Trump Nominates Paul Atkins to Lead SEC -- What Will It Mean for Whistleblowers?

On Wednesday (December 4), President-elect Donald Trump nominated Paul Atkins to take over the helm of the Securities and Exchange Commission (SEC) when Gary Gensler steps down in January.  Trump posted the announcement on his Truth Social platform where he hailed the incoming SEC Chief as “a proven leader for common sense regulations,” who “believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors.”

Atkins (66) is by all accounts well known and widely respected within the securities industry.  He is no stranger to the SEC either having served as a commissioner from 2002-2008 under George W. Bush, and prior to that on the staff of two former SEC Chairs, Richard Breeden and Arthur Levitt.

After the SEC, he founded Patomak Global Partners, a financial services consulting firm on regulatory and compliance matters, including issues related to crypto and digital assets.  It is his views on looser regulation of crypto assets which is getting the most attention with his nomination.  This is an area in which the SEC has been particularly aggressive under Gensler and where all expect Atkins will most dramatically change the SEC’s direction.

Indeed, Atkins’ more relaxed view on crypto seems to be a key motivating factor for Trump’s selection of Atkins for the job.  Trump pointed to Atkins’ position as Co-Chairman of the Digital Chamber’s Token Alliance in his announcement of the nomination, highlighting that Atkins “recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”

Few are questioning Atkins’ bona fides for the position.  But there seems to be some disagreement — mostly along partisan lines — over the level of rigor he will bring as Top Cop to the Wall Street beat.  Aside from a more lenient approach to crypto, most expect Atkins to pull back the reins on the SEC’s Gensler-led crusade against Environmental/Social/Governance (ESG) securities-related offenses.

How loose the agency will get in the ESG space remains to be seen.  So does whether Atkins’ expected laissez-faire approach to digital assets will extend to other industries.  But for those who may have been hoping for an anything-goes-business-friendly SEC Chair, they likely will be disappointed.  An Atkins-led SEC will almost certainly stay strong in protecting investors and going after bread-and-butter securities fraud.

According to a Reuters piece on the nomination, “several people who have worked with Atkins also described him as highly professional, principled and fun.”  As Securities Docket jokingly hypothesized in its Daily Update today, perhaps his selection was all about the fun:

Here’s how I now imagine the SEC Chair selection process going down:

What about Atkins, is he the right person for the job? A. Yes, he is highly professional and principled. Q. Is he fun?  A. Yes.  Q. How many people say that?  A. Several.  Q. Done.

Putting to the side how much fun Atkins will bring to the agency, some are wondering whether he will bring the same level of commitment as Gensler has to supporting the SEC Whistleblower Program.  The only insight we have been able to gather on this is from the July 2011 testimony he provided to the Senate Committee on Banking, Housing, and Urban Affairs as a Visiting Scholar for the American Enterprise Institute.

His whistleblower views in that testimony were mixed.  On the one hand, he recognized that “Dodd-Frank clearly aims to encourage whistleblowers and ease their fears of retaliation, ostracism, and reputational damage for future employment — all authentic concerns for legitimate protesters.”  At the same time, he cautioned against the “perverse incentives” he feared the SEC Whistleblower Program would foster, including overwhelming the agency with frivolous tips and undermining internal corporate compliance programs.

Of course, that was before the SEC Whistleblower Program truly took hold.  More than 13 years later, none of Atkins’ concerns have played out, there have been billions of dollars in whistleblower-prompted SEC recoveries, and there is broad bi-partisan support for the program and overwhelming consensus it has been a smashing success.  So much so that it has been a model followed by several other agencies that have adopted their own SEC-styled whistleblower programs (including DOJ, FinCEN, and NHTSA).

With all this, we are confident the SEC Whistleblower Program under Atkins’ stewardship will continue to be a critical piece of the SEC enforcement regime.  So to all those would-be whistleblowers who have information on potential securities violations, there no doubt will be some tweaks in the SEC’s areas of focus and rigor.  But we do not expect there to be any change in the agency’s warm whistleblower embrace.

If you would like to learn more about what it means to be an SEC whistleblower, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon Whistleblower Team for a free and confidential consult.

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