it will be effective in 

arming investors with the information they need to make a truly 

informed decision. That evidence should carefully consider the different effects that disclosures might have on investors with different backgrounds, expertise, and financial objectives. And disclosure-based policy prescriptions should take those differences into 

account when designing the rules governing adviser disclosures. 

Poorly designed disclosures are unlikely to mitigate conflicts of interest—and may risk further confusing investors already overwhelmed by the complexity of financial advice. 

Moreover, as noted above some conflicts are so complex that I believe they are unlikely to be mitigated through disclosure alone. If 

confirmed, I would work with the SEC’s Staff and my fellow Commissioners to ensure that the SEC’s work in this area is effective 

at ensuring that retail investors are made aware of any conflicts 

of interest their broker-dealer faces. 

Q.4. Will you consult the extensive economic analysis the Department of Labor put together for their rulemaking on the fiduciary 

standard, including analysis on the incidence and cost of conflicts 

of interest in the financial services industry and on how these financial conflicts influence adviser recommendations? 

A.4. Yes. As noted above, my approach to these questions will be 

evidence-based, and I will absolutely consider the substantive economic analysis produced by both Government agencies and outside 

entities on the incidence and impact of conflicts of interest, including the Department of Labor’s economic analysis of the fiduciary 

rule. I would also be delighted to consult with current Department 

of Labor personnel who have worked on that Department’s rulemaking in this area. 

149 

3Securities and Exchange Commission, ‘‘Study on Investment Advisers and Broker-Dealers’’ 

(January 2011). 1See Securities and Exchange Commission, ‘‘Purchases of Certain Equity Securities by the 

Issuer and Others’’, Release Nos. 33-8335; 34-48766; IC-26252, 17 CFR §228 (2003) (providing 

a safe harbor from certain securities-law liability for stock buybacks affected in a particular 

manner). 

Q.5. How will you ensure that broker-dealers do not call themselves advisers? How can investors distinguish between sellers and 

advisers if sellers are allowed to market themselves as advisers? 

A.5. I share your concern that investors need to have absolute clarity about what types of financial professionals they are working 

with and what services they are providing. Anyone who represents 

himself or herself as providing financial advice should be subject to 

duties appropriate to that role. 

As the SEC Staff noted in a 2011 report, ‘‘[d]espite the extensive 

regulation of both investment advisers and broker-dealers, retail 

customers do not understand and are confused by the . . . standards of care applicable to investment advisers and broker-dealers 

when providing personalized investment advice and recommendations about securities.’’ 3 If confirmed, I would be delighted to engage with firms, consumer and investor advocates, and other stakeholders to determine whether any additional steps should be taken 

to ensure that investors understand the difference between brokerdealers and advisers. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR DONNELLY FROM ROBERT J. JACKSON, JR. 

Q.1. In previous conversations with Mr. Jackson and Ms. Peirce, 

we have discussed my concerns that the wave of stock buybacks in 

recent years has been at the expense of the long-term health of 

companies, their workers, and their communities. 

Are you concerned that the increase of stock buybacks in recent 

years has been at the expense of investments in American workers? 

A.1. Yes. To the degree that stock buybacks are occurring because 

corporate executives are failing to make important and productive 

investments in their employees and their communities, this is an 

issue that concerns me—and should concern all Commissioners. 

Shareholders and stakeholders alike are right to question whether 

buybacks help or harm the long-term health of the company, the 

long-term performance of its stock, and the long-term well-being of 

its employees. 

As we discussed, the SEC’s rules governing stock buybacks were 

last substantially updated in 2003—a very different time for our 

markets, our economy, and our country. 1 Given the importance of 

this issue to investors and employees, I believe these rules now deserve another look—and should be updated in a way that gives the 

stakeholders in these companies full transparency as to the reasons 

why the company has chosen to buy back shares. 

Q.2. What actions can or should the SEC take to better monitor 

stock buybacks and to increase transparency? What about requiring more immediate disclosure (as opposed to quarterly, as currently required)? 

150 

2See Dhammika Dharmapala, C. Fritz Foley, and Kristin J. Forbes, ‘‘Watch What I Do, Not 

What I Say: The Unintended Consequences of the Homeland Investment Act’’ (NBER Working 

Paper No. 15023) (2009); see also Thomas J. Brennan, ‘‘Where the Money Really Went: A New 

Understanding of the AJCA Tax Holiday’’ (Northwestern Law and Economics Working Paper) 

(2014). 

A.2. These proposals, and several others that would improve transparency around repurchases, deserve close consideration as the 

SEC works to modernize its rules governing stock buybacks. When 

the SEC last considered these rules in 2003, the scale and scope 

of stock buybacks—and their importance to the economy as a 

whole—were far smaller than they are today. Better disclosure of 

stock buybacks would require managers to explain the basis for 

their decision to investors and to the public, and allow markets to 

price the buyback properly. That kind of disclosure is absolutely 

worth considering, and if confirmed I would look forward to working with your office on this issue. 

Moreover, as we discussed during the hearing, I’m especially concerned that current rules are not sufficient if new legislation encourages repatriation of corporate profits from overseas. We know 

that the last time Congress enacted a corporate tax holiday, in 

2004, American companies used a significant amount of that money 

for a wave of stock buybacks. 2 If tax law changes again to permit 

corporate cash to come home, I want to be sure that companies are 

prepared and required to explain to investors what they plan to do 

with that money—especially if they are going to use it for 

buybacks. If I’m confirmed, I would look forward to working with 

my fellow Commissioners and the Staff to make sure our securities 

laws give investors the information they need if Congress enacts 

another tax holiday. 

Q.3. Mr. Jackson, your written testimony includes this excerpt: ‘‘I 

will work to implement the corporate-governance protections that 

Congress has enshrined into law—so that investors, employees, 

and communities can be sure that our companies are working to 

produce the kind of long-term value creation that has been the 

hallmark of the American economy for generations.’’ I agree that 

companies should produce long-term value creation, but unfortunately ‘‘short-termism’’ has become a disease; Wall Street pressure 

results in corporate management making decisions based on the 

next quarter as opposed to the next decade. 

Ms. Peirce, do you share similar concerns about ‘‘corporate shorttermism’’? What actions can or should the SEC take to combat this 

problem and encourage long-term value creation? 

A.3. There are at least three areas in which the SEC should consider action to encourage companies to focus on the long term. The 

first is an area I have written about a great deal: executive pay. 

Current corporate practice requires most public-company executives to hold their stock-based pay for only 3 years, so it is 

unsurprising that those executives often pursue short-term stockprice increases rather than long-term value creation. As I mentioned during the hearing, it is time for corporate executives complaining about short-termism to put their money where their 

mouths are. SEC rules should encourage executives to hold their 

stock for far longer periods than they currently do. This would give 

151 

3See, e.g., Patrick Bolton and Frederic Samama, ‘‘L-Shares: Rewarding Long-Term Investors’’ 

(ECGI Finance Working Paper) (2012). 4See Securities and Exchange Commission, ‘‘Purchases of Certain Equity Securities by the 

Issuer and Others’’, Release Nos. 33-8335; 34-48766; IC-26252, 17 CFR §228 (2003) (providing 

a safe harbor from certain securities-law liability for stock buybacks affected in a particular 

manner). 5See YouTube, ‘‘Carrier Air Conditioner Moving 1,400 Jobs to Mexico’’ (Feb. 11, 2016), available at https://www.youtube.com/watch?v=Y3ttxGMQOrY. 

executives powerful incentives to invest for the long-term rather 

than manage to quarterly earnings targets. 

Second, the SEC should consider taking steps that would allow 

companies and investors to choose voting structures that favor 

shareholders who commit to hold shares for the long term. Academics have argued that permitting these structures can be beneficial, and other jurisdictions have long permitted their use. 3 The 

SEC should consider how to encourage and enable public companies and their investors to choose these voting arrangements. 

Those arrangements, if appropriate for the particular company and 

investor base, could help ensure companies favor the interests of 

long-term investors over short-term speculators. 

Finally, SEC rules governing stock buybacks—which allow corporations to return cash to investors today rather than invest for 

the long term—have not been updated since 2003. That was a very 

different time for our markets, our economy, and our country. 4

Given the importance of this issue to making sure that public companies invest for the long term, I believe these rules now deserve 

another look. Better disclosure of stock buybacks would require 

managers to explain the basis for their decision to investors and to 

the public, and allow markets to price the buyback properly. That 

kind of disclosure is absolutely worth considering, and if confirmed 

I would look forward to working with your office on this issue. 

Q.4. Mr. Jackson, in our meeting, I mentioned the Carrier layoffs 

and the heart-wrenching video where a corporate executive told 

hundreds of workers their jobs were going to Mexico. In response, 

I crafted the End Outsourcing Act to keep jobs in America by restricting tax breaks and Federal contracts for companies that ship 

jobs to foreign countries. 

It is difficult, however, to track when and where outsourcing occurs. I believe the SEC can take modest steps in this regard by requiring public corporations to disclose country-by-country employment. This would help investors determine which companies employ American workers and better understand where outsourcing 

has occurred. Do you support requiring corporations to disclose employment on a country-by-country basis to help increase transparency of outsourcing and American employment? 

A.4. Thank you for the opportunity to discuss this issue in our 

meeting—and for urging me to view the video mentioned in your 

question, which I watched the next day. 5 Witnessing the devastating impact of Carrier’s decision firsthand helped me understand the importance of this issue—and, if confirmed, I will keep 

those pictures and those people closely in mind each day I work at 

the SEC. 

Whether the kind of disclosure rule described in your question 

would be appropriate depends upon whether the information in 

question would be material to investors—that is, whether it would 

152 

alter the total mix of information that shareholders would consider 

when investing in the company. As I have written before, one way 

to know whether certain information is material is to ask whether 

shareholders have expressed interest in that information. 

Many significant investors—including large pension funds and 

mutual funds—have recently expressed interest in the information 

described in your question, both in their public statements regarding these matters and through shareholder proposals. For this reason—and because this issue is so critical to the future of millions 

of Americans—I would welcome the opportunity to work with the 

Commission and your office to investigate whether SEC rules 

should be updated to require disclosure of these matters. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ 

FROM ROBERT J. JACKSON, JR. 

Q.1. I am very concerned about legislative proposals to dramatically increase the threshold for submitting shareholder proposals. 

Shareholder proposals are an important way for shareholders to 

communicate with management. They have been instrumental in 

improving corporate governance, such as requiring that independent directors make up at least a majority of corporate boards. 

Shareholders submit proposals on emerging risks, such as cybersecurity and consumer data protection. 

I also worry that the SEC may respond to pressure from companies that do not like dealing with shareholder proposals and raise 

the threshold on its own. 

Do you think shareholders should have a voice in the companies 

they own? 

A.1. Yes. My research, teaching, and previous Government service 

have long focused on making sure that investors have the tools 

they need to express their views to corporate management. As I 

noted in my testimony, for example, I am especially proud to have 

worked on the Treasury Department’s proposals to give shareholders a voice on executive pay. Giving investors the ability to express their views help hold management’s feet to the fire, demanding accountability on issues that shareholders believe are important to the success of the company. 

The SEC’s shareholder-proposal process has, for decades, encouraged helpful dialogue between managers and investors in just this 

way. That process allows shareholders to guide management on 

what they believe the right direction is for the company—almost always on a nonbinding basis. While I am open to the possibility that 

those rules, which have not been revisited for some time, might be 

modernized, my focus during any such process will be to ensure 

that the rules encourage investors to express their views to corporate management. Corporate accountability is critical to the future of our companies and the economy, and I am deeply skeptical 

of making changes to these rules that would make it harder for 

shareholders’ voices to be heard. 

Q.2. Do you think it would a problem if the threshold for submitting proposals was set so high that it blocked all but the biggest 

and wealthiest shareholders from submitting proposals? 

153 

A.2. Yes. I would have serious concerns regarding any proposal to 

limit shareholder proposals only to the largest or wealthiest investors. The shareholder proposal rules are shareholders’ best opportunity to have a dialogue with the company and to bring forth 

ideas and proposals to management. Limiting that process to the 

largest or wealthiest shareholders would deprive American companies of the views of their owners and reduce management’s accountability to shareholders—steps that make little sense for an 

agency charged with protecting investors. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR CORTEZ MASTO FROM ROBERT J. JACKSON, JR. 

Q.1. If confirmed, what specific steps would you take to bolster individual executive accountability, consistent with what Chairman 

Clayton has advocated for? 

A.1. I believe that holding executives accountable when they violate the law is critical to maintaining trust in our financial system. 

Specifically, there are at least two areas that deserve greater time 

and attention. 

First, I will make certain that in any particular case the Division 

of Enforcement has explored every alternative related to bringing 

proceedings against responsible individuals—not just companies. 

Although I cannot at this time comment on any particular enforcement matter that may come before me as a Commissioner, I assure 

you that, where the Division of Enforcement recommends action 

against a company but not responsible individuals, if confirmed my 

first question will be to ask what can be done to ensure that corporate insiders are held accountable for their actions. 

Second, I will urge Chairman Clayton and my fellow Commissioners to adopt the rules mandated by Section 954 of the Dodd– 

Frank Act, which require public companies to develop policies regarding the clawback of executive compensation. Those rules would 

help ensure that executives do not reap financial rewards while 

making decisions that harm American investors. As I mentioned 

during the hearing, 7 years after the passage of Dodd–Frank, it is 

time for the Commission to finalize the rules that Congress mandated in that law. That’s especially true for Dodd–Frank’s clawback 

rules—which would help hold corporate executives personally accountable for causing harm to American investors. 

Q.2. Some observers like to point to the Sarbanes–Oxley Act of 

2002 or the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 as to why there’s been a drop in public companies 

since the mid-1990s. But a flood of private capital since that time 

has caused merger and acquisitions (M&A) activity to surge. Bankers enjoy the fees that industry consolidation brings in, and with 

an average CEO tenure of 3 years, executives benefit from a shortterm boost in stock prices. On top of that, Congress has passed legislation such as the JOBS Act, which makes it easier for companies 

to stay private for longer. 

What do you make of this argument that regulations are to 

blame for a drop in public company formation? Or is it more likely 

that a whole set of public policy choices make it easier for incumVerDate Nov 24 2008 14:53 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00157 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-24 NOMINATIONS\HEARING\102417.TXT JASON
154 

1See, e.g., Hsuan-Chi Chen and Jay R. Ritter, ‘‘The Seven Percent Solution’’, 55 J. Fin. 1105 

(2000) (‘‘Investment bankers readily admit that the IPO business is very profitable, and that 

they avoid competing on fees because they don’t want to turn it into a commodity business.’’). 

bent firms to buy-up innovative start-ups, and make it easier for 

private companies to stay that way for longer? 

