[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]


                      OVERSIGHT OF THE SECURITIES
                        AND EXCHANGE COMMISSION
=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED NINETEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 11, 2026

                               __________

                           Serial No. 119-58

       Printed for the use of the Committee on Financial Services
       
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]       

                            www.govinfo.gov
                               __________
                            
                      U.S. GOVERNMENT PUBLISHING OFFICE  
63-965 PDF                   WASHINGTON : 2026
=======================================================================
                           
                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    FRENCH HILL, Arkansas, Chairman

BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking 
    Chairman                             Member
FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice 
PETE SESSIONS, Texas                     Ranking Member
ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York
ANDY BARR, Kentucky                  BRAD SHERMAN, California
ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York
TOM EMMER, Minnesota                 DAVID SCOTT, Georgia
BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts
WARREN DAVIDSON, Ohio                AL GREEN, Texas
JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri
BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut
WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois
    Carolina                         JOYCE BEATTY, Ohio
MARLIN STUTZMAN, Indiana             JUAN VARGAS, California
RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey
DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas
YOUNG KIM, California                SEAN CASTEN, Illinois
BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan
SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia
MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana
ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon
ZACHARY NUNN, Iowa                   SAM LICCARDO, California
LISA McCLAIN, Michigan
MARIA SALAZAR, Florida
TROY DOWNING, Montana
MIKE HARIDOPOLOS, Florida
TIM MOORE, North Carolina
                      Ben Johnson, Staff Director
                         
                         C  O  N  T  E  N  T  S

                              ----------                              

                      Wednesday, February 11, 2026
                           OPENING STATEMENTS

                                                                   Page
Hon. French Hill, Chairman of the Committee on Financial 
  Services, a U.S. Representative from Arkansas..................     1
Hon. Maxine Waters, Ranking Member of the Committee on Financial 
  Services, a U.S. Representative from California................     2

                               STATEMENTS

Hon. Ann Wagner, Chairwoman of the Subcommittee on Capital 
  Markets, a U.S. Representative from Missouri...................     4
Hon. Brad Sherman, Ranking Member of the Subcommittee on Capital 
  Markets, a U.S. Representative from California.................     4

                               WITNESSES

Hon. Paul Atkins, Chairman, U.S. Securities And Exchange 
  Commission.....................................................     5
    Prepared Statement...........................................     7

                                APPENDIX

                   MATERIALS SUBMITTED FOR THE RECORD
                 RESPONSES TO QUESTIONS FOR THE RECORD

Written responses to question for the record from Hon. Paul 
  Atkins
    Representative Maxine Waters.................................    58
    Representative Bill Huizenga.................................    79
    Representative Ann Wagner....................................    81
    Representative Pete Sessions.................................    82
    Representative Warren Davidson...............................    83
    Representative Bryan Steil...................................    84
    Representative Daniel Meuser.................................    86
    Representative Young Kim.....................................    89
    Representative Andrew R. Garbarino...........................    91
    Representative Scott Fitzgerald..............................    92
    Representative Michael Lawler................................    95
    Representative Zachary Nunn..................................    96
    Representative Maria Salazar.................................    98
    Representative Brad Sherman..................................    99
    Representative David Scott...................................   101
    Representative James A. Himes................................   109
    Representative Nikema Williams...............................   112


 
          OVERSIGHT OF THE SECURITIES AND EXCHANGE COMMISSION

                              ----------                                

                      Wednesday, February 11, 2026

                     U.S. House of Representatives,
                           Committee on Financial Services,
                                                    Washington, DC.

    The committee met, pursuant to notice, at 10:02 a.m., in 
room 2128, Rayburn House Office Building, Hon. J. French Hill 
[chairman of the committee] presiding.
    Present: Representatives Hill, Lucas, Sessions, Huizenga, 
Wagner, Barr, Williams of Texas, Loudermilk, Davidson, Rose, 
Steil, Timmons, Stutzman, Meuser, Kim, Donalds, Fitzgerald, 
Flood, Downing, Haridopolos, Moore, Waters, Velazquez, Sherman, 
Meeks, Lynch, Green, Cleaver, Foster, Vargas, Gottheimer, 
Gonzalez, Casten, Pressley, Tlaib, Torres, Garcia, Bynum, and 
Liccardo.
    Chairman Hill. The Committee on Financial Services will 
come to order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``Oversight of the Securities 
and Exchange Commission.''
    Without objection, all members will have 5 legislative days 
within which to submit extraneous materials to the chair for 
inclusion in the record.
    I now recognize myself for 4 minutes for an opening 
statement.

    OPENING STATEMENT OF HON. FRENCH HILL, CHAIRMAN OF THE 
  COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM 
                            ARKANSAS

    Good morning. I want to welcome my longtime friend and our 
chairman of the Securities and Exchange Commission (SEC), 
Chairman Atkins, and thank him for joining us today.
    The SEC's mission is clear: To protect investors, maintain 
fair, orderly, and efficient markets, and facility capital 
formation. At its core, this mission is about fostering public 
confidence in our markets. These are not suggestions. They are 
not partisan preferences. They are the statutory mandates 
enacted by Congress.
    Unfortunately, during the Biden Administration, the SEC 
strayed from this mission. Instead of focusing on its core 
mandate, the Commission pivoted toward politicized rulemakings 
that stretched far beyond the bounds of those core statutory 
authorities.
    A great disappointment, former Chair Gary Gensler, we 
witnessed a Commission that relied frequently on regulation by 
enforcement rather than transparent rulemaking. We saw attempts 
to embed political and social objectives into securities 
regulation, all at the expense of American investors and small 
business owners.
    The consequences of this approach speak for themselves. 
Coupled with crushing compliance burdens, these policies 
accelerated the shrinking of our public markets. Since 2021, 
the number of publicly listed companies in the United States 
dropped by 10 percent.
    Leading entrepreneurs found their capital for growth in 
private markets, delaying opportunities for America's 
individual investors, small institutions, our unions, our 
401(k) plans, to have more investment choices and that cutting-
edge innovation was driven offshore by often regulatory 
uncertainty.
    That is why in December, the House advanced the 
Incentivizing New Ventures and Economic Strength Through 
Capital Formation (INVEST) Act. This strongly bipartisan 
legislation is designed to reignite our capital markets by 
cutting red tape, empowering entrepreneurs and small 
businesses, and expanding investment opportunities for all of 
our citizens.
    I want to commend Chairman Atkins for his efforts to 
reverse the prior rulemakings that hindered capital formation, 
and for steering the Commission back onto those fundamental 
enforcement responsibilities. These actions align with 
committee Republicans' commitment to foster efficient, 
transparent, and innovation-friendly markets that protect 
investors, provide regulatory clarity that markets need, 
particularly in emerging areas, such as digital assets.
    It is imperative that Congress provide a functional and 
durable framework for digital assets. We look forward to 
sending a market structure bill to the President's desk in 
2026.
    Today, we will examine recent actions taken by the SEC and 
provide members with the opportunity to address any questions 
or concerns regarding the Commission's current trajectory. We 
will also assess the SEC's approach to digital asset 
regulation, examine steps being taken to depoliticize the proxy 
access process, and to review internal reforms of the 
Commission itself.
    Our shared goal is straightforward: A marketplace where 
investors have the information and protections that they need 
to participate with confidence, and where American businesses 
can access capital to innovate, expand, and create new 
opportunities for both jobs and investment.
    I look forward to hearing from Chairman Atkins, and I yield 
back the balance of my time.
    I now recognize the ranking member of our committee, Ms. 
Waters from California, for 4 minutes for an opening statement.

