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On February 18, 2025, the White House issued an executive order (“EO”) declaring that the independent federal government agencies – such as the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Communications Commission – will now be under the direct supervision of the White House, which will review draft regulations and may withhold funding for actions not in line with the President’s policies.
Among other things, the EO states that all agencies must:
The EO also directs the Director of the Office of Management and Budget (OMB) to establish performance standards and management objectives for independent agency heads, and report periodically to the President on their performance and efficiency in attaining these standards and objectives. The OMB Director will also:
Further, the EO says that no executive branch employee acting in their official capacity may advance an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law, including but not limited to the issuance of regulations, guidance, and positions advanced in litigation, unless authorized to do so by the President or in writing by the Attorney General.
The SEC has traditionally been regarded as an “independent” agency but this status is largely a matter of practice and tradition, and has been disputed by some commentators. The EO does not explicitly say that the President may remove an agency head without cause, but does state that executive branch officials remain subject to the President’s “ongoing supervision and control.”
The EO clearly signals an effort by the Trump administration to exert tighter control over the independent agencies of the executive branch, including the SEC. It is not yet clear whether non-rulemaking acts – such as no-action letters, enforcement actions or SEC staff bulletins –would be caught under the EO’s requirement to “submit draft regulations for White House review.”
We expect that there will be litigation challenging the EO on constitutional and statutory bases. In issuing the EO, however, the President has made it clear that he intends the put his stamp on the SEC. Even without the EO, the President has significant power to achieve his agenda at the SEC. Although two of the five SEC Commissioners will not be from his political party, the President has the power to nominate all of them and the Chair and the majority will be from his party.
20 February 2025
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