A.2. There are many explanations for recent changes in the number of public companies, and all of them deserve the SEC’s attention. For one thing, the emergence of deeper and more robust private capital markets than we have ever had before allows large 

companies to stay private for far longer than they once could. For 

another, the capital-markets fees that a company must pay to go 

public are far higher in the United States than in other markets, 

giving entrepreneurs pause before listing their shares. And extensive acquisition activity over the past two decades has worked to 

combine thousands of public companies, reducing the number of 

listings on American exchanges. 

American capital markets can and should remain the envy of the 

world. Chairman Clayton has made clear that this area is a priority for him, and if confirmed, I would work closely with the 

Chairman, my fellow Commissioners, and the Staff to ensure that 

the Commission takes the steps necessary to keep our capital markets competitive. 

Q.3. What about the fact that investment banks’ fees to underwrite 

initial public offerings has consistently clustered at seven percent 

over many decades? Why hasn’t competition driven down the price 

to take young companies public, and if confirmed, will you seek to 

study this issue? 

A.3. The fees bankers earn for taking companies public are higher 

in the United States than in most other jurisdictions, and these 

fees are often the most important factor in the decision to go public. Scholars have long noted that investment banker fees have 

clustered around seven percent for a wide range of companies over 

a period of decades. 1 The fact that American entrepreneurs are required to give up some seven percent of their creation in order to 

take their companies public seems to me to be an important factor 

in any assessment of the changing rates of IPOs in our markets. 

To be sure, there are many reasons why companies choose not 

to go public today, and they all deserve attention—including the 

factors described in your question. If confirmed, I would look forward to working with your office to study this issue further—and 

take whatever actions are necessary to ensure that America’s capital markets remain competitive. 

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ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

WALL STREET JOURNAL ARTICLE SUBMITTED BY SENATOR VAN 

HOLLEN 


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about 0.4 percentage point over a broad market index between the time of their trades and the 

market close after the disclosure. These gains, realized over the span of a few days, would be 

much larger on an annualized basis. 

When officials bought shares outright- rather than by exercising options received as 

compensation-the gains were even better, at about 1.6 percentage points over the index. Openmarket purchases are noteworthy because corporate executives, who typically receive chunks of 

stock through salaries and bonuses, are often less inclined to buy shares out of pocket. 

The longer companies waited to make disclosures, the better the returns, according to the study. 

When companies used the full four -business-day window, the average excess profit rose to 1.95 

percentage points. 

Related 

Securities laws require companies to disclose major developments on SEC forms known as 8-Ks, 

which cover everything from new credit agreements to acquisitions and dividend 

announcements. Insiders aren't explicitly banned from trading ahead of these announcements 

but, as with other times, can't do so if they possess market-moving information unknown to 

other investors. What constitutes such information is a matter of debate in some cases. 

The findings wade into a long-running debate over whether U.S. securities laws, many of them 

decades old, can effectively police a trading market that has grown ever faster and more 

complex. Critics say the lag time allowed by current disclosure rules is a relic of an era before 

electronic filings and is ripe for abuse. 

"To leave open a gap like that is an invitation to insider trading," said Robert Jackson, a 

Columbia Law School professor who co-wrote the study with his colleague Joshua Mitts and 

Alma Cohen of Harvard. 

It isn't clear that the officials, particularly less-senior ones, were aware of the developments 

disclosed or knew which direction they were likely to move the stock. In some cases, the 

information may have been made public before the 8-K, by other means. But the consistency of 

the profits suggests insiders benefit from proprietary knowledge of their businesses when making 

trades, Mr. Jackson said. 

The study adds to a body of academic and other work that has made similar findings. A Wall 

Street Journal investigation in 2012 found that many executives reaped robust gains when they 

traded ahead of major announcements. 

The latest study excluded any filings that noted the trades in question were made pursuant to socalled I ObS-1 plans. They are pre-established arrangements under which executives can schedule 

trades for particular times or price triggers. Executives don't have to disclose these plans but 

often do so on their trading forms, which can seJVe as a strong defense against any allegations of 

impropriety. 
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Wausau Paper Corp. on Aug. 13,2014, finalized the sale of a long-shuttered Minnesota plant 

that had proved difficult to unload. On Aug. 18, Chainnan and ChiefEllecutive Michael Burandt 

bought 3,000 shares of Wausau stock, his first stock ownership since taking the job four months 

earlier. After the sale was disclosed to investors on Aug. 19, the shares rose and Mr. Burandt 

earned a paper profit that beat the market index by two percentage points, the study found. A 

Wausau spokesman said Mr. Burandt believed the shares, which had fallen sharply in the prior 

months, were undervalued. He added that Wausau executives had just been allowed to resume 

trading after being barred from doing so around the company's second-quarter earnings. 

In another example, Simmons First National Corp., a small Arkansas bank, moved in August 

2012 to buy back $10 million in trust-preferred securities, lowering its overall debt. Then-CEO 

Thomas May bought 3,000 shares in between when Simmons notified the trustee of its plan and 

when it disclosed the news. The study's authors calculate an excess return of 1.1% over two 

days. 

A Simmons spokesman declined to comment. Mr. May, who retired in 2013, didn't respond to a 

request for comment. 

Rep. Carolyn Maloney, D., N.Y .. , who sits on the House Financial Services Committee and 

reviewed the latest study's findings, called them "troubling" and said she was preparing 

legislation to address the issue. Her office is considering several options, including a bill 

preventing executives from trading their own company's shares ahead of an 8-K filing. 

The headquarters building of the SEC. Photo: Joshua Roberts/Bioomberg News 

The SEC in 2002 proposed shortening the 8-K filing window to tv;o business days from between 

five and IS but backed off amid resistance from corporate law firms, among others, who said it 
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would burden companies, especially smaller ones with fewer resources, and lead to rushed, 

inaccurate disclosures. The agency settled on four days. 

"Companies often need, and do use, that time to make sure the information is accurate," said 

Bradley Bondi, a lawyer at Cahill Gordon & Reindel LLP who was previously an SEC 

enforcement official. Shortening the window could lead to errors or sloppily worded filings that 

could invite shareholder lawsuits, he said: "The main consumer of8-Ks isn't the investing 

public-it is the plaintiffs bar." 

He said an alternative may be tougher enforcement oflaws already on the books. "This isn't a 

problem with the law," he said. 

Write to Liz Hoffman at liz.hoffman@wsi.com 
159 

‘‘THE 8-K TRADING GAP’’ SUBMITTED BY SENATOR VAN HOLLEN 


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The Center for law and Economic Studies 

Columbia University School of law 

435 West 1161

• Street 

New York, NY 10027·7201 

(212)854·3739 

The 8·K Trading Gap 

Alma Cohen 

Harvard law School 

Robert J. Jackson, Jr. 

Columbia law School 

Joshua R. Mitts 

Columbia taw School 

Columbia Business School 

For a visual~ation tool describing specific cases from the data examined in this 

Artide, please visit htto1/bjJ.Iaw.columbia.e<lu/!l!cgap 

WMing Paper No. 524 

September 7, 2015 

Do not quote or c~e without author's permission. 

An index to the working papers in the Cclumbio Low 

Sdlool Working Paper Series is loco ted ot 

http://web.law.columbia.edu/law-w>nomlc-studles/workl!lf!:P3oe<s 
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The 8-K Trading Ga1> 

Alma Cohen' 

Harvard Law School 

Robert J. Jackson, Jr. 

Columbia Law School 

Joshua R. Mitts 

Columbia Law School & Columbia Business School 

September 7, 2015 

ABSTRACf 

When a significant event occurs at a publicly 1111ded company, federal law requires the 

fill11 to disclose this infoll11ation to investors in a securities filing known as a Foll11 8-K. But the 

fill11 need not disclose immediately; instead, SEC rules give companies four business days after 

the event occurs within which to file an 8-K. These rules thus create a period during which 

market-moving infonnation is known by those inside the firn1 but not most publioxompany 

investors-a period we call the "8-K trading gap." In this Article, we study how corporate 

insiders trade their company's stock during the 8-K trading gap. 

We develop a unique dataset of 15,419 Foll11 8-Ks with trades by insiders during this gap. 

We identify systematic abnoll11al returns of 42 basis points on average, per trade, from trades by 

insiders during the 8-K gap. When insiders engage in an unusual transaction during the gapopen-market purchases of their own company's stock- they earn even larger abnoll11al returns of 

163 basis points. We also show that, when they engage in such purchases, insiders are correct 

about the directional impact of the 8-K filing more often lhan not-and that the probability that 

this finding is the product of random chance is virtually zero. 

To examine whether it is the expertise of the insiders, or the value of the infoll11ation, that 

drives insider returns, we then focus on a type of 8-K that reveals positive inf0ll11ation: those that 

announce new agreements with the company's business partners. We show, without reference to 

any specific insider transaction, that a trading strategy of buying on the date such an agreement is 

struck and selling immediately before the agreement is disclosed yields, on average, abnormal 

returns of35.4 basis points. We also demonstrate that insiders are more likely to engage in openmarket purchases of their own company's stock when the finn is about to reveal new agreements 

with customers and suppliers. In light of the potential concerns raised by these findings, 

lawmakers should reconsider the effects of infonnation-forcing rules such as those governing 

Fonn 8-K on the incidence and profitability of trading by insiders. 

· Alma Collen is at Ha~ard Ulw SchooL Roben J. J~kson, Jr. is Professor of Law and Co-DirtCIOr of the Ira M. 

Millstein Cemer for Global Markets and Coqx>r.ne Ownership at Coluni>ia Ulw SchooL Joshua R. Mitts is 

POS1docloml Fellow in E~irical Law and Ecooonlics al Colwroia Ulw School and a Ph.D. stndem in finance & 

Economics aJ Columbia Busin:ss School We wish 10 express our deep gmtitnde 10 Gregory Klochkolf, Kale 

Thon1lSQn. Zack Nagler, Derek SaiV. Eliana Tomldo, Jan>!! Da1 idson, Bill Nguyen. and Manhe\1 Weiner for their 

critical work on this projeCL We also thank lan AJ res. Lucian Bebcbok. kiTTCJ' Gordon. Zomr Goshen, Alex 

Raskolnikov, Gabriel Rauterberg. Richard SquiJe, and Eric Talley for helpful oonunellls. Direct correspondena: to 

aloollc law ban~rd edu. roben.jackson1f_la11·.oolumbia.edu andjosllnmitts1f_la11·.oolwro•1.edu. 
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I. INTRODUCTION 

Trading by corporate insiders has long been the subject of heated debate among 

lawmakers and commentators. Although Manne (1965) forcefully questioned whether the law 

should allow such trading, for more than sixty years the Securities and Exchange Commission 

(SEC) has devoted significant resources toward enforcing the rules designed to reduce insiders' 

profiiS from trading in their company's stock. The precise contours of those rules can be difficult 

to discern.' What is clear, however, is that SEC Rule IOb-5, the principal source of liability for 

improper trading, prohibits an insider from trading with those to whom she owes a fiduciary duty 

on the basis of so-called material nonpublic information. Another group of SEC rules govern 

whether and when public companies must disclose this kind of information to the public. While a 

significant body of work has examined insider trading more generally, relatively little attention 

has been given to the interaction between these information-forcing rules and insider trading. 

In this Article, we examine a unique type of trading by corporate insiders: trading during 

the period when SEC rules allow companies to delay the public disclosure of significant 

corporate events. When such an event occurs, SEC rules require that the firm disclose it in a 

securities filing known as Form 8-K. But those rules do not require the 8-K to be filed until the 

fourth business day after the event. Thus, SEC rules create a period when market-moving 

information is known by insiders but not by most investors-a period we call the "8-K trading 

gap." In this Article, we provide the first study of how insiders trade their company's stock 

during the 8-K trading gap. 

1 A100ng o1her issues clouding Jhe scope of insideNr.kling liability, a = Socord Circuil decision rnises 

sd>stantiaJ questions about the proof required 10 SllSJain a com·iclion for l'iolations of Role IOb-5 against outsiders 

who receil'e confidential oorpornte infonmtion from insiders. The United Stites recemly petitioned the Supreme 

Coun 10 rcriew the Socord Orcuifs decision. (Stercnson & Goldstein. 2015.) 
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After identifying more than 15,000 8-Ks with trades by the company's insiders during the 

8-K gap, we examine the profitability of those trades based on the direction of the insiders' 

transactions. We show that insiders enjoy systematic abnonnal returns of 42.3 basis points on 

average per trade. We then review each 8-K by hand to identify the type of corporate event that 

will be disclosed by the finn shortly after these trades. We document abnormal returns from the 

insiders' transactions across a wide range of types of infonnation-including forthcoming details 

of merger agreements, changes in the company's capital structure, key customer or supplier 

agJ"eements, and notices of stock-listing compliance violations. 

Having documented these profits, we then address a possible concern. The results 

described above show only that insiders do, in fact, trade profitably during the 8-K gap-a 

finding that some might regard as unsurprising given insiders' deep information about the fim1 

and its value. Put another way, one might expect that insiders, when they trade their own 

company's stock, consistently tum a profit-regardless whether an 8-K filing is imminent. We 

thus examine whether an individual who knew only about the forthcoming 8-K filing, but had no 

other access to non-public infonnation about the firm, could trade profitably during the 8-K gap. 

To answer that question, we focus on a particular type of 8-K that is on average likely to 

generate a positive response in share prices: the announcement of a significant agJ"eement \vith 

the company's customers or suppliers.

2 Abstracting away from particular transactions by insiders, 

we show that a simple trading strategy-buying on the date when such an agreement is struck 

and selling on the date when that agreement is disclosed to the public-would yield abnonnal 

returns of about 35.4 basis points. Thus, a person who knew only that the company had signed 

' As C.'lJiaincd in fUl1hcr ooail beto1r, because SEC rules gowning Fonn 8-K require 11131 companies disclose" ~n 

t~ finn enters into signifJCalU new agreements "ith customers and suppliers. Because such ag~ttmcnts are, on 

balance. designed to increase rather tban decrease fmn ralue. lOOse rules are likely. on aref118C. to produoc positire 

inform.1tion about the lue oft~ finn. 

2 
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such an agreement could earn abnonnal profits using this strategy. Finally, we consider whether 

insiders are more likely to engage in a relatively unusual3 transaction-the open-malket purchase 

of their own company's stock- between the time major agreements with customers or suppliers 

are struck and when those agreements are disclosed. We find that insiders are more than 20% 

more likely to engage in open-market purchases during this period than at other times. 