OPENING STATEMENT OF HON. MAXINE WATERS, RANKING MEMBER OF THE 
  COMMITTEE ON FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM 
                           CALIFORNIA

    Ms. Waters. Thank you very much, Mr. Chairman. You and I 
have a very different understanding about what is happening at 
the SEC.
    Chairman Atkins said, ``It is a new day for the SEC.'' What 
did he mean? Did he really mean that this SEC is now putting 
Wall Street and billionaires first and America's investors 
last?
    Since his tenure began, Chairman Atkins has withdrawn 14 
major proposals that would have protected retail investors, 
dismissed cases and investigations against Trump's crypto 
billionaire friends, paired back corporate disclosures that 
provide the public with critical information, moved to let 
private equity dump their failing investments into unsuspecting 
investors, restricted shareholders' ability to influence the 
companies they own, halted the SEC's defense of the climate 
disclosure rule, even as the wildfires in California show there 
are material risks, and cut SEC staff by roughly 20 percent.
    At the same time, the President, along with his family and 
closest advisers, continue to enrich themselves through what 
appear to be insider trading, self-dealing, and in both the 
equity and crypto markets.
    The SEC, under Chairman Atkins, has yet to investigate a 
single instance of the potential large-scale fraud and market 
abuse being brazenly carried out by this administration and its 
allies.
    The SEC is also supposed to be an independent Commission, 
free from political influence. At his confirmation hearing, 
Chairman Atkins said: ``I want to take politics out of 
financial markets.'' Yet, in many of his public speeches, he 
has repeatedly pledged his loyalty to Trump more than 16 times. 
That is remarkable for the head of a supposedly independent 
agency.
    Additionally, today, the SEC does not have a single 
Democratic commissioner. Again, this is extraordinary and the 
SEC is not making policy in an open and bipartisan manner with 
the usual public notice and comment process. Instead, Atkins' 
SEC appears to take its orders directly from the President and 
avoids public comment at all costs.
    None of this should come as a surprise. Over the past year, 
the executive branch and Congress, under Republican control, 
have become nothing more than a rubber stamp for carrying out 
Donald Trump's personal agenda.
    From his arbitrary and inflationary tariffs to the use of 
public office to enrich himself and his friends through corrupt 
dealmaking to the weaponization of the Department of Justice 
(DOJ) against political enemies to repeated attempts to 
undermine the midterm elections, to sending his own personal 
brown shirt-style Army into our communities that have killed 
Americans, and terrorized our cities and towns.
    It is clear: The Federal Government no longer functions for 
the people and by the people. It functions solely for Trump, 
and by Trump.
    By not enforcing the rule of law against the President and 
his friends or openly engage in grift and corruption. Chairman 
Atkins is aiding and abetting this reckless and unlawful 
agenda.
    Chairman Hill, it certainly is a new day at the SEC; a Wall 
Street and billionaire holiday.
    I yield back.
    Chairman Hill. The gentlewoman yields back.
    The chair recognizes the chair of our Capital Markets 
Subcommittee, Ann Wagner, for 1 minute for an opening 
statement.

STATEMENT OF HON. ANN WAGNER, CHAIRWOMAN OF THE SUBCOMMITTEE ON 
      CAPITAL MARKETS, A U.S. REPRESENTATIVE FROM MISSOURI

    Mrs. Wagner. Thank you, Mr. Chairman, and welcome, Chairman 
Atkins. It is good to see you again.
    First, I want to thank you for putting capital formation 
back at the top of the Commission's priorities. Your new pro-
growth addenda will make it easier for companies to go public, 
increase investor opportunities, and support innovation and 
entrepreneurship throughout the United States.
    My bipartisan INVEST Act will cement that work. We are 
giving the American people more investment options. We are 
giving American small businesses the ability to expand. We are 
getting big government out of Main Street's way. Our bipartisan 
reforms in the INVEST Act and your regulatory reforms at the 
Commission could not be more aligned, and I thank you for your 
partnership in these efforts and more.
    I yield back.
    Chairman Hill. The gentlewoman yields back.
    I recognize the ranking member of our subcommittee on 
Capital Markets, Brad Sherman of California, for 1 minute for 
an opening statement.

