Cummings questions SEC waiver expansion

A top House Democrat is blasting a possible move by a financial regulator that would make it easier for watchdogs to allow bad actors back into the market.

Rep. Elijah Cummings (D-Md.), the top Democrat on the House Oversight Committee, is criticizing a Securities and Exchange Commission (SEC) proposal that would allow additional regulators to let players back into the market after running afoul of the federal government.

{mosads}Under current law, financial firms face tougher rules or can even be barred from some market activities if they have violated certain anti-fraud laws. But the SEC has the power to grant waivers to any potentially barred institutions to allow them to continue regular market activities.

The use of such waivers has faced a flow of criticism from congressional Democrats, who argue the SEC hands them out too easily and they amount to a “get out of jail free” card for wrongdoers.

Now, Cummings is questioning an SEC initiative that would allow other regulators, like the Commodity Futures Trading Commission and some private self-regulatory organizations, to grant waivers under certain circumstances.

Cummings said in his letter that such a move could hand powers to regulators that Congress never intended, and argued that the SEC needs to be the ultimate arbiter of who gets a pass.

An SEC spokesperson declined to comment.