Because these findings raise concerns about trading by corporate insiders, we ''1sh to add 

four cautionary notes regarding the interpretation of our results. irs~ we emphasize that our 

evidence in no way establishes that the insiders in our sample have engaged in illegal or 

improper conduct. As noted above, the contours of the law governing liability under Rule IOb·S 

are complex, and the elements of such liability require a showing of cenain facts, such as the 

insider's state of mind, upon which our evidence does not bear. Second, we note that our 

evidence does not establish the causal direction of the relationship between the 8-K gap and 

trading by insiders. h may be that insiders delay 8-K disclosures to create trading opponunities 

(Niessner, 2015), or that insiders aware that an 8-K will not be filed for several days choose to 

trade before the filing occurs. Because the design of our study is not experimental, we are unable 

to distinguish between these hypotheses. Third, and relatedly, because our design is not 

experimental, our evidence does not show that profitable trading by insiders is caused by the 8-K 

gap. We simply document that insiders do, in fa~ trade profitably during the gap-not that the 

gap causes greater levels of insider profits. 

' It is relatircty rnre for ill$iders to engage in open-martret purthlscs-as oompared. for e.xru~le, to the exen:ise of 

Slock options or sale of company Slock-®use insiders already h!Ye. as a oonsequeooe of lh:ir employment by 

the company. undirersilied C.\lJOSUre to tl>e fum and its fortunes. mal<ing additional long exposure genera · 

undesirable for insiders (Jensen & Mockling. t 976). foliO\\ ing t~ conclusion of prerious work that "insiders are 

0\·erirr<cSied in lh:ir fmus due to 1h: C\~1 of personal wealth and truman capital irn·cstcd" (Rogers. 2008). and 

hence that ill$iders' opcn-nl3d<et pun:hases are likely to be more predictire of future returns than insider sales (e.g.. 

Seyhun. 1986) \IC examine opcn·martcct purchases espcc•ttty close~· in our analyses betO\v. 
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Finally, we caution that corporate events are communicated to the public in many ways. 

Our focus is on trading that occurs after the event but before the information is disclosed on 

Form 8-K. We do not address the possibility that, in any particular case, the information 

disclosed in a Form 8-K was made public before the 8-K was filed-for example, through 

conversations between corporate management and the press. We note, however, that despite this 

possibility the consistent abnormal returns to insiders' transactions in the 8-K gap documented in 

this Article might still raise concerns for policymakers. The reason is that, on balance, we would 

not expect trading prior to the revelation of already-public inforntation to generate consistently 

economically and statistically significant abnormal returns of the kind we observe in the data. 

The fact that such returns exist suggests that not all of the information disclosed in the 8-Ks we 

study was already public at the time of the insiders' transactions. 

Our study provides several novel contributions to previous work in this area. First, 

although extensive previous work in the finance literature examines the returns to trading by 

insiders (e.g., Seyhun, 2000), little work in this area has emphasized the relationship between 

such trading and the information-forcing rules that form the bedrock of securities law. We 

document returns to insiders' transactions conditional on the current choices reflected in SEC 

rules about the timing of disclosure of corporate events to the public. Second, unlike much prior 

work in this area (for an important exception, see Meulbroek, 1992), we document how insiders' 

returns differ among the different types of information that the firm is about to reveal-and, 

hence, provide a framework for policymakers considering whether securities rules in this area 

should reflect the heterogeneous nature of the information they govern. Third, we demonstrate 

that profits from the 8-K trading gap do not require the unusually deep inforntation that insiders 

4 
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have about the firm; instead, even a relatively uninformed investor can earn systematic abnormal 

profits by knowing about particular types of corporate developments before the market does. 

Finally, the evidence we present may raise concerns for policymakers. Our findings 

suggest that Congress and the SEC should consider whether allo111ng firms to delay the 

announcement of material nonpublic information for four days creates trading opportunities that 

strain the already significant public resources dedicated to enforcing the rules that prohibit 

improper trading by insiders. Second, firms hoping to address the potential for such trading often 

voluntarily adopt scrcalled "blackout" periods prohibiting insiders from transacting in the 

company's stock around the rime of quarterly earnings announcements. But these prohibitions 

often do not apply to other significant events reportable on Form 8-K, and our results suggest 

that firms should consider extending blackout periods to those events. Finally, our evidence 

suggests that policymakers currently considering choices regarding the design of informationforcing rules-such as those that govern Form 8-K- should consider the effects of those choices 

on the opportunities for trading by insiders. 

The remainder of the Article proceeds as follows. Part 2 provides background on 

previous study of trading by corporate insiders and the SEC rules that we use to identify the 8-K 

trading gap. Part 3 describes the development of our dataset and the results of our analysis of 

insider profits from trading in the 8-K gap. To address potential critiques of that analysis, in Part 

4 we focus on trading in the gap when the 8-K will reveal a particular type of information: 

significant agreements between the company and its customers or suppliers. Part S concludes. 
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2. BACKGROUND 

A. Mandatory Disclosure Rules and Trading by Insiders 

The standard justification for the mandatory disclosure rules that characterize much 

modem securities law is that, in the absence of such rules, information about the value of 

securities would be underprovided from a social point of view. (Coffee, 1984.) Indeed, it has 

been said that the "essen[ce)" of these rules is to facilitate the work of informed traders so that 

stock prices accurately reflect the collective value of the firm's investment opportunities. 

(Goshen & Parchomovsky, 2006.) While Manne (1965) contended that profitable trading by 

insiders, too, could help improve the accuracy of public-company stock prices, the law has taken 

a different course: insider trading on the basis of material nonpublic information is, broadly 

speaking, illegal. Because enforcement of that prohibition is imperfect, however, previous work 

has documented profitable trading by corporate insiders rather extensively (e.g., Lorie and 

Niederhoffer, 1968; Jaffe, 1974). 

Less noticed is the relationship betwee11 the design of mandatory disclosure rules and the 

incidence and profitability of insider transactions in their own companies' stocks. Theoretically, 

however, we would expect that the design of information-forcing rules will profoundly influence 

insiders' behavior, both as traders and as managers of the firm itself. Suppose, for example, that 

a manager is presented with the opportunity to enter into a new agreement on behalf of the 

company that, in expectation, will significantly increase the firm's value. Suppose, too, that 

policymakers wish to choose the mandatory-disclosure rule that will most efficiently transmit the 

value implications of this development to securities markets. Lawmakers have a wide range of 

choices in designing this rule, but all can be expected to influence the manager's behavior. 

Consider, for example, a rule requiring the firm to disclose the agreement at the moment that the 

6 
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manager signs the relevant contract. Managers inclined to profit from their infonnation may seek 

to delay that moment to enable profitable trading, 1\ith correspondent implications for social 

welfare. By contraSt, consider a rule that requires the finn to disclose the agreement one month 

after signing. This design is less likely to influence the manager's conduCI regarding the 

agreement itself. But it is also likely to permit considerable trading by the insider on the basis of 

this infonnation-again, with correspondent social costs. 

To choose among these design alternatives, however, policymakers need evidence 

regarding the coSts and benefits of the existing regulatory regime.

4 ln this Article, we examine 

trading activity by corporate insiders that is associated with the current regulatory design of the 

SEC rules that require public companies to disclose significant corporate events to investors.l 

B. Tbe SEC's 8-K and Insider-Trading Disclosure Rules 

In this Article, we take advantage of two types of securities-law rules to provide unique 

evidence on insider transactions in public-company stocks. rs~ we consider rules that require 

publicly traded companies to disclose important corporate events to investors on Fonn 8-K. 

Second, we draw upon rules that require insiders to disclose their trades to the public in a filing 

known as Form 4 to examine trading during the 8-K gap. 

' looeed, a related recent debate in corpor.ue aoo securities law-regarding lh: optimal disclosure rule for oolders of 

large blocks of public<ompany stock--drnn$ on similar questions of institutional design. AltMugll current law 

pcrmiiS blockoolders of 5% or more to wait as long as ten da) s before disclosing their ~lion, the SEC is cvncntly 

considering a petition tosoonen that period toone day. (Wachtell Lipton, Rosen & Katz. 2011 .) In prerious work. 

one of us has a~gued that the design of that rule inlllicateS eenain benefiiS associated 11 ith such blockoolders. 

(Bebehuk & Jackson. 20 12.) Another one of us has aJgUed tl~'lllaw nakers should lake adrantage of the benefits of 

prirate ordtring nhcn dereloping such rules. (Mitts 2013.) That work, like this Anicle. exarnir>!S tl" eoSis and 

benefitS of the design coo ices rellocted in cvrrem securities law. 

' Although most work in this area has not emp~zed tb: relationship benreen lh:se design cooiees aoo l!3ding by 

corpornte insiders, one imponam OOd) of prior scholarship hilS C.\]Jiored thai internet ion. In a series of rteem papers, 

conunc,.ators hare considered "helhcr tb: design of SEC Rule 10b5-l-which prorides thal if insiders ado[ll a 

"plan" uooer which they preconunit to cenain trnnsactions. tl<>se uades will be presumed not to riolale Rule IOb)-

hasactually led lomore. rntb:r !han less. insideHrnding profits (Henderson e1 a!.. 20U: Jagolinzer, 2009). 
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The SEC rules governing Form 8-K are nearly as old as the Commission itself. Form 8-K 

was created by the Commission in 1936 "as the form to be used by companies to file 'current' 

reportS when specific extraordinary corporate events occur.'" (SEC, 2002.) The SEC's initial 

rules for Form 8-K allowed companies to file the Form up to ten days after the end of the month 

in which the extraordinary event occurred-that is, as many as forty days later in some cases. In 

1977, however, the Commission amended these rules to require companies to file an 8-K within 

five business days of such an event. The Commission also amended its rules, over time, to 

require fim1s to file a Fonn 8-K for a broader group of corporate events; in securities-law 

parlance, the various events that are subject to 8-K disclosure are referred to as "ltems".

6 

In 2002, however, in the wake of the En ron and WorldCom scandals, Congress passed 

the Sarbanes-Oxley Act. That law included a little-known provision, Section 409, indicating that 

publicly traded corporations should be "required to disclose to the public, on an urgent basis, 

information on material changes in their financial conditions or operations." The SEC proposed 

extensive changes to its 8-K rules in 2002. For present purposes, the most important proposed 

change was to "shonen the filing deadline for Fonn 8-K to two business days after an event 

triggering the Fonn's disclosure requirements." (SEC, 2002.) But the Commission received 

extensive comments from, among others, prominent law !inns and investment banks urging the 

SEC to reconsider. Finally, in 2004, the SEC decided not to adopt its proposed two-day deadline; 

instead, "persuaded by .. . these commenters," the Commission chose to mandate "a four 

business day deadline for Fonn 8-K." (SEC, 2004.)

7 This SEC rule makes it possible, and indeed 

' For e:cunple, as descn'bod in funhcr detail below, Hem 1.03 on Fonn 8-K requires disclosure of 11I1Cthcr 1hc 

company oos erucred imo banl:rupccy or receil'ership. Hem 2.0 I requires disclosure of lhe complerion of lhe 

acquisilion or sale of corpnr.lle asseiS. and Hem 3.01 requires disclosure of 1he company's receipc of a oo1ice !hal it 

Ius failed 10 sa1isfy lhe liSiing rules of a s1ock excoonge on" hich I he fi1111 's sccurilics are liSiod. (SEC, 2015 (I).) 

' BecaJSe lhe SEC's rules gol'eming Fonn 8-K coonged siglificalllly in lhe years precedi11g 2001. we consider only 

lrnding acli\il)' in 21m and laler in our empirical aoolysis below. 
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perfectly legal, for there to be a gap of as many as four trading days between the occurrence of a 

significant corporate event and the disclosure of that event to the company's investors. 

SEC rules have also required disclosure of trading by corporate insiders since the Great 

Depression. These rules require a public company's directors and officers to disclose the dates, 

prices, and other details of their trades in the company's stock oo Form 4.

1 Although the SEC's 

rules once required Form 4 to be filed within I 0 days of the end of each month, Congress also 

altered these rules in the Sarbanes-Oxley Act. This time, Congress did not leave the SEC 

discretion with respect to the filing deadline: with few exceptions, Section 403(b) of SarbanesOxley strictly requires that Form 4 be filed \\1thin two business days of the insider's transaction. 

Although extensive previous work has used the rich data provided in Form 4 to stud/ 

trading by insiders, to relatively little attention has been given to the SEC's 8-K rules. One recent 

working paper (Niessner, 201 S) considers whether managers use the flexibility provided by the 

8-K gap to strategically time the release of negative news, finding that managers are more likely 

to disclose such news on Fridays and before national holidays. Although that paper considers the 

relationship between strategic timing of disclosures and insiders' sales of their company's stock, 

1 The SEC rules goreming Fonn 4. promulg;ned under Section 16(a) of the Sect!rities E."bange Act of 93~ also 

apply to beneficial 011 ~of IO%of the oompany's stock. though~~~ do not cxamirx: the trading bebarior of 10% 

holde~ during the 8-K gap indus Anicle, 11e imend to ~'plore such ll:lding in future work 

' For examples from the finance liternlure. see Lorie and Niederlrolfer (1968). laJTe (1m). Se)hun (1986). and 

lrashina and Sun (2011). Fonn 4 data bare also been used C.\1ensi,tly in Clt1>i~l 11ork on insider trading in the 

legal literature: for examples. soe Henderson et al. (2014) and Jagolinzer (2009). Following much of this pre,1oos 

Mrk, as described belo11 ll'toblain Fonn 4 data from the Thomson Rcute~database. 

10 We agree, of co~. with dte well-kno1111 previous \\Ort ooncluding toot stud) ing trading by inside~ duough 

Fonn 4 data is of limited use because ·oorporatc inside~ ... would tnostl ke~· refrain from reporting [insider 

trading tltat violates Rule 1~-S)to the SEC" on Fonn ~ (Muelbroek. 1992). Nerenheless. for nro reasons we 

follow prior literature (e.g.. Seyhun. 1986) llw Sludies trading dtat is disclosed br inside~ on Fonn 4. Filii. insider 

transactions during the S·K gap ntay be of panicular ime!eSI because 11C can diroct~· obsen·e the comem or the 

infomtation disclosed illllll<ldiate~· rollowing the insider's trade. Sooond, our idellliJieation of thousands or Fonn 4 

disclosures delailing trading by inside~ during the 8-K gilp-trades dtal. vinually by defmition. inunediately 

precede the revelation of rnaterial nonpublic inform.'llion-may raise concerns for polic) n\1kers. 

9 
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the study's focus is on the timing of disclosures rather than trading by insiders. In the ne.xt Part, 

we present the first evidence on trading by corporate insiders during the 8-K gap. 