     STATEMENT OF HON. BRAD SHERMAN, RANKING MEMBER OF THE 
  SUBCOMMITTEE ON CAPITAL MARKETS, A U.S. REPRESENTATIVE FROM 
                           CALIFORNIA

    Mr. Sherman. Mr. Chairman, a lot of people are concerned 
about the reduction of the enforcement staff at the SEC because 
they are concerned about the honesty of our capital markets and 
the role they play in the economy but others, I think, are 
concerned about how your cutting back of that enforcement could 
lead to the impoverishment of our President, Donald Trump.
    You see, the way it is supposed to work is you are supposed 
to begin the investigations of those who are defrauding our 
investors. Then those who are likely to face criminal or civil 
penalties have to buy a lot of Trump coin. This then leads to 
hundreds of millions of dollars of profit for Donald Trump.
    We saw this with Justin Sun. We will see this with the 
Winklevoss brothers, Brad Garlinghouse, Mr. Shou, but it all 
starts with you and so, I would urge you to reinvigorate your 
enforcement. Catch those who are defrauding investors and make 
sure that Donald Trump can make hundreds of millions of dollars 
each and every month.
    Thank you.
    Chairman Hill. The gentleman yields back.
    I would like to recognize myself for a point of personal 
privilege.
    I want to thank two of our senior leaders here at the House 
Financial Services Committee that have served so well both the 
committee and our members. First, our counsel, Kyle Smithwick, 
started with the Financial Services Committee as an oversight 
counsel before quickly taking the reins of the subcommittee.
    He served as the committee's general counsel for Former 
Chairman McHenry. We were lucky to have him on our team this 
Congress, and I appreciate his commitment to our robust agenda 
over this past year. We wish him the best when he goes to the 
U.S. Treasury Department.
    Last but not least, Brooke Nethercott is also departing the 
committee this week. Brooke served as our committee's deputy 
communications director. She has been integral to my team for 
several years in which we have made significant progress on a 
lot of my policy agendas.
    She was my communications director for the Second District 
in Arkansas, and her energy and passion for Arkansas, too, is 
unmatched for somebody from Connecticut. The good news is she 
is not going too far. She will go work for Chairman Selig at 
the CFTC as the head of their communications group.
    So would you help me recognize these two fine people.
    Today, we welcome the testimony of Hon. Paul Atkins, 
Chairman of the SEC. Chairman Atkins, we thank you for taking 
time to be with us. You will be recognized for 5 minutes to 
give an oral presentation of your written testimony. Without 
objection, your written testimony will be made part of our 
record.
    You are now recognized for 5 minutes.

 STATEMENT OF HON. PAUL ATKINS, CHAIRMAN, U.S. SECURITIES AND 
                      EXCHANGE COMMISSION

    Mr. Atkins. Well, thank you very much, Mr. Chairman. So 
Chairman Hill, Ranking Member Waters, and members of the 
committee, it is a great honor to testify before you today. 
Thank you for this opportunity to discuss the work of the 
Securities and Exchange Commission.
    Nine months ago, I returned to the SEC with a clear mandate 
to recommit the agency to our core mission of protecting 
investors, maintaining fair, orderly, and efficient markets, 
and facilitating capital formation. I am grateful to work 
alongside dedicated public servants who have hit the ground 
running in pursuit of these priorities.
    America's $124 trillion capital markets are the deepest and 
most liquid in the world. They are a marvel of human ingenuity. 
Yet over the years, rules have multiplied faster than the 
problems that they were intended to solve.
    This Congress and the Trump Administration are focused on 
bringing down the cost of living for the American people, and 
the SEC has a very vital role to play in that. For example, 
public companies spend $2.7 billion a year to file their annual 
reports. This is $2.7 billion that companies are not 
reinvesting in their businesses to create jobs; $2.7 billion 
that our disclosure regime is diverting from your constituents 
to corporate lawyers, accountants, and consultants.
    Now, this is not to say that we want to gut corporate 
disclosure at all, which is vital, but we must modernize, 
rationalize, and streamline reports so that they are 
meaningful, understandable, and not a repellant to investors 
like this 10-K here from Entergy, which is just shy of 1,000 
pages long. After all, how many of you would read through an 
annual filing that certainly doubles, if not more, ``War and 
Peace?'' Disclosure documents of this sort of length can do 
more to obscure than to illuminate.
    For context, shortly after I left the SEC in the mid-
1990's, there were more than 78 companies that were registered 
with the U.S., with the U.S. SEC. By the time I returned as 
chairman, that figure had fallen by roughly 40 percent. So this 
trajectory tells a cautionary tale that the SEC is working to 
rectify, through the three pillars of my plan, to make IPOs 
great again.
    First, re-anchoring disclosures in materiality; second, 
depoliticizing shareholder meetings; and third, allowing public 
companies to have litigation alternatives so that we shield 
investors from the frivolous--innovators from the frivolous and 
investors from the fraudulent.
    I also applaud the bipartisan initiatives before Congress, 
including those in the Senate's Empowering Main Street in 
America Act and the House's INVEST Act, to help keep America's 
capital markets open, dynamic, and above all, worthy of 
investors' trust.
    Of course, I also support congressional efforts to enact 
the Digital Asset Market Clarity (CLARITY) Act. Upon its 
passage, the Commission stands ready to implement this landmark 
legislation. A Federal framework for crypto markets is long 
overdue. Under Commissioner Hester Peirce's leadership of our 
crypto task force, SEC staff has provided more clarity in the 
past year than in the total prior decade, but there is no 
action that we can take that future-proofs a rulebook more 
formatively than nonpartisan market structure legislation.
    As Congress completes its vital work, CFTC Chairman Mike 
Selig and I intend to provide a bridge toward legislation. 
Through our now joint Project Crypto, we will consider a token 
taxonomy to offer both investors and innovators a clear 
understanding of their regulatory obligations. We also look to 
considering exemptions that would allow market participants to 
move and transact on chain.
    Finally, and most fundamentally, capital markets thrive on 
many factors, but they endure on trust. So the SEC is returning 
its enforcement program to first principles of rooting out 
fraud and remedying investor harm.
    Since I rejoined the Commission, we have brought 
enforcement actions to address offering fraud, insider trading, 
accounting and financial frauds, and breaches of fiduciary duty 
by investment advisers.
    Since the formation of our Cross-Border Task Force in the 
fall, meanwhile, we have suspended trading in the stocks of 14 
Asia-based issuers upon evidence of potential market 
manipulation. I am working within the securities laws to 
protect investors from those who seek to use international 
borders to evade and undermine U.S. investor protections. 
Markets are global. Investor protection must be as well.
    As I said at the outset of this testimony, the SEC is 
returning to its core mission----

