Paul Atkins voted against at least 10 enforcement actions punishing individuals and companies, including Citigroup (C.N) and IBM (IBM.N), according to a Reuters review of Securities and Exchange Commission records from the final years of his 2002-2008 stint as a commissioner. In doing so, he defied his fellow Republican agency chairs.
Atkins was also fastidious, scrutinizing proposed enforcement actions word by word and frequently pushing back on SEC staff who recommended bringing charges, according to three former SEC enforcement staff.
At the time, Atkins made no secret of his mistrust of much of the SEC's process for probing and disciplining rule-breakers, arguing that corporate fines unfairly penalize shareholders and that the SEC should focus on individual fraudsters. He became well-known for his industry-friendly views, even as the agency grappled with the fallout from the Enron and WorldCom accounting scandals.
But his enforcement dissents, which have not been previously reported in detail, and Reuters' interviews with more than a dozen former SEC officials and academics, provide insight into how deep that skepticism was. They suggest Wall Street is set for a much easier ride after years of aggressive enforcement under Democratic Chair Gary Gensler, whose SEC levied over $20 billion in penalties and other charges.
High-profile companies whose SEC cases could be affected by new leadership include electric carmaker Tesla TSLA.O, crypto exchanges Coinbase Global COIN.O and Binance, and investment firms BlackRock (BLK.N), Carlyle (CG.O) and TPG (TPG.O).
Under Atkins, the SEC will likely focus on misconduct that causes direct investor losses, such as scams, rather than corporate malfeasance where the harm is not always immediately obvious, the sources said. Critics say such an approach is dangerous because big companies can pose systemic risks and are capable of large-scale harm to investors.
"His nomination should bring down the stress levels and ambient heart rates for compliance ... staffers," said Tyler Gellasch, a former SEC official who now leads the Healthy Markets Association, which focuses on increasing capital markets transparency and reducing conflicts of interest. Its members include pension funds.
Atkins did not respond to requests for comment. He has said little on enforcement in recent years but has continued to argue for light-touch oversight, and has represented companies in regulatory disputes via his consultancy, Patomak Global Partners.
Trump transition spokespeople did not respond to a request for comment.
10 DISSENTS
SEC leadership comprises five politically-appointed commissioners, including the chair, who vote on rules and enforcement actions. Typically, chairs bring a vote when they have enough support to pass a measure.
During Atkins' tenure, commissioners sometimes revealed how they voted on regulatory matters, but neither they nor the agency routinely publicized the outcomes of enforcement votes, obscuring commissioners' overall records from public view.
Reuters reviewed online voting records from Atkins' tenure, for which only 28 months during 2006 to 2008 are available. The records relate to administrative enforcement actions brought before the SEC's in-house court but not federal court litigation.
With 10 dissents, Atkins disapproved of more than twice as many actions as Democratic commissioner Roel Campos, while Democrat Annette Nazareth and Atkins' fellow Republican Kathleen Casey did not dissent on enforcement matters at all during those months. Campos, Nazareth and Casey did not respond to requests for comment.
Even in today's partisan climate where party-line SEC dissents are common, Atkins' willingness to oppose his fellow Republicans on enforcement matters is striking, underscoring how strongly he felt about the issues, said experts.
"Atkins is an independent thinker with a clear view about how markets work," said Stanford professor Joseph Grundfest, who was a Democratic commissioner in the 1980s.
Jay Clayton, SEC chair during Trump's first term, was similarly skeptical of big corporate fines and focused mostly on small-scale investor frauds. But the agency was still active, notching record penalties in 2020 and surprising some onlookers with landmark charges against Tesla and crypto firm Ripple.
While Atkins' 10 dissents were among thousands of votes he would have made, former agency officials said they accurately reflect his exacting approach to enforcement issues.
"He put us through our paces," said former SEC assistant enforcement director Gregory Faragasso, who praised Atkins' acumen and expertise. "He would want to get down into the weeds on certain issues ... you'd have to really know your stuff."
Two other former officials shared similar observations. One said Atkins would negotiate corporate penalties with staff, often pushing for a focus on fines for individuals over companies.
Atkins voted against a $7-million SEC settlement with IBM over accounting and other issues, and opposed a 2008 order against Citigroup over its financial statements. He also dissented on smaller matters, such as censuring unregistered accountants.
The documents do not record Atkins' reasoning but, in contemporaneous remarks, he argued that corporate fines only hurt shareholders who had already suffered from the original misconduct.
He also argued that enforcers often pursued minor infractions, suggesting in a 2008 speech that they did so to pad enforcement figures, and that enforcers were not transparent about the evidence they had on targets.
"Where there are serious violations, enforcement action is necessary, but the goal should be to work with firms to build their internal compliance," he said.