3. TRADING BY CORPORATE INSIDERS DURING THE 8-K GAP 

A. Data 

We begin by collecting 70I,905 Form 8-Ks filed with the SEC from January l, 2004 to 

December 31, 2014 by 9,303 companies "1th ticker symbols registered with the Center for 

Research on Security Prices ("CRSP"). In light of the seriousness of the potential implications 

associated with managers' trading during the 8-K trading gap, we took an unusually conservative 

approach to generating our dataset, excluding from this study a number of 8-K filings and trades 

by insiders that we intend to examine in future work 

Firs~ we remove any filing disclosing an event reportable under Item 5.02 under the 

SEC's Form 8-K rules, as these events generally refer to stock or option awards granted to the 

company's management. 11 We then remove any 8-K disclosing an event under Item 5.07 under 

the SEC's 8-K rules, because these report the results of shareholder votes at annual meetingswhich are both unlikely to be material and likely to have been disclosed, at least in part, at the 

meeting itself. We next remove any 8-K that contains the phrase "underwriting'' or 

"unregistered," as these likely reflect private securities transactions beyond the scope of our 

study. We then remove any Form 8-K that refers to a so-called "trading plan" pursuant to SEC 

Rule JObS-I, as these plans typically call for prescheduled insider transactions and under SEC 

11 Nevenheless. the tuning or such grants. and the post-grant returns that mana~ enjoy. pm,;de an imeresting 

subjoct for funher study, as soown in imponant rteent worl< by Oainestt al. (20 15). 11\'ll stud) provides evide.nee 

consistent 11 ith ~lC ootion thai exocutives manipulate stock prices to increase the \'aloe of their option oompcnsatioll 

The 8-K gap provides one cln!UlCilhrough 11 hich this nnnipulation may occur. We intend to examine the timing of 

Slodo(l)mpcnsmion grants. and the filing ofFom18·Ks rumouncing those grants. in future work. 

10 
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rules !heir adoption generates a presumption against illegal trading. 12 Finally, we follow 

Niessner (2015) and also remove from our dataset any Form 8-K reponing events in Item 1.03 

(bankruptcy or receivership), as these can be anticipated in advance; Item 2.02 (earnings 

announcements), as these are prescheduled and often subject to blackout periods voluntarily 

imposed by some fimts; and Item 7.01 (Regulation FD), which has a 24-hour reporting periodn 

We further reduced the sample to those 8-K filings made on trading days by filers with available 

market capitalization data on CRSP. These filters yield a sample of 169,616 Form 8-K filings by 

5,246 filers. 

For each of these filings, we utilize the Form 8-K SEC-provided "Filing Date" as the date 

on which the information is disclosed to the public.'' However, we recognize that in some cases 

the underlying information may become public prior to the filing of the Form S·K, either through 

12 While this filter aUows us to address the announcment or a lObS· I plan, we canrot ~<elude alltradts thai are 

claimed by the insider or the company to be pursuam to a I(M)S.I plaiL The reason is toot. altOOugh some finns 

assert in footnotes on Fonn ~ that a particular hade was excculed pwsuant io such a plan, such disclosures are 

'-oluntal) and hence likely to be biased on the bases or finn or individual char.lctcristics (Hende!wn et al., 201~; 

Nicssner, 2015). For three reasons, oowever, the presence or tl3llS3ctions pursuant to lObS. I plans is unlikely to 

affect oor results. Fit;t. as to our calculations oftbe profits insidet; earn through trnding. in t.\-pectation trades under 

predetermined trading plans should not be abnonnally pmfiL'Ible, and hence sltould rove no effect on our 

calculations. Second, the nlOSI profiiJible insider transaction that "e study~pen market purcooses-are unaffected 

by 10b5·1 plans. since toose plans ovemheimil1gl)· call for prescbeduled Sllles. rather thao pultbases. or company 

stock (Jagolinztr, 2009). Final~·. previous work has cast doubt on the 1101ion that trades pttt;ttant to lObS· I plans are 

truly uninfonned, noting that (I) tnany insider ~11cs occur very shonty after the plan is established, (2) some pLw 

consist or a sin8)e insider sale, and (3) co..,anies appear to selective~· tcnninate these plans early or cancel 

indiridual insider Sllle~ Jagolifll.tl (2009): Robbins (2010): Soon and Veliolis (20IJ). To the C.\1ent toot, as this 

\\Ork suggest~ trade$ pursuam to J(M);.t plaJlS are not truly uninfonned, their presence in our .mtset is appropriate. 

"All or the fillet; described in the tC.\1 are ~plied by e.xcluding any Fonn S.K ming that contains tbe text "1.03". 

"2.02'. "5.02". "5.07", "7.01". "undcmriting", ''unregiste!C<f·. or "litH'. These filtct; are applied to the text of 

the Fonn S.K filing itself. e.xcluding attachments. The filtering does 1101 prefL< the seareh with '·Item· or another 

plmtse, as tllis can be unreliable due to the structure of teXl in Fonn 8-K fiJi~. Very few Fonn 8-Ks should be 

erroneous~· discatded [rom our dataset using this metliOd. 

"For fiJi~ posted after :~ the SEC's EDGAR systcmautomatical~· adjusts the fiUng date to the rouo"ing 

date: for filings posted belween :OOpm and 5:30pm, the EDGAR system n:cotds the fiUng date as the actual date of 

filing (SEC. 2015 (2)). The closing prices used tluouglxlut this Sludy are es~lisbed 11 hen markets close at tOO pm. 

Thus, for fili~ posted behrcen ~:OOpm am 5:30pm, the filing date accurately oorrcsponds to the trading day on 

which the market leanlS the disclosed infonnation-that is, the trnding day immediately follo\\ing the filing date. In 

previous work. two or us soowed that a signiftcalll number of fdings is posted to EDGAR behreen 4:00pm and 5:30 

pm(JacksoJL Jiang, and Mitt~ 20U), pm,;dingsuppon for thiscooict. 

II 
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a press release by the firm or news coverage. We therefore scan the text of each Form 8-K for 

the phrase "press release" and, if this phrase is present, we extract the nearest proximate date and 

utilize this date as the date of public disclosure instead of the Form 8-K filing date if the former 

precedes the latter. 1s While we are unable to perform a similar procedure for news coverage 

more generally-or to address the possibility that the finn has previously voluntarily disclosed 

the information, for example on its website-we emphasize that in the absence of systematic 

investor biases, information that has already been made public should not present profitable 

trading opportunities. Thus, to the extent that infom1ation becomes public before the 8-K is filed, 

the expected trading profit for trades in the 8-K gap should approach zero in expectation. Our 

finding that insiders enjoy systematic profits when trading in the 8-K gap is therefore 

inconsistent "~th the notion that the information contained in the 8-Ks we study has 

systematically already been made public. 

We determine the date of the actual corporate event disclosed in the 8-K by electronically 

parsing the text in the Form 8-K, which contains this information. 16 We compute the gap 

between the actual event date and the date the 8-K is filed as the number of trading days between 

the former and the latter. In the case of an event date that is not a trading day, we utilize the 

immediately preceding trading day. 

17 We drop gaps greater than five trading days, as these 

likely reflect exceptional circumstances in which the SEC's standard four-business-day rule may 

" Due to variations in 8·K te.<L this method may 1101 pctfealy address all cases im·oh;og a press release. In 

unreported analysis. however, we estim'lle that this algorithm capcures more than 99% of such cases. 

16This infonnation. known as the "Conformed Period of Report.· is included in the EDGAR file header and is 

piOI;ded by the finn. (SEC 2015(3)). We manually rerit\\ed SC\~ml Fonn 8-K filings and eonfiml!d that this 

header matches the date listed in the body of tlte 8-K itsel( 

,.In the case or multiple Fonn 8-K filings on the same date. we utilize the greateSI gap among the Fonn 8-K filings. 

12 
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10241779.eps

not apply, as well as any gaps less than zero, which could occur if a firm files the Form 8-K prior 

to the occurrence of the underlying event. 

This process yields a final sample of 164,314 Form 8-K filings by 5,231 public 

companies over our 10-year sample. The following table shows the distribution of firms in each 

year of our dataset, along with the average number offomt 8-Ks filed by firms over that time: 

pnsert Table I Here.) 

As the table shows, the number of firms in our dataset is relatively stable per e<~r; variation in 

the overall number is driven by the emergence and disappearance of fimts over time. Concerns 

of survivorship bias do not pose a problem for our analysis because we are estimating outcomes 

over very shon intervals of time. In addition, as Table I also shows, the average number of8-Ks 

filed per firm in our sample fell from 2004to 2007 and has remained relatively stable since. 

We begin by considering the distribution of 8-K trading gaps in our sample. Figure I 

below describes the frequency of gap lengths among our sample of8-K filings: 

(Jnsen Figure I Here.] 

As Figure I shows, a plurality of Form 8-K filings have no trading gap at all-that is, the fimts 

disclose the event on the day it occurs. Among the 8-Ks that do have trading gaps, gaps of one 

day (that is, disclosure the day after the event) and four days (that is, the maximum gap permitted 

under SEC rules) are most common. 

We next consider whether the distribution of the 8-K gap varies by the size of the firm as 

measured by market capitalization. Table 2 describes the number of 8-Ks with gaps of a 

particular length by each decile of market capitalization among the firms in our sample: 

[Insert Table 2 Here.] 

13 
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As Table 2 shows, longer 8-K gaps are far more common at smaller firms. The largest 10% of 

the firms in our sample file more than 50% of their 8-Ks on the same day the event occurs, and 

more than 70% of their 8-Ks within twenty-four hours of that event. Descriptively, these results 

are consistent with the intuition that larger finns enjoy the assistance of experienced attorneys. In 

conversations \\1th experienced counsel with whom we shared our results, the attorneys indicated 

that they generally seek to minimize the gap between the occurrence of a reportable event and 

the disclosure of that event to the market. 

We obtain information on trades disclosed by insiders on Fornl4 from Thomson Reuters. 

Crucially, we include transacrions only if they occurred in the 8-K gap: that is, we only include 

trades by insiders on or after the event date and before the 8-K filing date. Thus, we do not 

include transactions that might have occurred after the firm filed its 8-K, and we do not include 

trades that occur when there is no gap-that is, when the Fonn 8-K is filed on the same date as 

the underlying event.11 We also omit trades by I O"lo beneficial owners, keeping only trades by 

corporate officers and directors in the underlying data, 

19 as well as trades by firms whose stock 

price trades below $1.00 per share, as these stocks are likely to have artificially skewed returns. 

This process yields a sample of 42,820 trades in the 8-K trading gap. The following table 

shows the total number of trades in the 8-K trading gap by year, as well as the average number of 

trades during each 8-K trading gap per year: 

[Insert Table 3 Here.) 

" This me! hod excludes from our sample iR$ider 1ransac1iom 1ha1 occur on 1be same day as a press release or 8-K 

releasing new infonnation to lhe lllil!ket We e.xdode lhese uansaclioos even !hough lh:y may weU hare preceded 

ll.e issuance or 1be press release or 8-K and e\tn !hough rocen1 wod< suggests 1ha1 n•'lrl<eiS do no1 inunedia1ely 

iocorpora1e 1be new iruonna1ion iruo lh: s1oek price (e.g., Niessner (2015)). For purposes of 1his smdy, we focus 

only on Lrndes !hal Ull3100iguous~· cam: after lh: disclosed corporale e\~111 and before lh: disclosure of thai erentlo 

lhe market In fulure work. lOWC\~r. "~ inlend to consider these e.xcludcd lradcs more closely. 

19 To perfonn !his filrering. ne eliminale any transadion reported in 1be Thln~ron Rauers da!abase 1001 fcalun:s a 

role eode of"B". "BC". "BT'. "OB". "H". or "DO". AltllOugh we e.xclode lh: trades of JO'Io benefiCial owners for 

purposes of this study. "~ intend to examine oUiside shareholders' 1rades.1oo. more closely in fUiure work. 

14 
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As Table 3 shows, the number of insider transactions in the 8-K trading gap rose in 2006 and 

2007 but has remained at relatively lower, and stable, levels since.

10 Nevenheless, insider 

transactions during the 8-K gap are common: in the median year in our sample, nearly 3,400 

such transactions trades took place between the occurrence of a significant corpo13te event and 

its disclosure.

11 

We next consider whether trading by insiders is more common in shorter or longer 8-K 

gaps. Figure 2 below shows the distribution of the insider transactions in our sample according to 

the length of the 8-K gap in which the transaction occurred: 

[Insert Figure 2 Here.) 

As Figure 2 shows, a plurality of the trades in our sample oocur in the longest possible gap 

permitted by SEC rules-that is, a gap of four trading days. Of course, given that longer gaps 

cover longer periods of time in which insider transactions can oocur, this result is in some ways 

unsurprising. Nevertheless, Figure 2 documents a significantly higher incidence of trades in our 

sample in 8-K gaps of four days than in shorter gaps. 

Having documented trading by insiders during the 8-K gap, we sought to better 

understand the content of the information revealed immediately after each insider's trade. We 

"'Jncalcul<lling lhe numbcrofuadcsby insiders in ~leS K gap. 11Caccepled ~leda13 in Foml4 at faee value. That 

is, where insiders reponed more tllan one order on Fonn 4, we reoorded 100re than one transaclio~en "here 

arguab~· the individual olders mi8J>1 have reflecLed a single uansaction. We do so because we do 001 O.\'J)C(Ithat 

cases like the!C-1• here insiders break a single trans:lCtion do11n into many stock orders for pulJlOSCS of Fonn 4-

are correlated 11ith 11 ~r or ootthe insider transactions occur during the 8-K gap. and hence we do not e.~pect that 

this phenomenon will affect our results, Of course. if it is tile case that insiders tend to do this more often during 8-K 

gaps than during other periods-for e.'®,.,le.to inftuencc the market's inlCI])rewtion of their trading beharior- that 

finding alone would be 110nh funherstudy. We e.'pect to consider these questions in flllure worlc. 

" We do 001 intend to suggest Lhal trading by insiders is mort common during S·K gap periods than during o«her 

periods, Study of tlJat question would likely be confounded by the absence of a meaningful control period to which 

S·K gap periods could be rigorously co,.,.1nld. lnsLead. we note Onl) that 11e documcm thousands of trades by 

C0lp013te insiders that occur between lhc dale of sisnificaDL COlp013tc erents and the disclosure of those ere~ to 

the public. That finding will mise concerns for tl10se who would e.'pecl that insidcJS generally abstain from trading 

i•runediatc~· before the disclosure of material COIJlOr.lte infonnation. 

15 
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thus individually reviewed every 8-K in our sample with at least one reported trade by an insider 

during the 8-K trading gap. (Although recent work, such as Niessner (20 15), uses 8-K "Item" 

numbers as a proxy for infonnation content, we worried that this approach relies too heavily on 

ambiguous and inconsistent choices made by corporate counsel when determining which "Item" 

a particular event should be disclosed under.

21) Thus, we classified the 15,419 Fomt 8-Ks with at 

least one reponed insider transaction in the 8-K trading gap into one of fourteen substantive 

categories. The follo1ving table describes each of these categories: 

[Insert Table 4 Here.] 