    [The prepared statement of Mr. Atkins follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Chairman Hill. The gentleman's time has expired.
    Thank you, Mr. Chairman.
    We will now turn to member questions. I will recognize 
myself for 5 minutes of questions.
    You referenced Entergy. We are proud of Entergy, the 
publicly traded utility that administers power in the State of 
Arkansas, for example, the thousand pages for a 10-K. You and I 
both have studied a lot of commentary over the years that 
Warren Buffett has made about the disclosure systems. I think 
we both quoted the exact same quote this fall after he issued a 
letter in November about the proxy.
    He said that there were a lot of overlapping rules that had 
caused the proxy to balloon in size, and really, I think, 
diminishes some of its informational benefits to shareholders. 
We compared on the committee 1980, 1990, 2000, 2010, and 2020 
proxies for four or five companies that were members of the Dow 
Jones Industrial Average and the S&P 500 for all of those 
reporting periods, and they went from 15 to 20 pages to over 
300 pages.
    What is your guiding force as you look through the 
regulatory disclosure regime on how we can lower that cost? 
What is a specific element? You referenced it in your opening 
statement.
    Mr. Atkins. Well, thank you, Mr. Chairman.
    Well, it comes down to materiality. That is the bedrock of 
the securities laws, and it is written into 10(b), section 
10(b) of the Exchange Act. The most important seminal Supreme 
Court decision was written by Thurgood Marshall back in 1976 
where he warned about the danger of information overload where 
if things are not stuck to materiality, which the Court defined 
as what a reasonable investor needs to know in order to buy, 
sell, or hold securities, basically, or vote shares. So that is 
really the bedrock.
    I remember when I was a little boy, my father going through 
annual reports and whatnot, proxy statements. Back then, one 
could do that, and I really challenge anyone--I cannot even--
sitting here lift this more than two reams of paper.
    Chairman Hill. Thank you for that.
    So in addition to that, I think corporate governance has 
really seen a big change since you were on the Commission last 
time in the early 2000s in regard to proxy access and how 
corporate secretaries and boards deal with proxies being 
solicited for various proposals. Recently, the D.C. circuit 
court in 2024, a decision in ISS v. SEC held that proxy voting 
advice does not constitute a solicitation under section 14(a) 
of the Exchange Act, effectively eliminating the Commission's 
regulatory over-authority of the proxy advisory firms.
    This decision creates a significant oversight gap for an 
industry dominated by just two firms, both of whom happen to be 
foreign owned, ISS and Glass Lewis, which control 95 percent of 
the proxy advisory market for institutional investors.
    Glass Lewis recently announced it will offer open quote, 
custom voting frameworks, closed quote, tailored to individual 
client preferences rather than applying an uniformed policy 
across all its clients. This pivot raises a fundamental 
question about conflicts of interest, the methodology, 
transparency, and whether investors receiving this advice 
understand the basis on which it is being provided.
    Does the Commission view this new approach as sufficient, 
or does it underscore the need for a different regulatory 
direction?
    Mr. Atkins. Mr. Chairman, well, we are definitely looking 
at this whole ecosystem with respect to corporate governance 
and shareholder proposals. Part of the problem, I think, with 
these advisory firms is that they are more a symptom of the 
underlying problem, and that is the weaponization of 
shareholder proposals and those government, sort of, framework.
    So anyway, so we are actually actively looking at it, and 
that is part of the three-point program, to try to make IPOs 
great again and make it cool to be a public company again.
    Chairman Hill. If Congress were to amend section 14(a) of 
the Exchange Act to explicitly cover proxy advisory firms, how 
would the Commission use that authority? What would be the 
methodology to have a rigorous standard for transparency?
    Mr. Atkins. Well, I think mostly it is a fiduciary duty and 
living up to what their standards should be. Both of them now, 
I understand, are registered as investment advisers. So we have 
a hook there but again, we are happy to work with you all as 
you----
    Chairman Hill. Do you regret your vote during the first 
time you were on the Commission about offering a safe harbor 
for proxy advisory advice?
    Mr. Atkins. Well, actually, I voted no----
    Chairman Hill. Did you vote no?
    Mr. Atkins [continuing]. on that rule, and, unfortunately, 
the safe harbor was the thing that----
    Chairman Hill. Yes, my time has expired. Thank you for that 
discussion.
    I now recognize the ranking member for 5 minutes for her 
questions.
    Ms. Waters. Thank you very much, Mr. Chairman.
    Chairman Atkins, on January 15, my colleagues and I sent 
you a letter detailing our significant concerns about the SEC's 
dismissal of over a dozen crypto actions. Our concerns are 
twofold. First, these cases were dismissed, despite the fact 
that the SEC was winning in court proving that the SEC's crypto 
enforcement program was well-grounded in the law. Second, that 
the people who benefited from your about-face were also people 
who gave millions of dollars to President Trump and his family.
    I am most astonished by the case of Justin Sun, founder of 
the TRON Network. The SEC's complaint alleged, among other 
things, that Sun engaged in hundreds of thousands of 
manipulative trades to artificially inflate the price of its 
crypto token TRX.
    In the fall of 2024, a Federal district court judge found 
that Sun had defrauded TRX investors and that TRX is a 
security. Despite this holding, this SEC stayed its case 
against Justin Sun in February 2025 to explore a potential 
resolution.
    Well, while you were exploring a potential resolution, Mr. 
Sun has been busy ingratiating himself within Trump's orbit. He 
has invested over $75 million in the World Liberty Financial 
tokens and is the top holder of the $Trump meme coin, which 
earned him an invitation to the White House and a special 
dinner with the President.
    Just last week, a person verified to be Mr. Sun's ex-
girlfriend stated publicly that she has detailed evidence that 
Mr. Sun manipulated the price of TRX using fake trading 
accounts and noted she is willing to provide evidence and 
testify in support of these allegations.
    Chairman Atkins, you have said that under your leadership, 
the SEC will focus on real fraud. Yes or no, does your 
statement extend to fraud----
    Mr. Atkins. Yes.
    Ms. Waters [continuing]. in the crypto market?
    Mr. Atkins. I am sorry?
    Ms. Waters. Yes or no, does your statement extend to fraud 
in the crypto market?
    Mr. Atkins. Well, whatever involves securities.
    Ms. Waters. Okay.
    Is the SEC going to continue to prosecute its fraud against 
Justin Sun? Yes or no?
    Mr. Atkins. Well, I cannot discuss anything about an 
ongoing case.
    Ms. Waters. Okay. Well, will you commit to giving the 
committee a confidential briefing on the matter?
    Mr. Atkins. I am happy to talk to the extent I can about 
matters.
    Ms. Waters. Given that courts have ruled that TRX is a 
security and, therefore, within the SEC's jurisdiction, do you 
agree that the SEC has a responsibility to obtain additional 
evidence offered by Mr. Sun's ex-girlfriend? Yes or no?
    Mr. Atkins. Well, again, I cannot comment on any ongoing 
matter.
