What does the exodus of senior officials at the SEC mean for the future of securities regulation?  This month, the SEC announced that the agency's chair, two division heads, and the general counsel and chief of staff will leave their posts. Though it is not unusual for political appointees, like the SEC chair and commissioners to end their tenures after a Presidential election, it is not typical that the senior staff does so.  These changes in leadership may signal a new direction for the SEC, and may also delay some regulatory efforts like money market reforms, crowdfunding regulation, and progress on Dodd-Frank regulations.  


There will be no gap in leadership at the SEC because the White House took the unusual step of naming Commissioner Walter as Schapiro's successor, not merely as interim chair until some other person can be named. This suggests that the White House expects Walter to stay on as chair indefinitely, rather than just a few months. Commissioner Walter's term expired in June and she may serve as Chairman through the end of 2013 without the need to be confirmed by Congress. Upon assuming the chairmanship, Walters' seat  became vacant among the commissioners.  Because the Commission may not be comprised of more than three commissioners from the same party as the White House, another Democrat can be appointed to fill Walters' vacant seat.  Until a new commissioner is nominated and confirmed, however, the Commission is deadlocked with two Democratic Commissioners and two Republican. This potential deadlock may slow rulemaking and some enforcement activities to a virtual crawl.  This leaves key Dodd-Frank regulations, crowdfunding rules, and money market reforms in limbo, at least for the time being.  


Though the Commission's agenda is likely to be little changed under Walter's leadership, she must first focus on filling the vacancies in key positions on the senior staff left by the departure of General Counsel Mark Cahn, Trading and Markets Director Robert Cook, Division of Corporation Finance Director Meredith Cross, and SEC Chief of Staff Didem A. Nisanci.  Some of these retirements from the SEC were expected, but their timing may reflect a shakeup of the Commission's staff based on tacit or overt pressure from the White House to refocus and reinvigorate the agency's key policymakers.  These vacant staff leadership positions may be filled either internally from SEC staff, or externally from industry, legal and accounting circles, or academia.  Walter's picks for some of these key positions may signal her priorities, and how she plans to navigate some of the more controversial aspects of her agenda.