The classification of the substantive content of each Fonn 8-K by hand allows us to consider the 

distribution of infonnation in 8-Ks 1vith trades in the gap. Table 5 below describes the number of 

8-Ks in our sample in each of these fourteen information categories: 

[Insert Table 5 Here.) 

For the reasons described above, 8-K filings disclosing infonnation relating to executive pay 

arrangements, executive stock sales, or the results of shareholder votes at annual meetings do not 

typically include the type of material nonpublic information we study here. For that reason, we 

exclude from our analysis below any Fonn 8-K that, in our individualized review of each of the 

8-Ks in our sample, discloses infonnarion in those categories.u 

" As noted abore. we do rely upon 8-K "Item" nunters to exclude obserrooons from our sample. But we were 

unoomfonablc using those dcsigJI:ltions in our ana~·sis of the content of the info111131ion that the 8-K will rcrcal The 

reason is that in conversations with e.xperienced counsel. they C.'Jlressed concern that the definitions of each S·K 

"Item· under SEC rules are too malleable to reflect a reliable pro')' for U>e infonnation contained in the 8-K. For 

purposes of oor research design. our wony was that choices of item desigJI:ltions might be correlated nith omitted 

~~riab es for nhich we cannot corttrol, suoh as the conrpany·s counsel. Thus, nc took a nroreconscrvatirc ~proaclt, 

m·ic\1 ing each 8-K by hand for its infonnation content As indicated belo11 , in the case of 8-Ks addressing maners 

relating to executive pay anangen>ents and the results of shareholder roles at annual meetings. this hand-coding 

work gires us additional comfo~ that our sample does not include 8-Ks related to those matters. 

" Consistent nith our concem described ahore, that counsel use Fonn 8-K "Item" oombers ioconsisteotlv to 

describe the Sllbslllncc of the infonnation that the finn nill disclose. nomithslanding oor e.<ciUSKlO of any ·8-K 

including disclosure on ltci11S 5.02 (executive compens.11ion) and 5.07 (results of shareholder rotes), as Table 5 

shows our indiridualized review of the 8-Ks that survived that exclusion still included many disclosures re!Med to 

16 
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10241783.eps

B. Profitability ofTrading by Insiders During the 8-K Trading Gap 

We begin by estimating the abnormal returns that insiders earn when trading during the 

8-K gap. Before turning to those estimates, two caveats are in order. First, we emphasize that our 

analysis reflects only approximations of such profits; for many reasons. the insiders in our study 

may not have actually taken the dollar profits that we describe. One reason is that Section 16(b) 

of the Securities Exchange Act of 1934 prohibits insiders from retaining profits from so-<:alled 

"shon-swing" trading- that is, trades in opposite directions within six months of each other. 

Under Section 16(b). if insiders conduct a purchase following a sale, or a sale following a 

purchase. during a six-month period, any profits from those transactions must be disgorged to the 

finn.l-1 Thus, the insiders we study could not immediately realize the profits we calculate here 

under Section 16(b}. In this analysis. like prior work, we do not consider whether and how 

insiders might exit from the positions we describe. Instead, we simply estimate how much better, 

on the margin, the insiders in our dataset do by buying or selling their own company's stock 

rather than the broader stock market. 

Second-and, perhaps, somewhat surprisingly-we do not utilize the transaction price as 

it is reponed on Form 4. There are several reasons why. First, because Form 4 disclosures do not 

include the precise time of day when the insider's transaction was e.xecuted, it is not possible to 

calculate a comparable market return for these trades when using the reponed transaction price. 

Second, it is unclear how reliable self-reported transaction-price data are; they are occasionally 

missing from the Thomson Reuters dataSet and may feature self-reponing bias. Thus, for each 

those mane!$. Despite the disadrantageS of such an indil'idualixed ra;ew in many researth senings (e.g .. Macey & 

Mius (20 I 4)). then, we think it is the appropriate methodology here. 

" Of cour.;e. as pra·ious worlc has noled (Schizer. 2000). this prohibition can be cirtwnremed through hedging 

trnnsactions 11 ith rtSpeCI to shares of company Slock purthased by the executire witl1 her01111 funds. 

17 
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transaction we study, we calculate the insider's abnormal return21 from the closing price of the 

day of the insider's transaction to the closing price of the day following the day oo which the 

Form 8-K filing is made, as follows:u 

where r

1rade is the return from the closing price of the day of the trade to the closing price of the 

day following the Form 8-K filing27 and m,.ade is the return on the CRSP value-weighted 

market index 23over that same period.

29 

To evaluate the profitability of trading by insiders during the 8-K trading gap, we must 

classify trades by their direction: that is, whether the insider is effectively buying or selling her 

company's stock. We use the Thomson Reuters Form 4 transaction codes to determine the nature 

:sThrooghout our 3113~ si~ and consiSieru with priorllork aoo finance intuition. we efl1lbasi7.~: insiders' omoonnal 

recums-that is. the difference between the recums they earn on tl~e~company's Slock aoo those tbey oould earn in 

tllC market. We ack.no" ledge. however. tllat some concerned omout our fiooi~ may be interested in insiders· raw 

recums-that is. t~ simple returns tllC) cam by trading in the 8-K gap. In unreponed anal sis,"~ find that insiders· 

raw returns are stalistically and eoonomical~· consiSient with tbe abnonnal returns we repon tbmngboutthis Article. 

" We present our results in this fashion because "e share tllC view of tllOse in tiiC finance literature 11110 prefer to see 

a Slraigbtfomard regression presenting results based solely on net-of-market returns rather than tllC selected risk 

factors that have been tllC subject of e'1ensive critique in finance work. That choke. we think. is especial~· 

appropri.1te here. n~re tllC privare infom~11ion recums "e Sludy arc likely to be uncorrelatcd nith risk factors. 

Neven~less, as a robustness check we replicated the results described below using sla003nltbree- and four-factor 

risk models. The results were unchanged. In addition. in response to IIClpful comments from our oolleagues. we also 

re-ran our results using an equal-weighted. 11llher than '~hlC·n~igldod. index for our m1rkct proxy. Once again. t~ 

results were uncb.1nged. 

" More proc se~·. nc calculate t~ cumulatire abnonnal return by taking t~ sum of the dai~· recums for each or the 

days over this period. CUmulative abnoml3l returns (CARs) are a staroard measure often used in the finance 

literature: as plt\ious 1\0rk bas es~lished. this approach bas advaOO!ges over otllet methods-such as buy-andhold returns or continuous~· compounded returns-also used in this area. (Mitchell & Staff om. 2000.) We use a 

•ncan-adjustcd malket 1nodcl consistent 11 ith pte\;ous work showing that this approach pcrfonns just as well as 

more complex JllCtbods using risk facws. (B!0\\11 & Wan~et, 1900.) 

:s We use the CRSP Marl<et lnde.x ror the conlbiood SIOCk·trading e.x~ rather than a large-finn index. such as 

tl.e S&P 500, because the finns ofilllcrest in our Slody are general~· mid-to Slnall-si1.~: finns. 

" We uti~ze tllC closing price on the day of tl.e trade to aocount for the possibility tl>at prioes may have updated to 

relleci3S)nunetric inl'onnationasa result of the insider's inl'omlCd tradingontllat da)·(e.g .. Seyhun. 1986). We thus 

avoid imputing tot~ insider profits from priorda)S that~ or~ •na~ be unable to realize. We utilize tl.e closing 

price of the day following tllC Fonu8-K filing because •nail)' fonu8-Ks are filed after the market closes at 4:00pm 

(Jackson. Jiang. and Mitts. 21l14). making the da)• aner tllC Fonn 8-K filing the relel·am da)• for measuring the 

iu~uro ng of new public infom~11ion into the fino's Slock price. 

18 
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10241785.eps

of the insider's transaction.30 We then sign ar1rade by the directionality of the trade, utilizing 

+arcrade for positive (long) exposure and -arrrade for negative (shon) exposure. Thus, if the 

insider trades in a positive (long) direction and the abnormal return is positive, the insider is 

"credited" 111th the entirety of the abnormal return for that trade. If the insider trades in a 

positive Oong) direction and the abnormal return is negative, the insider is "penalized" with the 

entirety of the abnonnal return for that trade. A similar analysis holds for trades by insiders in a 

negative (shon) direction. 

We begin with three preliminary statistical tests that measure how insiders perfonn when 

they trade during the 8-K gap. First, we examine whether, on average, insiders' signed arrrade is 

significantly different from zero. Second, we consider the relationship between the length of the 

8-K gap and insiders' returns from trading during the gap. Finally, we create a dummy variable 

for whether the insider's transaction was in an 8-K gap of longer than two days and examine the 

relationship between that dummy variable and signed arrrade· Table 6 below repo11s the results 

of each of these three tests3t 

(Insen Table 6 Here.) 

lO We include as -positi\'e" exposure-chat is, tong exposure to tb: company's stock--crnnsactions coded by 

Thomson Reuters as "J>" (open-m:uket ptuthases). "A" (grants or an~rds of Slock or options). "I"' (payment of 

option c.'crcise p~ Ouoogll withlx>lding of shares). "M" (exercise of Slock opcions). "C" (con"crsion of options). 

-o· (exercise or out-of-llle-moro:y options), -x- (exercise of in-O~e moro:y options). and "L • (small acquisitions of 

shares ptmuant to option c.'ercises). We include as · ncgati\'e· C.'POSure-that is. shon cxposnre to the SIOCktmnsactions coded as "S" (open-market sales). "0" (forfeiture of shares pursuant to contractual pro"isions). "E" 

(e.,piration of a slx>n deri\'ative position). "H" (c.,piration or a long deri\'ati\'e position), ·o· (a borra fide gift), ·tr 

(a tender or company stock by 1hc insider), "6" (disposition or company shares) and -r (disposition or c.'erciscd 

options). We are skeptical wb:tb:r transactions m:uked as -o· should be included as sales. although we note that 

insiders may be able to influence whether tile)' forfeit stock pursuant to contracmal pro"isions. Nc\'enheless. in 

unrcponed anal) sis we re-run the regressions below e.<cluding ·o· transactions The results are consistent n iOt 

those described tluoughouttb: Ar1icle. 

31 We estimate each model using ordirrary le.'lSI squares regressions with standard enors robust to b:terolked:ISiicity. 

19 
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10241786.eps

As the results in model {I) show, trading by insiders during the 8-K trading gap yields average 

profits of 42.3 basis points per trade. 

32 Moreover, these profits increase with the length of the 

gap. In a linear specification, each additional day in a gap increases insiders' average abnonnal 

returns by 13.3 basis points. Trades in 8-K gaps longer than two trading days are 33.9 basis 

points more profitable than trades in gaps of two trading days or less, which average a profit of 

20.2 basis points. In other words, trades during gaps of three trading days or more are associated 

with more than two times the average profits of trades made in gaps that are two days or less. 

We next consider whether the profitability of trading by insiders during the 8-K gap is 

concentrated in particular types of transactions. As noted above, previous work has demonstrated 

that insiders' open-market purchases warrant special attention. As a theoretical matter, because 

insiders already have undiversified exposure to their finns, from the insider's perspective 

acquiring additional long exposure by using her own funds to purchase her company's stock is 

usually unappealing (Jensen & Meckling I 976). And, as an empirical matter, insider purchases 

are more predictive of future stock returns than other types of insider transactions, such as stock 

sales or the exercise of stock options (e.g., Seyhun, 1986). Thus, we estimate insiders' signed 

ar1rade conditional on each of the Thomson Reuters transaction codes in our datase~ i.e., 

£(signed artrade I trancode j] = 0, where j represents each of the transaction codes in our 

dataset.33 Table 7 below describes the results: 

[Insert Table 7 Here.] 

" Some may consider these returns relath e~· smaU in light or the potential legal concerns raised b)' trading in ~IC 8-

K gap. We note. howe-·er. that our sample includes o~· rtp<>rted trades by inside~ We also note that insidels. 

anticipating that ~ have a reponing obligation in cirttllnsbnces like tliCSC. likely elect DOl to trade on many or the 

JOOSt profit.1ble trading opponunities. 

n We e.'clude from Table 7 those transaction codes col'6isting of fe-ver ~lao 200 transactions om the eleven )'earl; 

in our dataset. 

20 
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As Table 7 shows, and consistent with prior work, open-market purchases are by far the 

most profitable type of insider transaction in the 8-K trading gap, with an average abnormal 

return of 1.63%. In our ~~ew, these transactions are among the trades in the 8-K gap that are 

most likely to raise concerns. It is difficult to justify an insider increasing his exposure to the 

fim1 through open-market purchases by alternative explanations such as diversification, liquidity 

or compensation. The notion that insiders engage in open-market purchases in light of their 

infonnation advantage seems to be a more plausible explanation for these findings. 

We therefore next examine how often insiders' open-market purchases of their own 

company's stock are directionally correct-that is, whether these purchases precede increases in 

the company's stock price upon the filing of the 8-K. We find that such purchases precede stock· 

price increases in approximately 57% of the transactions we examine, and that the stock price is 

unchanged or decreases upon the filing of the 8-K in approximately 43%. While at first blush 

this difference may not seem substantial, in unreported analysis we run a chi-square test to 

measure the probability that this outcome was produced by random chance (that is, that random 

directional selection would produce the insider success rate that we observe). That probability 

(0.000000000 16%) essentially approaches zero. 

Finally, we investigate how insiders' profits from trading during the 8-K gap vary among 

eleven different types of information in our Form 8-K filings (as identified by the individualized 

review of the filings described above). Specifically, we test £(signed arrrade I category i] = 0, 

where category i represents each of the eleven categories of Fonn 8-K filings that include 

material nonpublic infonnarion.

34 Results of a t·test for each category, including robust standard 

errors, are shown in Table 8 below: 

" Altoough our indiriduatittd micw of each Fonn S·K resulted in di1iding tk filings into foonocn categories of 

disclosed infonnation, as noted ilove three of 1bese calegories-disclosures related to executive pay. insiders' stock 

21 
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[Insert Table 8 Here.] 

Table 8 describes substantial heterogeneity of profits from trading during the 8-K gap 

among the different categories of information disclosed in our sample. Insiders earn 

economically and statistically meaningful profits when trading in the gap if the subsequent 8-K 

reveals information about changes in corporate documents, changes in the firm's capital structure, 

mergers and acquisitions, corporate restructurings, key customer or supplier agreements, stock 

listing compliance violations, and changes in the firm's accountant. But insiders don't always 

win: trades by insiders during the 8-K gap when the disclosure is related to legal issues are 

economically and statistically significantly unprofitable. 