    Ms. Waters. Will you commit today that the SEC will 
continue to investigate and prosecute fraud even if that fraud 
entails crypto assets that are securities, such as in the case 
of Justin Sun and TRX?
    Mr. Atkins. Again, that is our job, is to investigate fraud 
that involves securities, so wherever it may be.
    Ms. Waters. Well, I want to tell you: You made a 
commitment. You came in, you talked about how you were going to 
deal with fraud. It is right before your eyes and we, on this 
committee, are going to keep on until we get to the bottom of 
this fraud. So will you give us a confidential briefing on this 
matter?
    Mr. Atkins. To the extent the rules allow me to do that, 
so, yes.
    Ms. Waters. I would appreciate that and thank you very 
much.
    I yield back.
    Chairman Hill. The gentlewoman yields back.
    The chair recognizes the gentleman from Michigan, the vice 
chairman of the Financial Services Committee, Mr. Huizenga. You 
are recognized for 5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman, and good to see you 
again, Mr. Atkins. I appreciate your time here.
    I have got a lot to cover here, but you have been vocal 
about your efforts to modernize and streamline shareholder 
disclosures. Amen. Hallelujah. Over the past 20 years, it has 
become easier for investors to access and view fund disclosures 
electronically. E-delivery makes sense. It is seamless and 
convenient, saves money, reduces waste, and reflects investor 
preferences.
    SEC action on this subject would bring fund disclosures in 
line with similar e-delivery changes that have been made by the 
Internal Revenue Service (IRS) and the Financial Industry 
Regulatory Authority (FINRA) just this year, the Department of 
Labor in 2020, the Social Security Administration in 2016, and 
the Federal Retirement System, known as the Federal Thrift 
Savings Plan, the TSP, did that in 2003, over 20 years ago. So 
we are subject to that, actually.
    So does the Commission plan to engage in rulemaking related 
to e-delivery?
    Mr. Atkins. Yes, we are actively looking at all of that.
    Mr. Huizenga. Well, I would be remiss if I did not mention 
that Congress has now moved my bipartisan e-delivery bill, 
Improving Disclosure for Investors Act twice now through the 
House, and there is broad support for this issue, so I would 
encourage you to continue on with that.
    Mr. Atkins. I have instructed the staff to work on that.
    Mr. Huizenga. Well, thank you.
    All right. Moving on to another favorite subject of mine, 
the PCAOB, the Public Company Accounting Oversight Board. As 
you know, I have advocated for years that the PCAOB should be 
folded into the SEC. Given the politicization of the board over 
the years, I think this makes sense.
    Under the Biden Administration, the PCAOB issued 
prescriptive rules that imposed high compliance costs while its 
budget increased at a rate significantly faster of that of your 
own SEC with annual salaries of board members exceeding $.5 
million. I was glad to see that the SEC recently approved the 
PCAOB's budget totaling $362.1 million, which is a 9.4 percent 
decrease from the prior year, including a 52 percent and a 42 
percent reduction in the chairman's and the other board 
members' compensation, respectively.
    I know that a new board has been recently appointed. What 
plans do you have that will further streamline the PCAOB?
    Mr. Atkins. Well, so thank you for that.
    Yesterday, actually, I swore in the new chairman and new 
members of the board, so looking forward to their work. They 
are well-steeped in what it takes and should take to do audits 
and oversee that. So I really have a lot of confidence in them. 
We will be working with them very closely to try to work on 
their----
    Mr. Huizenga. Well, I look forward to hearing more about 
the plans on how to streamline that.
    I have got about 2 minutes left. I want to briefly touch on 
the SEC climate disclosure rule. As oversight chairman, last 
Congress I spent a considerable amount of time trying to 
understand how and why the SEC finalized this overreaching 
rule. There was litigation, then the rule was voluntarily 
paused by Chairman Gensler, then Acting Chair Uyeda, under him, 
the board voted to end defense of the rule. Really, frankly, 
this has become a mess.
    Because of the oversight work our committee did in 
Congress, we were able to prove that the SEC not only lacked 
expertise, their own admission, but also the authority to issue 
climate disclosure requirements for publicly traded companies. 
You cited materiality earlier.
    Chair Atkins, can you update the committee on the status of 
the rule and where the SEC plans to go next with it?
    Mr. Atkins. Well, thank you. The rule is stayed, right, and 
it is before the Eighth Circuit. So, the circuit has sent us a 
couple of letters, and so we are actively considering our next 
steps. So but suffice to say that we will be guided by 
materiality as a standard of how we approach this issue.
    Mr. Huizenga. Again, I would like to explore that more 
maybe at another time.
    Finally, in the last administration, the SEC and the CFTC 
fined dozens of firms more than $1 billion for failure to keep 
records of off-channel communications. Let me remind you, last 
year, it came to light that the SEC's IT department had 
supposedly inadvertently deleted a large swath of former SEC 
Chair Gary Gensler's text messages. Oops.
    Do you have plans to propose updated commonsense 
recordkeeping rules that would give firms clear and reasonable 
guidance with what records they need to keep?
    Mr. Atkins. Yes. We are definitely working on that. I have 
instructed the staff to do that. The crazy quilt of different 
standards or different types of market participants like broker 
dealers, advisers----
    Chairman Hill. The gentleman's time has expired.
    Mr. Atkins [continuing]. rating agencies. So we are working 
on that. Thank you.
    Mr. Huizenga. I will have one more question in writing to 
submit.
    I yield back.
    Chairman Hill. The gentleman yields back.
    The gentlewoman from New York is recognized, Ms. Velazquez, 
who is the ranking member of the House Small Business 
Committee.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Chair Atkins, I would like to follow up on the Ranking 
Member Water's line of questioning. Since becoming chair, the 
Commission has pulled back from a remarkable 61 percent of the 
cases against the crypto industry. Do all these cases have the 
same legal or evidentiary deficiencies?
    Mr. Atkins. Well, thank you.
    Most of those were withdrawn or changed before I arrived 
last April, but I can say that what we are trying to do is 
realign to what the statute hopefully will be, the market 
structure statute and the outlines that I have given in a 
couple of speeches regarding how we view the taxonomy and the 
structure on crypto.
    Ms. Velazquez. So I bring this up because of the 23 cases 
the SEC inherited, 21 from the Biden Administration, and 2 from 
the first Trump Administration, there has not been a noticeable 
change in the facts of these cases to warrant the SEC's 
decision to pull back from these cases.
    Do you know what many of these cases do have in common?
    Mr. Atkins. Well, depending on which ones you are talking 
about, most of them, from my memory, have to do with 
registration section 5 under the 33 Act. Actually, the SEC has 
a rather mixed record in court regarding those.Ms. Velazquez. 
Okay.
    According to The New York Times, the defendant in most of 
these cases have close ties to President Trump.
    Mr. Chairman, I ask unanimous consent to submit this 
article into the record.
    Chairman Hill. Without objection, it will be included.

