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Trump pick for SEC chair faces conflict-of-interest scrutiny

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Paul Atkins, President Donald Trump’s pick to lead the Securities and Exchange Commission, faced an early political test over his strong ties to Wall Street and digital-asset firms.

At his nomination hearing Thursday, the former Republican SEC commissioner and founder of consulting firm Patomak Global Partners met with stiff opposition from Democratic lawmakers over his potential conflicts of interest and support of deregulation.

Senator Elizabeth Warren, speaking just before his Banking Committee hearing, said she’s concerned that Atkins is “thinking about his past and future clients” rather than American families. That criticism is unlikely to get in the way of his approval by the GOP-controlled Senate. 

Supporters of Atkins see him as an ideal choice to roll back Biden-era policies, bolster capital formation and provide clarity to the crypto industry.

In a letter sent Thursday to Warren, Atkins said he had “met or exceeded” the same ethics standard applied to prior SEC nominees, and was divesting from more than 150 financial holdings.

Priorities reset

Atkins told lawmakers he plans to work on “clear rules of the road” for Wall Street and digital-asset firms. 

“Unclear, overly politicized, complicated and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment,” Atkins said. “It is time to reset priorities and return common sense to the SEC.”

Atkins, 66, would be the wealthiest SEC chair in recent decades. He and his wife, Sarah, an heir to a roofing-products firm, have a net worth of at least $327 million, according to Office of Government Ethics filings.

His stake in Patomak is worth at least $25 million, based on  documents made public on Tuesday. Atkins said he will resign as chief executive and divest from the firm and other holdings within 90 days of confirmation.

Client list

The firm’s long list of clients has raised questions about Atkins’s ability to navigate any conflicts of interest. His filings show compensation from Bank of America Corp., Barclays Plc, Exxon Mobil Corp., global investment firm Temasek Holdings Pte. and trading firm Virtu Financial Inc., among others. 

Warren, the top Democrat on the Banking Committee, has pressed him for details on who will purchase his stake in his firm. Divestitures aren’t enough “unless he agrees to disclose to Congress who the buyer will be and whether they are paying for access to the SEC chair,” Warren said in an emailed statement before the hearing.

Warren also has accused Atkins, an SEC commissioner from 2002 to 2008, of downplaying risks in the market before the financial crisis. Atkins responded by saying the crisis was multifaceted but rooted in subprime mortgage loans made by Fannie Mae and Freddie Mac under government pressure.

Scaling back

Atkins is expected to scale back regulation and enforcement, a path the SEC is already taking under the Trump administration. 

Last month, the SEC asked a federal court to delay arguments in its legal defense of climate disclosure rules. And on Monday, the agency’s acting enforcement director said penalties will generally be lower.

Atkins is listed as a contributor to the Heritage Foundation’s Project 2025, which calls for a rollback of SEC regulations and eliminating the Public Company Accounting Oversight Board, the audit regulator established after the Enron accounting scandal. Atkins deflected questions on whether the board should be scrapped, saying it was up to Congress. 

Senator Angela Alsobrooks, a Maryland Democrat, pushed Atkins to pledge that he won’t allow politics to interfere with the SEC’s work. She referenced reports about SEC Commissioner Mark Uyeda, who is now acting head of the agency, asking enforcement attorneys to declare that a case they wanted to bring against billionaire and Trump adviser Elon Musk wasn’t politically motivated. Bloomberg reported the unusual request in February. 

Atkins told the panel he didn’t anticipate there would be any attempts to politically influence the agency while he is chairman.  

Crypto prospects

For the crypto community, Atkins’s nomination is viewed as critical for the development of a light-touch framework that sharply contrasts with former SEC Chair Gary Gensler’s aggressive approach. Gensler pursued firms for failure to register as exchanges and disclose information about their tokens.

Wall Street firms often criticized Gensler’s fast-paced rulemaking agenda and tight timelines — sometimes as few as 30 days — to respond to agency proposals. They also complained about the time and money spent complying with regulations, including new disclosures in their corporate financial statements.

“It’ll be more of an emphasis on capital formation and investment choice as opposed to more of an emphasis on investor prohibition or greater regulatory obligations,” said Nick Morgan, president of the Investors Choice Advocates Network and former SEC attorney. “That’s a very good thing.”

Luke Pettit, the Trump pick to serve as assistant secretary of the Treasury, as well as Jonathan Gould, the nominee to lead the Treasury’s Office of the Comptroller of the Currency, also testified before the panel. 

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Accounting

Acting IRS commissioner reportedly replaced

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Gary Shapley, who was named only days ago as the acting commissioner of the Internal Revenue Service, is reportedly being replaced by Deputy Treasury Secretary Michael Faulkender amid a power struggle between Treasury Secretary Scott Bessent and Elon Musk.

The New York Times reported that Bessent was outraged that Shapley was named to head the IRS without his knowledge or approval and complained to President Trump about it. Shapley was installed as acting commissioner on Tuesday, only to be ousted on Friday. He first gained prominence as an IRS Criminal Investigation special agent and whistleblower who testified in 2023 before the House Oversight Committee that then-President Joe Biden’s son Hunter received preferential treatment during a tax-evasion investigation, and he and another special agent had been removed from the investigation after complaining to their supervisors in 2022. He was promoted last month to senior advisor to Bessent and made deputy chief of IRS Criminal Investigation. Shapley is expected to remain now as a senior official at IRS Criminal Investigation, according to the Wall Street Journal. The IRS and the Treasury Department press offices did not immediately respond to requests for comment.

Faulkender was confirmed last month as deputy secretary at the Treasury Department and formerly worked during the first Trump administration at the Treasury on the Paycheck Protection Program before leaving to teach finance at the University of Maryland.

Faulkender will be the fifth head of the IRS this year. Former IRS commissioner Danny Werfel departed in January, on Inauguration Day, after Trump announced in December he planned to name former Congressman Billy Long, R-Missouri, as the next IRS commissioner, even though Werfel’s term wasn’t scheduled to end until November 2027. The Senate has not yet scheduled a confirmation hearing for Long, amid questions from Senate Democrats about his work promoting the Employee Retention Credit and so-called “tribal tax credits.” The job of acting commissioner has since been filled by Douglas O’Donnell, who was deputy commissioner under Werfel. However, O’Donnell abruptly retired as the IRS came under pressure to lay off thousands of employees and share access to confidential taxpayer data. He was replaced by IRS chief operating officer Melanie Krause, who resigned last week after coming under similar pressure to provide taxpayer data to immigration authorities and employees of the Musk-led U.S. DOGE Service. 

Krause had planned to depart later this month under the deferred resignation program at the IRS, under which approximately 22,000 IRS employees have accepted the voluntary buyout offers. But Musk reportedly pushed to have Shapley installed on Tuesday, according to the Times, and he remained working in the commissioner’s office as recently as Friday morning. Meanwhile, plans are underway for further reductions in the IRS workforce of up to 40%, according to the Federal News Network, taking the IRS from approximately 102,000 employees at the beginning of the year to around 60,000 to 70,000 employees.

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Accounting

On the move: EY names San Antonio office MP

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Carr, Riggs & Ingram appoints CFO and chief legal officer; TSCPA hosts accounting bootcamp; and more news from across the profession.

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Accounting

Tech news: Certinia announces spring release

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Certinia announces spring release; Intuit acquires tech and experts from fintech Deserve; Paystand launches feature to navigate tariffs; and other accounting tech news and updates.

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