31 And trading profits in some 

categories-such as disclosures related to corporate restructurings, product or production updates, 

and changes in management-are not meaningfully different from zero. Nevertheless, Table 8 

sale$. and the resuiiS of shareholder votes-are unlikely to reOoct material nonpubUc ituonmtioa Titus, out of au 

abundance of cautio a "e e.xclude any 8-K disclosing infonnation in these categories from our sample. 

lilt may seem smprising that tltere is any category of infonmtion in which in9ders who tr.lde in the 8-K gap do not 

make systematic profits-ani indeed. systematically lose. We note. however. ~ro considerations that may make 

this finding more consistent 11 ith irduition. First. as no4cd above, work in this area studying insider tr.ldes reponed 

on Fonn 4 l~s sonLCtilllCS found such lr.lding to produce limited profiiS (Scyhun. 1986) or no statisticall) 

IILCaningful profiiS at all (Giroty and PalnLOJL 1985; ElliOl et aL. 1984). perhaps because insiders do not "ish to 

repon consistently profitllble trading to the SEC (Meulbrook, 1992). Of course. other prior empirical •roLl bas come 

to tiLC opposite conclusion (e.g. Jagolinzcr. 2009; Roulstonc. 2008). suggesting that resuiiS of these am lyses depend 

significantly on the conte.xt in which the reponed insider trnnsactions ocwr. Nmnheless, our finding that "hether 

insiders are able to trade profitllbly in the 8-K gap depends on the type of infonnation the 8-K will rereal is 

consistem with prior work concluding that insiders profit inconsistently from their reponed trades. 

Second. 11c note tba~ to cam consistcm profits bc~•ccn tlLC time a corporate ere.-. occurs and the time the 

public I~ about that erent, an insider must kno"' not only nonpublic infonnation btll the Ukely reaction of the 

market to that information" hen it is revealed. For ~··o reasons. it is plausible to us that insiders could consistm~· 

err regarding the marl<et's mtetion to tlLC resolution of outs~tnding legal•natters inrolring their fmns. Fi~ most 

insiders in our sample lack the legal expenisc noctSsal)' in order consistently 10 illlcrpret n~trkct reac1ions to 

comple.x legal de\~lopnLCOts. Second, \\bile these insiders do lm~ the bc1tefit of ad1ice from legal C'JlCns. these 

e'JlCns ha"e prirate incentires to aher their assessmem of legal de\·elopntents. which may lead insiders to be 

systelll3lically miSiaken about how markets will react to tlLOSC dc1dopments. 

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shows that, in some infonnational contexts, insiders profit by trading between the time a 

corporate event occurs and the moment the finn reveals that event to the public.

36 

Having documented these profits, we address a possible concern. The results we have 

described thus far show only that insiders do, in fact, trade profitably during the 8-K gap, a 

finding that many might regard as unremarkable given insiders' extensive knowledge about the 

finn.

31 1n other words, one might expect that insiders, when they trade in their own finn's stock, 

consistently turn a profit, regardless whether an 8-K filing is imminent. We thus wondered 

whether an individual who know only of the imminent 8-K filing-but had no other access to 

non-public infonnation about the finn-could trade profitably during the8-K gap. 

To answer this question, in the next Part we test whether a particular type of 8-K filingthose announcing new agreements with customers or suppliers-predicts positive, abnonnal 

returns in a company's stock, regardless whether insiders traded during the associated 8-K gap. 

We show tha~ in this category of information, the gap wind()W alone yields directionally 

consistent-that is, positiv~onzero abnonnal returns. Thus, a person who knew that the 

contpany had signed such an agreement, but had no other non-public inforntation about the finn, 

could earn abnonnal returns by buying the company's stock before the 8-K filing. We also find 

that, during a gap before an 8-K reveals the existence of new agreements of this type, managers 

are more likely to engage in open-market purchases than at other rimes. These results lend 

credence to the view that the 8-K trading gap does not merely yield spurious profits for corporate 

* To enable readers of this Article to consider panicular cases in\'OI\'ing trading by insiders during the 8-K gap. we 

have rc.Jeased, coocurreltly "ith the Anicle, an onlioc visualization that displays ra1domly sclocted cases un·oJ,;ng 

open maiko:~ purchases from our dataset. The risuali7~tion may be aa:cssed here: lltp:/.llj l.law.colwmia.cdu/8kg.1>. 

,. We emphasize that the e.idence pro,ided in Pan 3 does not demonstrate that insiders profit from trades in the 8-K 

gap more th.1n they profit from other trades. We did not conduct such an ana~ sis because, in our' iew, there is no 

meaningful control period to which trades during the 8-K gap can be compared. B<:cause previous wolk on the 

profiutiUty of reported tradillg by insiders is mi'cd (e.g .. Seybun. 1986: Jagolinzer. 2009). "~ cannot say 11 helh:r 

tmding by insiders during the 8·K gap is more or less profiL'tle than tmding by colj)Orate insiders 1nore generally. 

23 
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managers-but rather a credible trading opportunity for any trader who has access to the 

information before the rest of the market. 

4. TRADING IN THE 8-K GAP: TH!: CASE OF KEY BUSINESS AGREEMENTS 

In this Pan, we carefully examine one type of Form 8-K: those that disclose key 

agreements with the firm's customers and suppliers. We focus on this category because, unlike 

other types of information disclosed on Form 8-K, it is possible for investors to form a clear prior 

about the directional effect of the disclosure of this information. For the reasons given below, on 

balance an 8-K revealing a new customer or supplier agreement can be expected to increase the 

fi nn's stock price. Thus, in theory traders should be able to profit by buying the company's stock 

after the firm enters into such an agreement and selling before the agreement is disclosed. 

There are four reasons why we think that the firm's entry into agreements with its key 

commercial partners can be expected to be systematically associated with positive abnormal 

returns. irs~ as one of us explores more fully in contemporaneous theoretical work (Mitts, 

20 15), SEC rules governing the disclosure of commercial agreements give managers incentives 

to shift contractual activity with a positive effect on firn1 value into contracts that are subject to 

disclosure under the SEC's Form 8-K filing rules. Second, the entry into significant new 

agreements with commercial partners is, in expectation-even if not ex post-an act designed to 

increase the net present value of the firm's project and, hence, its stock price. Third, the SEC's 8-

K rules make clear that the firm's emry into significant new commercial relationships is usually 

required to be disclosed under Form 8-K's Item 1.01. By contrast, the termination of such 

relationships- which could more plausibly reflect value-decreasing circumstances-is required 

to be disclosed under Form 8-K's Item 1.02 in relatively limited circumstances. 

31 This 

" For example, the SEC's 8-K rules spocify in the insuoctions 10 llem I.Otthal even some agroemcms Slruck in the 

oldina~y ooun;e oflhe company's business moSI be disclosed in Fonn 8-K. By oorurnstlhese rules make clw thai 

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asymmetry in the SEC's rules suggests tha~ on balance, disclosure of rontracts with the firm's 

customers and suppliers is likely to reflect positive news. 

39 Finally, the legal standard governing 

disclosure of these agreements-known in securities·law parlance as "materiality"-is 

notoriously malleable, giving managers the legal freedom to strategically disclose positive news 

more frequently than negative news.40 

By ro tras~ we think that the disclosure of other events in the Form 8·Ks in our 

sample-such as changes in the terms of the rompany's financings, the arrival or depanure of 

particular managers, or the annooncement of a merger or acquisition-has a far more an1biguoos 

implication for firm value.'

1 New financing agreements may feature terms less favorable to the 

firm. The departure of a manager may be perceived by markets as being beneficial or detrimental 

to the firm's future. But the annooncement of new real eronomic activity in the form of an 

agreement with a company's customers or suppliers is likely, on average, to increase the firm's 

future cash flows and, hence, its stock price42 

In this Part, we use this insight to examine the behavior of stock prices when customer or 

supplier agreements are annoonced on Form 8-K.ln this Section, we do so largely independently 

1he rennination of such agree me IllS llllSt be disclosed only if the agreemem is Jnaterial at the time of its tennin.11ion 

and the tenninalion evelll itself is doemod material. (SEC. 2015 ( 1).) 

" wec.xplore 1his intuition empirical~· by scarehiJ18 the text of the 8·K filings in ourd."llasetto dctennine 11hether. 

in faa, firms repnn entering into a new agree1nem signifJCallt~· more frequently tllall they repnn terminating an 

existing agreement. Su una~· Slatistics confinn the theon:cicat prio.; described in the text: of the 16-1,314 total 8·K 

filings in our datasel 50,639 (30.82%) repnn e\~llls under IICm 1.01 (entering into a new material agreement), 

"hile jUSI4.962 (3.02%) report erents under I! em 1.02 (tenninating an c.xisting material agreement). 

"'Fonner SEC Chaimlall Anllur Lerin famoos~· rejected some caUs for bright-line rules in this area insisting tbat 

jllllgJnents regaflling materiali~· must be made by corpor.ne ma~•uem and COWIStl after "consideration of all 

rele,~m facto.; tbat could impact an CSior' s decision: (Macdonald 1998.) 

" Niessner (2015) draws a similar inference. notiJ18 tl1111 many "llems" that are disclosed in Fonn 8·K hare 

ambiguous implications for the SllbStquent direction of !he stook's price. 

" An example of a Fonn 8·K amouocing a new customer or supptier agreemelll tbat is iocluded in oor dataset is 

pJOVided in Figure 3. 

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of specific trades by specific insiders. Instead, we ask only whether a trader who knows that the 

fimt is about to announce an agreement of this type can systematically profit by buying the stock 

after the agreement is consummated and selling the stock before the agreement is disclosed. 

We use statistical machine learning with textual data-an emerging method recently used 

by one of us to analyze judicial opinions (Macey & Mitts, 2014)-to identify the disclosure of 

customer or supplier agreements in the broad universe of 8-Ks we study. We begin by filtering 

our entire sample of 164,314 Form 8-K filings to 52,667 that contain Item 1.01 or 102. We then 

randonily selected 2,542 8-Ks and individually reviewed them, classifying them based solely 

upon whether the 8-K did or did nOI disclose a customer or supplier agreement. We then use the 

text of these documents to "train" a machine-learning model to determine the probability that any 

8-K filing discloses such an agreement. This model then classified 5,462 of the remaining filings 

as disclosing a customer or supplier agreement.43 finally, we identify 8-Ks announcing a new 

agreement of this kind by limiting our sample only to 8-Ks disclosing events under Item 1.01, 

yielding a final sample of 4,692 8-Ks announcing new customer or supplier agreements.41 

Having obtained a sample of disclosures with, on average, an unambiguous positive 

expected effect on the company's stock price, we analyze the behavior of stock prices and 

insiders when such disclosures occur. First, we consider whether a simple strategy of buying the 

<) A brief sunur;uy of !be teclmical steps we took in this process follows. Filsl we preprocessed !be dowmerus by 

remo,;ng punctuntion. nun~ aoo olber non·alphnnumeric characte~ aid relaining only wonls grea~cr than 4 

clnractm and less than t 5 chai3Cie~. We !ben applied n hat is known as the "Poner S!e11111lCr" to remo\'e suff.xes 

am other gJ311Unatic:al ehamctcriS!ics that do not affect the meaning of the text. Next, we extmcted one, two· aoo 

three-nord phr.!scs from tlte document and ut.ilizcd t.heir frequency as feaJures in a lasso logistic pnxlicti\'e model. 

We used !be well-known glmnel package by TTe\or HaS!ie aoo his <XKIUtho~ in Ibis step. For a tnore delailed 

discussion of lhe applicat.ion of mac line teaming methods to legal schola~hip. see M.'lee)· & Mitts (20 14). 

" We ackno\\ledgt, of oou~ that our statistical machine-learning model is imperfect in separating 8-Ks that 

disclose custonter or supplier agreement from those thal do not. To the extent that the model errs. hoii'C\'Cf. we 

e'-pect such cno~ to be raJXIomly distributed. This. !be cnor would like~· bias our analyses away from finding 

S!atistically significant results. 

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company's stock on the day the event oo:urs and selling the stock on the day before the event is 

disclosed-that is, trading in the 8-K gap-is profitable. We then ask whether insiders engage in 

more open-market purchases of their own company's stock during the 8-K gap-that is, when 

the existence of a new agreement with the company's customers or suppliers is about to be 

revealed to the market. 

A. Abnormal Returns to Gap Trading 

We begin by calculating the abnormal returns to trading in the 8-K trading gap for 

customer or supplier agreements. Unlike in the previous Pan, we do not sign the abnormal 

return-that is, we do not identify the direction of a trade and anempt to measure the return on 

that panicular trade. Instead, here we seek to evaluate the ex ante tradability of the 8-K trading 

gap. Thus, we calculate the abnormal return of a trading strategy consisting simply of holding a 

long position over the private \\1ndow portion of the 8-K trading gap as follows: 

a'Sap = rgap - mgap 

where IQap is the return from the closing price of the event date to the closing price of the day 

immediately before the Form 8-K is filedu and mgap is the return to the CRSP value-weighted 

market index over the same period. Just as in Pan 3, we estimate abnormal returns in three 

separate models. First, we consider whether argap is significantly different from zero. Second, 

we consider the relationship between the length of the 8-K gap and alQap· finally, we create a 

" U1tlike in the trndu1g JeSuits reponed in Pan 3 abore, 11-e exclude profiiS from the 8-K filing day itself in these 

JeSUits. The rtaSOn is th.'l1 in this Part, 11-e aJt 001 inre~esred in tx poSI insider profits, 11hich nalurnt~· include the 

price ~eaction on the day the 8-K is filed. Instead, we emphasize profiiS that can be earned by any inresw "bo 

simply Jtae!S to the infonnation in the 8-K in the absence of any of the other infonnational ach~nragcs an insider 

might hare. As e'-plained in the text, the analysis shol1s that an im·estor oould simply purchase the stock on the dare 

a new cuSioJner or supplier ag~etment is struck aud sell the stock on the date before that agreement is disclosed aud 

earn consistent abnomlal profits. For robustness. however. we estunare a rarie~· of ahematire specifiCations for 

Gljop· including (I) attributing the 8-K filing dale itself to a'io•· (2) attributing the dale following the 8-K filing 

dale to a'i••· and (3) begjmingG!j,, 11ith !he closing price of !he dare prior to the exooution dale of the customer 

or supplier agreemenL All of the results of tl>ese specifJCalions are consistem with the fllldings described in Table 9. 

For the ~easons gi1tn abore. bowe-·er, we beliere that the specifJCalions in Table 9 nit appropri<'lle for this lest. 

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dummy variable for whether the insider's trade was in an 8-K gap of longer than two days and 

examine the relationship between that dummy variable and signed ar1rade. The results are 

described in Table 9 below: 

[Insen Table 9 Here.] 

As Table 9 shows, a trading strategy of simply purchasing the firm's stock on the day that 

the company enters into a new customer or supplier agreement earns statistically significant 

abnorntal retums of 35.4 basis points, on average, during the private ponion of the gap alone. 