    [The information referred to was not submitted prior to 
printing.]

    Ms. Velazquez. So you are telling us the SEC decision to 
drop or pull back from most of the crypto cases that SEC 
inherited have nothing to do with the $1.2 billion the 
President and his family have made from the crypto industry 
since taking office?
    Mr. Atkins. Well, again, I was not involved in many--it 
depends on which ones you are talking about--of those 
decisions, but I cannot imagine that my colleagues would have 
been swayed by that.
    Ms. Velazquez. Well, Mr. Atkins, you, yourself are reported 
to have close ties to the crypto industry, holding 
approximately $6 million in crypto-related assets prior to 
being sworn in. So you are also telling us that your $6 million 
in crypto-related assets has nothing to do with the SEC 
decision to pull back from this enforcement.
    Mr. Chairman, I yield back.
    Chairman Hill. The gentlewoman yields back.
    The chair recognizes the gentleman from Oklahoma, the chair 
of our Monetary Policy Task Force. Mr. Lucas, you are 
recognized for 5 minutes.
    Mr. Lucas. Thank you, Mr. Chairman, and thank you, Chairman 
Atkins, for being here today.
    Under your leadership, the SEC has approved two more 
clearinghouses, two more clearing agencies, I should say, to 
offer Treasury clearing. This is a welcomed development and 
certainly a positive step as we move toward full implementation 
of Treasury clearing rule. I appreciate the update from 
Commissioner Uyeda earlier this week, as this is an immense 
undertaking for the industry and should warrant robust 
transparency.
    Is the SEC incorporating feedback from market participants 
and what still needs to be addressed to ensure there are no 
disruptions to the Treasury market at the end of this year?
    Mr. Atkins. Oh, thank you. That is a very important issue, 
the Treasury clearing process and changes to that very 
important market. So, yes, we are working closely with Treasury 
and with the industry to make sure that as this goes forward, 
there will not be any hiccups in it, and to make sure it goes 
smoothly.
    Mr. Lucas. On that same thought, Mr. Chairman, I was also 
pleased to see that the SEC requested comments on a proposed 
change to extend an existing cross-margining agreement to end 
users in order to reduce cost and make clearing more efficient. 
Can we expect a resolution to the proposal well before the 
clearing rule is alive? Market participants need sufficient 
runway to execute those changes.
    Mr. Atkins. Amen. I think we want to make sure that things 
go smoothly, that there are no hiccups there with it, and that 
people have plenty of notice and ability to gear up for those 
changes.
    Mr. Lucas. I know it almost goes without saying, but I hope 
you will work closely with the banking regulators to ensure 
capital rules recognize the risk-reducing benefits of netting 
across products.
    Mr. Atkins. Yes, that is important for the market itself 
and to be efficient with capital.
    Mr. Lucas. Chairman Atkins, for decades, public school 
teachers and charity workers have been barred from accessing 
many low-cost investments that their private sector 401(k) 
counterparts can use. Given your commitment to modernizing our 
capital markets, do you agree that we should no longer deny 
nonprofit employees access to these cost-effective vehicles?
    Mr. Atkins. It sounds like something that needs to be done.
    Mr. Lucas. My bill, H.R. 1013, which was introduced--
included, I should say, in the INVEST Act, finally amends 
Federal securities laws and provides parity for 403(b) plans.
    Turning to the Crypto Task Force, I understand you have 
contemplated an innovation exemption for tokenized equities. 
Our current capital markets are the envy of the world and, of 
course, must be safeguarded. Will you ensure that the 
Commission seeks broad and diverse stakeholder input through 
the notice and commitment process to mitigate unintended 
consequences of potential exemptions?
    Mr. Atkins. Yes. So notice and comment is important, but 
the innovation exemption that I have been talking about would 
be cabins, time limited, transparent, and really anchored in 
strong investor protections. So we would police that carefully, 
and it is like a sandbox, but not picking winners and losers.
    Mr. Lucas. Thank you for your responses, Chairman, and I 
look forward to a productive coming months.
    With that, I yield back, Mr. Chairman.
    Chairman Hill. The gentleman yields back.
    The chair recognizes the ranking member of our Capital 
Markets Subcommittee, Mr. Sherman of California. You are 
recognized for 5 minutes.
    Mr. Sherman. Mr. Chairman, you showed us how long these 
statements can be. I have not read the whole thing, but I will 
point out that the analysts do, and that the market price that 
security trades reflects the opinions of dozens of analysts who 
have read the whole thing, and that assures a fair price for 
buyers and sellers, and we need as much disclosure as possible, 
including quarterly reports.
    You mentioned materiality. Materiality, as you quote, the 
Court is what a reasonable investor thinks is important, and 
there is an effort by some even in this committee, but 
certainly in Washington to brand as crazy or unreasonable the 
millions of investors around this world who look at climate as 
material. They want to know. They want to base their investment 
decisions on the effect that the company has on climate.
    I would say that your duty to provide information to 
investors is just as great with regard to climate investors as 
investors who are looking at something else.
    We talk about--you mentioned in your opening statement some 
$2.7 billion in costs. I will point out that in 2024, there 
were $8.2 billion in fines levied and that is just the tip of 
the iceberg, because not only do you have that recovery, but 
think of all of the shenanigans that are deterred for every 
fraudster who is apprehended.
    Mr. Chairman, I want to thank you for your time speaking 
about some of these issues yesterday. Would two Democratic 
commissioners for the SEC make the SEC better?
    Mr. Atkins. Well, I believe that the President and the 
Senate send commissioners, but I have been now at the SEC for, 
in and out, 35 years, and I have seen how it has worked, and it 
works well with five commissioners. I have seen it when Arthur 
Levitt and Steve Wallman were commissioners, and that was two. 
So the work gets done, but it is good to have a lot of input, 
and so I would be happy to work with whomever the President 
sends our way.
    Mr. Sherman. Thank you.
    There are some great bills that have passed this committee, 
sometimes repeatedly, but unfortunately, we have a U.S. Senate. 
Fortunately, we have a Commission that could do all of these 
things without us legislating.
    Mr. Huizenga points out that the e-delivery bill is 
meritorious and something that you can adopt by rule, and I 
will also focus your attention, as I did yesterday, on the 
Business Development Companies (BDC) bill, which is, of course, 
part of the INVEST Act and freestanding legislation that would 
finally allow BDCs, as a practical matter, to be included in 
indexes.
    The next issue is the registered, mortgage-backed 
securities. That is to say, mortgages in pools where the 
mortgages have not been guaranteed by Fannie or Freddie. Since 
the SEC adopted regulation 8B-2, not a single one of these 
pools has been out there because this regulation requires 270 
data points about every loan. So if you have 1,000 loans in the 
pool, that is 270,000 data points, and I suggest a document 
even longer than the one sitting near your left hand.
    Will you take a look at this regulation and give us a 
regulation where we can have registered mortgage-backed 
securities that are not guaranteed by Fannie or Freddie?
    Mr. Atkins. Yes, sir. That is high on our list, and that is 
a crying shame that is the state of the market.
    Mr. Sherman. I would like to turn your attention to data 
protection. David Scott has an excellent bill that I have 
joined with him, as have others, dealing with SEC Data 
Protection Act, and I wonder if you will take a look at that 
bill, take a look at the data security at the SEC, and come up 
with a program that reflects the need to keep the data secure.
    Mr. Atkins. That is a big priority after we have seen the 
mishaps that have happened in the past.
    Mr. Sherman. I yield back.
    Chairman Hill. The gentleman yields back.
    The chair recognizes the distinguished gentleman from 
Texas, Mr. Sessions. You are recognized for 5 minutes.
    Mr. Sessions. Mr. Chairman, thank you very much.
    Chairman, welcome to the Financial Services Committee. We 
are delighted that you are here.
    I am sure when you walked in this morning, as you know, I 
saw you in line waiting out in the cold. Today, we are in the 
middle of a memorial service for a former colleague, Doug 
LaMalfa, a Congressman, our friend who passed away from 
California. So normally, this body would be full waiting to 
speak with you, so I simply offer a bit of information.
    Chairman, I saw you outside and had a chance to engage you. 
You are aware that your crack staff learned last night that I 
would be here and have several questions, and I would like to 
refer to those as an overall SEC actions and inaction, some 
things that you agreed to take on by virtue of the job, and 
things that were the responsibility that you have agreed to 
take on now.
    I note, in looking at your background, in 1983, you were a 
senior student writing editor of the Vanderbilt Law Review, and 
I consider that very favorable, because you, too, recognized, 
as a student--you wrote much. You expressed your opinion, but 
it was, essentially, providing to someone else information that 
you agreed with.
    I think we find ourselves, as Members of Congress, as 
writing students also many times to agencies of the Federal 
Government. We write a lot of letters, and we wait, and 
sometimes hear things back. I want to say that I have found 
your responsiveness, your breath of fresh air is helping, I 
hope on a bipartisan basis, but I know for myself, to address 
issues that are still actions and inactions that the SEC has 
taken up over the last few years.
    I would say to you I am interested in also your work, and 
really wish to compliment you because of the things that you 
have taken on, including what might be called your regulatory 
flexibility agenda, which I enjoyed, which you released in 
September, and intend to do this year to offer flexibility, 
reminding us, as you did, that you are for making sure that 
growth in investment opportunities happen to investors around 
this country. That would be proactive and also reactive to help 
us.
    I would like to tell you that we held, under Ann Wagner, 
Chairman Ann Wagner, a hearing that discussed from an IPO 
perspective that has been spoken a little bit about today, but 
I come at this as co-chairman of the Biotech Caucus. Biotech is 
the future energy that America stands a leg up on in supporting 
against our adversaries around the world.
    Who will develop the next great, not just biomarker, but 
bio breakthrough to supply the free world with a better 
opportunity? In relationship to this, we found out in testimony 
that I believe your staff has been provided--the testimony was 
up to 50 percent of IPO dollars went simply to compliance. I 
think you spoke well about this, not just your knowledge base 
about trying to reduce regulatory costs but the knowledge that 
this competes against America's best interest to be competitive 
with world markets, with other people who do not have the same 
rules and regulations we do.
    At no point would I back you away from or caution you not 
to go to what is in the best interest of the investor who could 
find themselves in a market like that of not knowing the truth 
about what is next. I would say to you that I provided your 
staff last night with several very specific items.
    You were very magnanimous today in line and said, without 
calling me by name, you would make sure that this agency picks 
up the pace and does intend to not only follow the items that 
we talked about but become more transparent in the relationship 
with members and the marketplace, and I want to applaud you. I 
felt like that you were standing in the cold was a good time to 
engage you and it worked.
    Mr. Chairman, I would yield back my time in thoughtful 
consideration to the staff and our new young chairman for his 
role and work. Thank you.
    Chairman Hill. The gentleman yields back.
    The chair recognizes the distinguished gentleman from New 
York, Mr. Meeks, the ranking member of the House Foreign 
Affairs Committee, for 5 minutes.
    Mr. Meeks. Thank you, Mr. Chairman.
    What I would like to say first look, I look across our 
country, and I see hardworking families invest in the stock 
market to build a future. These are not day traders or multi 
market players. They are teachers, firefighters, and nurses 
saving through mutual funds, pensions, retirement plans like 
401(k)'s, IRAs. These are everyday Americans. They rely on 
strong, fair, and accessible markets. We work for them.
    I was pleased, in fact, to co-lead the INVEST Act late last 