Unlike the returns described in the prior Part, these retums are directionally consistent and are 

independent of any individual's idiosyncratic information set- that is, these returns could be 

achieved by any investor aware of the new agreement before it is disclosed. Table 9 also shows 

that these returns increase with the length of the 8-K trading gap-that is, the longer the gap, the 

larger the profits an investor can earn by following this strategy. 

B. Insiders' Open-Market Purchases in the 8-K Trading Gap 

Thus far in this Pan, we have considered only indirect evidence of the potential for 

trading by insiders during the 8-K gap in advance of disclosures of customer or supplier 

agreements. But we have not examined insiders' behavior during 8-K trading gaps before these 

key agreements are disclosed. 

In this final section, we consider that behavior through a narrow inquiry: whether insiders 

are more likely to engage in open-market purchases during 8-K gaps that precede the disclosure 

of customer or supplier agreements than during other periods. In panicular, we ask whether 

insiders are more likely to execute open-market purchases in an 8-K gap that precedes the 

disclosure of such agreements than randomly chosen periods of time of equal duration. 

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We note at the ootset that this comparison is imperfect. Specifically, we woold expect 

that randomly chosen time periods are definitionally less likely to contain information, and thus 

cannot serve as meaningful counterfactuals to 8-K trading gaps-periods when, we know, 

material information is aboot to be disclosed to the market. Nevertheless, because of the unusual 

nature of insiders' open-market purchases-that is, already-undiversified insiders voluntarily 

opting to increase their exposure to their firm-we believe that they are, on the whole, especially 

likely to reflect trading on the basis of private information (an intuition consistent with, e.g., 

Seyhun, 1986) . We therefore suggest that a higher frequency of open market purchases during 

the 8-K trading gap is indicative of trading related to private knowledge of the information that 

will be disclosed in the subsequent8-K. 

To perfom1 this tes~ we generate a new sample in which, for each Form 8-K filing date, 

we randomly sample trading dates from the prior quaner for the same firm that are not Form 8-K 

filing dates. Thus, we sample a number of trading dates equal to the number of Form 8-K filings; 

for example, if a firm has filed Form 8-K on fifty dates, we sample fifty other dates from the 

quarter prior to each filing. 46 For each date on which an 8-K was IIQ/ filed, we impute a gap 

duration that is equal to its corresponding Form 8-K filing. 47 This imputed gap is utilized to 

collect all of the trades that occurred during those filing dates. 

We then consider individual trades reported on Fom1 4 for each trading date in both the 

"8-K" and "control" subsamples. Since we only see insider trades that are reported on any given 

date, we "fill oot" the panel by adding observations with zero trades for each individual who is 

Thu~ the uJJCOnditional probabili~· of a uading date being iocluded in the 8-K and control subsamples in this test 

is equatto 50% for ~h. 

" Suppose, for example. the fiJStlr.lding date in this sample with an 8-K filing featured an 8-K gap of three days. In 

tint case. the matching date wulwut an 8-K filing would be imputed a @i'P of three days, so that each uading period 

\\OUid last three dayS. 

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affiliated with the firm but did not report trades on a particular trading date. We then generate a 

binary variable to reflect whether an open-market purchase has occurred on each trading date. 

We estimate the following model using a linear probability model, i.e., ordinary least 

squares with a binary dependent variable: 

where Yi/k is a binary variable equal to I if individual i traded in firm j's stock in the kth 8-k 

trading gap or matched control period, d;;k is an indicator variable equal to I if the observation 

is in an 8-K trading gap and 0 if in a matched control period, q1 is a fixed effect for individual i, 

1!1 is a fixed effect for fimt j, if!k is a fixed effect for the kth 8-k trading gap and matched control 

period, and e11k is a random error term. We then consider the relationship between the 

probability of a particular individual making an open-market purchase and whether that 

probability is associated with whether that purchase occurs in an 8-K gap. The results are 

described in Table I 0 below, which reports the results as well how they vary when various 

combinations of these fixed effects are included in the model: 

[Insert Table 10 Here.] 

As Table 10 shows, insiders are more likely to conduct open-market purchases during 8· 

K gaps that precede the disclosure of customer or supplier agreements than during other periods. 

for example, Model (4) in Table 10-which uses individual-specific fixed effects to address 

heterogeneity related to unobservable differences among individual insiders-estimates that 

insiders are about 20% more likely to engage in open-market purchases during 8-K gaps that 

precede the disclosure of customer or supplier agreements than during other periods' 3 These 

" Because the const:IJ11 tenn in the models presented in Table tO reflects the unconditional probability that an open· 

lll3tket purehasc 11ill occur on any particu~tr trading date, the marginal ciTcct oft he 8·K l'ariablc can be calculated 

by dniding the coefficient on that rariable by the constaJllternt Tlws. for example, Model(~) repons a coefficient 

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results are robust to all five specifications presented in Table 10, each of which shows that 

insiders are statistically significantly more likely to execute an open-market purchase in 8-K 

gaps than during other periods. A natural question, of course, is whether these open-market 

purchases in advance of the disciOSIJre of customer or supplier agreements are, on average, 

profitable trades. In unreported analysis, using the same methodology described in Part 3, we 

find that these trades yield an average abnormal return of I 04 basis points. 

This finding suggests that executives are more likely to pursue unusual open-market 

purchases in their own company's stock when the finn is about to disclose significant new 

business agreements than during other periods. Taken together, the results presented in this Part 

provide evidence that insiders can- and do-earn significant abnormal profits by trading during 

8-K gaps that precede the disclosure of new customer or supplier agreements. 

5. POLICY CONSIDERATIONS AND CONCLUSION 

Our evidence shows that public-wmpany insiders trade during the 8-K gap-and earn 

economically and statistically meaningful profits when doing so. Before concluding, we briefly 

consider three implications of these findings for policymakers concerned about trading by 

corpornte insiders.

49 

Firs~ as noted in Part 2, any regulatory design choice regarding the SEC's rules can be 

expected to influence insiders' behavior. We have shown tha~ in light of the choice that the SEC 

has made-to permit firms to wait four trading days before disclosing material events to 

on the 8-K 1-ariable of .00519 (at greater than 99% statistical significance). That Model also repons a OOIISlalllteml 

of .0280. Therefore. Model4 estimates lbat inside~ are 2Q.6% (.00579 diridfd by .0280) more likely to engage in 

open-nrarktt purchases in an 8-K gap procooing tllC disclosure of a new customer or supplier agretnlCOtllran during 

the .. oonuor periods described in tllC te.xt. As 110100 in the text preceding Table tO. tllC other I!Xldels we present 

differ only in lemlS of tllC fi.xed effects used to address uoobseii'OO heterogeneil)'. For e.-<ample. Model (3) uses daily 

f.xoo effettsto address heterogeneity om time-for instance. tllC possibilill that our results are driven by trnding 

during a paniculartime period. As noted in Table 10. our results are oonsisteru across those specifications. 

" We note that Congress is oow considering severn! potentially imponant changes to insider-trading law. 

(Ackerman. 2015.) 

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investors-insiders trade extensively between the time these events occur and when they are 

disclosed. It may be that the Commission, in balancing the relationship between the design of its 

disclosure rules and insider-trading activity, has concluded that the benefits of the four-day rule 

outweigh the costs related to the trading activity documented here. For three reasons, however, 

we are not confident that current law reflects such an analysis. Firs~ as we have pointed out, 

following the Enron and WorldCom scandals-which, many asserted, included significant 

trading by insiders in advance of the collapse of both firms~ongress directed the Commission 

to require disclosure of significant corporate events "urgent(ly]." Second, the SEC invests 

considerable public resources in the enforcement of the insider-trading laws; it is counterintuitive 

(though possible) to suppose that it does so while designing its disclosure rules in a fashion that 

invites trading by insiders. Finally, the SEC rulemaking in 2004 that created the four-day 8-K 

ga~ther than the shorter two-day gap the agency had initially proposed-did not examine, or 

even acknowledge, the trading activity identified here. 

Second, many large public companies voluntarily adopt what are known as "blac.kout 

periods" during the pendency of critical corporate announcements, most commonly the quarterly 

announcement of the company's earnings. Although blackout-period policies vary considerably 

across firms, most emphasize earnings announcements, permitting insiders to trade when other 

corporate events-such as those studied here-are known to insiders but not the public. (Bettis et. 

al, 1999.) Our study provides evidence that insiders do, in fa~ trade during this period. The 

results suggest that firms concerned about the litigation and other costs associated 'vith IJ'ading 

by insiders prior to the announcement of key corporate events should consider expanding these 

policies to apply to a broader group of events, including those that the firm will disclose in a 

subsequent Form 8-K. 

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Finally, our findings provide a framework for lawmakers considering changes to the 

mandatory-disclosure rules that have long dominated the securities-law landscape. Policymakers 

might draw two preliminary lessons from our evidence. Firs~ our evidence that insiders trade 

profitably during the 8-K gap suggests that lawmakers should be mindful of the insider-trading 

implications of design choices associated with mandatory disclosure rules. Second, our 

findings-and particularly those documenting significant heterogeneity in trading by insiders 

based upon the content of the information that will be disclosed to the public-suggest that a 

single disclosure rule governing all information types may be inadvisable. Instead, policymakers 

should consider whether the nature of the underlying information itself should shape the 

disclosure rule that governs whether and when that information will be revealed to the marl<et. 

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Table I. Summary Statistics: Distribution of Firms and 8·K Filings by Year. This table d<Scrib<S the nunter 

of finns in our sample in each of the ele\·en ye:m of the period II"(: srud)•. The table also d<Scrib<S the arerage 

numberofFonn8·K filings on a per·fim1basis in each year. 

Year #offlnns #ofS.Ksper 

Finn 

2001 3,m.l 6. 1429 

2005 3,277 5.249 

2006 3.350 5.1)88 

2007 3.452 4.2915 

2008 3.372 tiOII 

2009 3.294 t0S92 

2010 3,255 3.9226 

2011 3,372 3.9585 

2012 3.479 3.975 

2013 3,574 3.9253 

2014 3.702 3.6118 

Table 2. Summa!)' Slatistics: Number of 8·Ks by Gap Lengtb and Martel Capitalization Dedic. This table 

presents the llllllDer of Fom18·K filings by mad<et capitalization decile and g~~p leQglb. 

MalkctCap Gap Length in Trading Days 

Decile 0 I 2 3 4 s 

10% 595 1 2174 1851 1860 3059 335 

20'/o 7087 2525 1702 1769 2566 21l 

30% 7375 2676 1550 1571 2475 161 

40% 7668 2718 1563 1516 2238 123 

50% 7343 2898 164 1 1647 2225 126 

60% 7452 2906 1643 1541 2128 120 

70% 754 1 2843 1540 1557 2209 118 

80% 7399 2983 1504 1557 23-12 lOS 

90% 7707 2906 1499 1m 2143 Ill 

1000!. sm 2657 1531 1219 1503 99 

Total 74.317 27.886 16.024 15,661 22.888 1.513 
195 


10247101.eps

Table 3. Summa!)· Statistics: Trading Actirity in the 8-K G•1• orer Time. This table presents !he total nunttr 

of trades in the 8·K tl3ding gap in our dataset by year, as weU as !he arerage number of tmes per 8-K uadutg gap in 

each year-that is. the total number of trades in the gap dirided by the numherof8·Ks with gaps in each year. 

Year Trades in Arerage Trades per 

8-K Tradinf Gao 8-K Tradilll! <J3o 

2\1().1 1,960 5.63 

2005 4,22 1 6.63 

2006 5,298 7.91 

2007 7,457 10.51 

2008 U68 7.12 

2009 3,069 5.47 

2010 2.788 6.17 

2011 3,193 5.39 

2012 3,246 4.64 

2013 3,436 5.66 

2014 3.384 4.67 
196 


10247102.eps

Tab e~. fonn 8-K Categories. The following lable li!ls the fourteen categories into which~~~ classified taeh of 

the Fonn 8-K mings in our sample. 

Categol) Name Definition 

Cbanges in ~)laws, chaners, and wde of ethics documc•ds. 

'OIPOI3te Documents 

Capital StiUCIUre Share repun:hase authorization or actual share repun:hases: issuance of 

quity, prefelltd equit). andlordcbl: ()j,;dend or special dividends for 

~th equity and prefelltd equities: new loans or IC\'Oiving credit 

greemei1S. 01 refmancing loans or crediti'C\ Oh~IS: payment of 

imerest expense on debt; bu)ing back debt. 

MergeiSand ~equis tions of other oompalies or assets: spin-offs. asset sales, elc. 

Aoouisitions 

Oll>Ornte Restructuring ~wnsizing of cenain group&. change ofbusiress segments. re· 

til(nmem of SCJ(mentailiL'or OOIPOrnte ooSI slructure. 

'ey O.Stomer and pc.:uiS when material cUSiomer or supplier apreDIS are annotJDCed, 

~Wiie Aj,leeJilents r changesfame.ndments made l<l these pes ofaAJ~X merus. 

Product or protrs 11 ben material information is IC\'ealed on a product or 

Production Updates roduCiion. 

lOCk u!ling ~AS AQorNYSE may infom1 aoompany that it isoutofoompliaooe 

ompliance VioiMions vith ce1t1in rules or regulations, which threaten company's listing 

!status. 

Cbanges in Management Includes promotions, resignations, new lures. and deaths of 

3DIL'or Boanl of DirectoiS ~J(ement and directors. 

xecut ire and Includes salal)' c~ bonus awards, shares,~od, direelorpay 

DireCiorPay djUSiments. eslablishing perfonnance wgets for bonuses and 

wanling bonuses. approval of iooeruive pay. and indemnification 

~~reemems for managers and diree1ors. 

lock sales or purtlrases by insiders ~ales Of COOIIXlD)' equity by tmmgers 300 directors. 

Voting Results from ~tandanl roting results for al1l1Wil meeti11g5: willnonnally include 

AIDI31 Meetings lection of ree~ors. r.tlification of auditor. appro' ing compensalion of 

nanagen~m team. 

Change in Acoounllllll Will uswlh· include simullaiiCOus dismissal offonner accountant and 

iring of nen accounk1nL 

Almuncement and Resolution of Includes subpoenas. jUJ)' trials, class action lawsuits. and signif1C3111 

Lee;~ I Issues Ciilll seulcmcnts. 

Other lf8-K everu does not fit in ore of above categories. 

Table S. Distribution of Fonn 8-K Filings " itb Trades in \be 8-K Trading Gap by Category. This table 

presents the frequency of tl~ Jl.m Fonn 8·K filings with trndes in the 8·K Trnding Gap by tl~ maiUllll~· coded 

eategol)' for that Fonn 8-K filing. 

Changes in Changes in Mc.ge and CO!l>OralC Key O.Stomer ProduCIOr Stock Listing 

Qlll>OI31e Capiral Acquisitions RCSIIUCIUring and Supplier Production Qlmpliaooe 

Documents Strucrure Agreements Updates VK!Iations 

1.225 3.739 1.m 188 730 196 215 

Changes in E.xecutivc Stock Sales Voting Change in Announcement Other 

Managemem and or Pun:hases Results from Accounlant and Resolution 

orBoanlof Diree1or by Insiders Annual of Legal Issues 

DireCIOrs Pay Mooings 

7()1 J.m 87 J.m 270 m 876 
197 


10247103.eps

Table 6. Profitability of Trading by Insiders During the 8·K Trading Gap. In this Table,~~~ pro,;de the results 

of three ordinary leaSt squares models in 111Uch the dependent ~~riab c is signed ar""'' for the tr.ldes by insiders in 

our samplc-dw is, insiders· abnom~a l returns from t.ransactions in 1hc 8-K rming gap. Model (I) oonsidcrs 

whether. on 3\~ge. signed trading profits from rmcs in 1hc 8·K gap are signifJCalllly different from zero. Model (2) 

examines the relationship benreen 1hc lengt.h of the S·K gap. in days. Model (3) oonsidcrs the relationship belween a 

dummy variable for cases \\heme the 8-K gap is longer li\W n10 trading days. The Iauer 1110 models are described 

by tllC folkm utg linear spccif1C31ions: 

signed ar.,..., =a+ fix, .. + E 

signed ar,.,4, =a+ fld,.,,,.,,. + E 

Where a is a constanttenn that eslimates the 3\·erage signed ar """' in 1hc absence of a gap in the first model and 

the 3\·erage signed ar.,.., for gap lengths of one or two days in 1hc seoond model: {I is the marginal increase ut 

signed ar.,.., per day of 1hc 8·K trading gap in the fi!St model and the average signed ar """ for gaps 0\'er n1o 

trnding da) s. and < is a random error tenn. T·sutistics are provided bei0\1' correlation coefficients in parenlhcses. 

We use the follo11it.g indialtors of Statistical significance:"" indic.11es p < 0.001. " itxlialtes p < O.oJ. run• 

indicates p < 0.05. 

(I) (2) (3) 

signed ar <Tade signed arrrade signed arrrade 

Gap (Per Day) o.oom"· 

(6.3~) 

Gap Orcr 2 Days ... 0.00339 

(6.67) 

Cllnstant o.oom· .. O.OOOH6 0.00202 ... 

(16.88) (0.55) (5.12) 

N 92 ~1 .192 ~1.192 

Table 7. Profitability of Trading by lnside11 During tbe 8-K Gap by Trmactioo Type. This table presents the 

a1~mge si8ood ar !Tade by each uansaclion code in the Fonn ~ oo. The Table also presents a Statistical tesl of 

whelhcr the 3\·erage signed ar !Tade for each transaction rode is significantly different from zero. T·Statislics are 

p!O\'ided belo11 oorrelation coeffiCients in parentheses. We use tilC following indicators of s!&Stical sigJtifiC3JICC: 

''" indicatesp<O.OOI. •• indiallcsp<O.OI. and • indialtcsp <0.05. 

GrJntsof Stock Share Exercise Bona OJ>tion Open· Open· 

Stock or 0111ion Porfeirure Price Fide Exercises Market Mattet 

01ttions Conre.r· Under Paid in Girts Purchases Sales 

sions Contract Shares 

ConsWtt 0.00185 ... 0.00529 0.00692"' 0.0024'' .o.OOI5f . 0.0032 ... 0.0163'" 0.00163'" 

(H9) (1.69) (4.83) (2.78) (·306) (U4) (9.99) (14.49) 

N 9.488 525 508 3.~6 768 5.391 2.730 17.888 
198 


10247104.eps

TlbHProf"abilitycHradetillheGapbyS.KlafnalionType lbisTilk~llllhe31trnge!Miorilliill~inlb:S.K ~on!llbalis 

olllrlignti etb~slrnmlion(sigrntarli'Gdt~ Tb:i is: Fmpul])1!tloltlis TaN:. mare 1Raltdasb31·~oolairtda ~j00tir.l01slxi• 

~oooo!lldi!ti tlkil bale~ oelhellalllaction oodt li.<lld oo Fool t 'Ire T<ille 161 ill.ilai'sa !tiiNicalliSI ti ~lxtlrrlheanngelll'~.u lor erh 

ali.'gOI)' oo iliormn k sigiifmi) diffel!lllrom l!lll T.gabfu at p111ml n~ lni ~IJ' We U!t ll! I~JJ\\ ~ n~ ol 

mtic!Jsi&lil.'3ll'e: 1111 inbsp<O.OOI. II ~p<O.O lll 1 inlialtsp<O.Il5. 

Astir TlilsOOII'I. m!ljly 1).~ allllt1liitial~ sigcifm llill~gm wlmlheir~ pr!>:oHKsd&Josq ir:!'o!1111ill in se~mtib: 

eleltt!31egorts we stuey. io:hxlirlg iJiiXIIJ.1iOiimi clnn.oes in OO!)XIIl!t doctns. clllng<s in~ stnxt:n. mg~ alii ~.ri!itiltt itr rusl!.lrel 

anllfiWM ~~tilling OOiflllill'e 1lilatice5, 2ill clllng<s in lb: finn's axoorllll Wt ib.l:ml Iilli i:9i'll t~ coooornical~ alii 

msn(2)1y !igrufK31ibsslswlm ill 8-K ~~lis inl001100non lh:wmcr~ Olll9lloli:mollcgal m 

Ct.1ngesi; C.inC~lll ~k~alll COI)lllil KeyC~:.<tmalll l'it1h't01 

- Slmure Aap;i:io~ Resbmllli~ .Agiwnflis l'ltdtliloUpilrls 

[)m:fiS 

signed liT"'" 000320 .. 0.(0)16 0.00l6J .0.00119 .. O.oo:IJi .0.00113 

(i.Ol) (ll~i) ~l ) 1~7) (M5) (·(l&J} 

.~ 6.191 li.618 6111 i39 l.OI! 100 

&idl.itlg Chtgesin Cln\'ei:l Arul:lloctnl:~alll ()lys 

Colfllrm ~ingen:ertt01 A«<Ollll 1\esi!liioooll.cgi 

V'JOilnoll BoonloiDiredo~ l;srs 

~liT .... 0.0111 .O!Ol>ll 0.0118 .0.00161 0.00108 

(397) (.0.10) (!59) Hll) (161) 

.1 il6 111» 1009 l.rol l.Oii 
199 


10247105.eps

Table 9. Abnormal Returns in 1be S.K Trading Gap for Customer and Sup11lier AgreementS. In I his Toole. ne 

pro' ide tre results of three ordinal)' least squares models in nllich tre depcnde•n ,·ariable isar,,,. Model (I) 

cons ~ nhclhcrar,., is significal'lly different from ?.Cro among tl10sc filings nilh non-zero 8-K trading g;IPS. 

Then. in Mndels (2) and (3). n-e regress signed ar,., on lhe length of lhe Si'P· or when a gap of orer two uading 

da)S is prcsc11, in tre foiiO\,ing 1oodels: 

ar9., = at {Jx9., tf 

ar9,

1 = at {Jd9

.,,,4.,, + f 

Where a is a coliSWlltenn that estimates the arernge ar,., : {J is tl1e a~ml increase in ar9., per day of lhe 8-K 

trading gap in Model (2) and the avernge ar,., for gaps O\Cf tno trading days in Model (3): and< is a mndom ellllr 

tenn. Note that our sample size of 3,6S2 is sli8hl~· SJnaller than the sample of 4.692 8-Ks disclosing agreements of 

llns type because ne e.,;ludc 8-Ks n itb no trading gap from this anal) sis. of T-st.1tillies arc )110\ided below 

correlation coefficients in parentb:ses. We use lhe folio" ing indicators of slatiSiical significance: "'' indicates p < 

0.001." indicates p < 0.01. and • indicates p <O.OS. 

(I) (2) (3) 

argop 4Jiq Q'iop 

Gap (Per Day) 0.00199"' 

(2.93) 

0.004SS"' 

Gap Orer 2 Days (1.98) 

0.003Sf'" -0 001~ 0.000905 

Constant (t26) (-1.36) (1.19) 

N 3.6S2 3.652 3,6S2 
200 


10247106.eps

Table 10. Probability of 01Jen Ma11<el Purchases During lbe8-K Trading Gaps !mmedialely Prior to 

Oisclosurc of Customer or Supplier Agrccmeni.S. This !able prescru the results of an ordinruy least squares 

regression in" hicb lhe dcpcndclll variable is a dununy for" helher an insider exCQ!ted an ope~>market pultlxlse on 

a panieular trading date. The variable of interest is a dummy for 11 helher lhaltrading dale falls in an 8·K gap. The 

dctlils of the scloction of trading dates, as 11tllas lhe specifications of the models below, arc descnbed in the t~xt. 

The models below differ only rcganling the ft'ed effects used to absorb tinJe.im~riant heterogeneity. Model (I) 

includes no fcxed cfTCCIS: Model (1) includes firm fixod effectS: Model (3) includes dai~· fixed effects; Model (4) 

includes individual ft'ed ~eelS: and Model (5) includes ftxed effects for each individual pair ofS.K lr.lding gaps 

and m1tched trading dates (to address. runong other things. the possibili~· that other results are driven by oullier 

pairs). T -sunistics arc prorided below corrcL'llion coc:ffieients in parcnt iCSC~ We usc the follo11 ing indicators or 

Slatistieal significance: ••n indicatcsp <0.001. •• indicatesp<O.OI, and • indicatesp<0.05. 

(I) (1) (3) (4) (5) 

p(purchase) p(purchase) p(purcbase) p(purchase) p(purchase) 

8-K Filing 0.01()6"' 0.00847'" 0.0089(;" 0.00579' 0.00452' 

(3.91) (3.73) (1.61) (1.54) (1.15) 

CollSUlllt 0.0256'" 0.0267'" 0.0164'" 0.0180'" 0.0287'" 

(14.68) (16.41) (13.63) (17.23) (19.49) 

N 16.368 16,368 16,368 16,368 16.]68 

Fi'od EITCCIS None Finn Dai~· lndiridual 8-KJ 

Cottrol Pair 
201 


10247107.eps

Figure 1. Summary Slaiislics: The Longrh of lhe 8-K Trading Gap. The figure below p!t$tms a hislogr.unof1hc 

8-K trading gap. defined as the number of days bd\\Cen the dale the signif.:all OOJ1lOilliC e~~m occurs and lhe dale 

!hal lhc erenl is disclosed on fom• 8·K. The figure below e.'cludes "negalive" gaps (which oowr when 1hc 

disclosure oc:ours prior 10 lhc evem) a•d g.1p5 !hal e.'coed five cJ.;ys (11hich may relleclthe kinds of exoeplional 

cireums1anoes 1ha1lead 1he finn 10 miss the SEC's filing deadline). 

90.000 

80.000 
202 


10247108.eps

Figure 2. Summol') Statistics: Dislribution of Trading by Insiders by 8-K Gap l<ngth. The figure below 

prescniS ti'o: frtquency of ll3des in our datilSCI based on ti'o: length of tllC 8-K lr.lding g;~p Ill • hiob the trades 

occurrtd. Each bar describes the nuntx:r of trades that ooeurrtd in 8-K gaps of a pa~ku ar length. Thll ts: just less 

than 7.000 trades ooeur during one-day gaps. i.e. cases in which there is one day benreen the occurrence of the 

crcnt and the filing of an 8-K disclosing th.11 C\Cill B) contms~ orcr 16.000 tradcsooeurduring four-daJ ~- Le .• 

cases in" bkh there are four da) s betwCC1l ti'o: occurrence of the C\~nt and tllC filing of an 8-K disclosing tl>at C\'Ctll. 

20,000 

18.000 
203 


10247109.eps

Figure J. AnnounC<IIltnt or New Customer or Supplier Agreements: Elamplc. The form 8-K below pro' ides a 

1)-pieal c,xample or an 8-K anrouncing a rew cuSiomer or suwlicragm:menl of the pe included in !he sample used 

in Part 4. Note lklttheoompaoy eruerod illlo!he agm:memonlu~· 13,2010. but did not file lhisS-K unliiJuly 19, 

2010: ~xcluding tliC intervening weekend. this 8-K fe:uures a uading g<~p of lhree d:lys. 

UNITED STATES 

SECURITI[S AND EXCHANGE COMliUSSION 

WASHINGTON, D.C. 205-19 

FORMS.K 

CURRENT REPORT 

Pursuantlo Seetion 13 or 15(d) or the 

Securities Exchange Acl or 9~ 

Date or repon (Date or ea~ieSI C\'ent reponed): July 13, 2010 

Emergent BioSolulions Inc. 

(Exact Name of Rcgillrant as Specified in Charter) 

Uemi.OI. Enlry into a Material Defmitire Agrttment. 

On July 13, 2010, Emergem BioDereosc Opc131ions Lansing Inc., a "hollj·-o"llCd subsidiary of Eme<gell 

BioSolutions Inc. iRegisuant"). emerod imo an agm:ment with the Office of !he Biomedical Ad,~reed Resean:h 

and DC\clopment Authorit) i BARDA ")or the U.S. Depanmcm of Health and Human Sen•iccs to dc\'elop and 

obtain reguL1tOI) awroval for la~ sca c manufacturing ofBioThran(Antluax Vaccine Adsorbed) in !he 

RegiSiranl's raccine manufacturil1g acili~· in Lansing Michigan. 

The agn:cmeru is a cost-plus-fixed-foe dC\·cJop,rem oomrnct 'al•ICd at up to awro ,inlilte~ $107 million. Including 

a t\\0-year base periud of perfomlallCIC of awroximately $5~ 6 million. and lhree ope ion years valued at a toial of 

awroximalely $52.3 million. Them~yearbase period ofpelfonnaree isrromJuly 19.2010 to Ju~ 18. 

2012. Each 3dditioml option peliod. if exercised, wot~d extend the period of performanoe b) an additional year, 

aoo the eotire oontl3CI periud of performance would end on Ju~· 18, 21>15. 

Activnies to he oonduaod during !he two·) ear base period includcoompletion of cbaracteril'Jll.ion aoo immunogenici~· studie~ suca.ssful consistency lot validation, and a prc-JND meeting. Optional activities to be 

conducted following BARD A's exercise of each option year would include, among other dings. stab iii~ 

demonSirations. clinical Slndics and biologics licensing application activities. 

A copy or the Regilltant's press release aiiiJ)Uncing the award is attaChed as Exhibit99.1. 

SIGNATURE 

Pursuam to the requin:merus of !he Securities Exchange Act of 193 . tlte n:giSlmnl basdul) caused !his report to be 

signed on i1s behalf bl lite undersigo:d hereumo du~· authoriud 

Date: July 19, 2010 EMERGENT B!OSOWTIONS INC. By: _____ _ 
204 


10247110.eps

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