year with Chairman Hill, Chairwoman Wagner, Congressman 
Gottheimer. I was even pleased more when the House passed the 
bill with a strong bipartisan vote, signaling that both 
Democrats and Republicans support modernizing rules to empower 
small businesses and everyday people.
    We did our job here, but I also believe that we have to 
work for those American people. We have got to make sure that 
they are protected, and their investments are as sound as we 
can do it.
    So Mr. Atkins, my question to you would be, as a successful 
person in the financial industry, would you ever recommend that 
someone take financial advice from their favorite celebrity?
    Mr. Atkins. From a celebrity? Is that what you said?
    Mr. Meeks. I mean, yes or no? Would you just tell somebody 
they should just take financial advice from a celebrity?
    Mr. Atkins. You should check out the background of the 
person, yes.
    Mr. Meeks. Because you would not ever and you have not ever 
taken financial advice from a favorite celebrity that you may 
have had. Is that correct? I would assume so.
    Mr. Atkins. Well, it depends. Warren Buffett is a 
celebrity, but anyway.
    Mr. Meeks. The reason I bring that up is this: Back in 
2022, when the SEC brought enforcement actions against a 
celebrity TV star, at that time it was Kim Kardashian, the SEC 
warned investors to use caution with celebrity endorsements of 
investment products. Just because it is being promoted by a 
well-known figure does not mean it suits every investor's risk 
tolerance or financial goals. I happen to think that is 
absolutely correct.
    We also have a similar situation today. Just a few weeks 
ago, five Trump-affiliated exchange traded funds under the name 
Truth Social-America First Electronic Funds Transfers (EFTs) 
were launched. It is meant to attract Trump fans who align with 
a patriotic America First agenda.
    Now, I am not sure what that means for the investment 
product, but most of these investors seem to be drawn to the 
product because of the Trump name, rather than understanding of 
the investment product. It seems to me that was just like Kim 
Kardashian. We do have, happen to have before he was elected, 
still a TV reality star now sitting in the White House.
    So my question to you, Mr. Atkins, is: How is the SEC 
evaluating investor protection risks when a financial product 
is tied to a high-profile political figure or celebrity, 
particularly when retail investors may be drawn in by name 
recognition or perceived trust, rather than a real 
understanding of the product's risks, and especially when that 
figure happens to be the President of the United States of 
America?
    Mr. Atkins. Well, our rules are geared toward disclosure of 
material information, and the risks therein, and so without 
speaking to any particular type of product that is really the 
essential thing that investors need to look at. Again, that is 
why we need to have good, tailored disclosure that is material 
and not--there is a lot to obfuscate.
    Mr. Meeks. No, I agree. So what I want to do--I have got 42 
seconds. I just want to know will you commit to providing to 
this committee, in writing, a clear description of the SEC's 
internal process for handling, evaluating, and approving 
decisions on the Trump-affiliated ETFs so we can confirm that 
the process was independent and focused on investor protection 
and free from pressure and influence from the White House?
    Because we are here for the American people, not to do the 
workings of the White House, we want to make sure it is free 
and clear of that. Can we get your commitment to do that?
    Mr. Atkins. Well, we are happy--without any particular 
investment, I am happy to provide you with our procedures of 
how we review filings.
    Chairman Hill. The gentleman's time has expired.
    Thank you. Feel free to expand on that in written answers 
to the gentleman's question.
    The chair recognizes the gentleman from Texas, Mr. 
Williams, who is the chair of the House Small Business 
Committee.
    Mr. Williams of Texas. Thank you, Mr. Chairman, and thank 
you for being here today. I appreciate it.
    A number of proposals affecting registered funds and 
advisers from the prior administration were not ultimately 
adopted and have since been removed from the rulemaking agenda. 
The SEC did finalize several fund-related rulemakings in recent 
years that have a significant operational and compliance 
implications.
    One example is a 2023 amendment to the fund names rule. 
Chairman Atkins, in cases like this, how is the Commission 
evaluating whether recently adopted rulemakings are operating 
as intended and what tools does the SEC have to address aspects 
of those rules that mainly have unintended consequences from 
funds or investors?
    Mr. Atkins. Thank you for that question very much.
    I have asked my division directors and their staff to 
review rules. I think it is good to have a retrospective view 
to see exactly how things are working. We also get lots of 
suggestions and comments from the industry and from investors. 
So the names rule is just one example of all of that.
    Mr. Williams of Texas. Now, for me, small to medium-size 
businesses--I am small business owner in Texas myself--the 
regulatory regime put in place by past administrations was too 
far burdensome and prevented them from taking necessary steps 
to access public markets. These businesses also face roadblocks 
when attempting to access private markets. There were too many 
rules regulating who can invest in private markets.
    So many businesses were left with very few options to raise 
the necessary capital to continue to expand their operations. 
Now, when regulatory frameworks were doing it economical for 
small and midsized companies to enter public markets and overly 
restrict who can participate in private markets, capital does 
not become safer; it becomes scarcer.
    So my question is, can you elaborate on how the SEC's 
renewed focus on facilitating capital formation is helping 
ensure that small-and midsize businesses, Main Street America, 
are not priced out of public markets or boxed out of private 
capital altogether?
    Mr. Atkins. Well, that is a very important issue. Thank you 
very much for raising that.
    Again one of my main focuses now is to make IPOs great 
again, and to do that is to help cut down on the burden of 
disclosure that is not material. Second is the litigation 
issues, if we can help ameliorate that. The third impediment is 
basically corporate governance weaponization. So those sorts of 
things help to keep people out of the public markets or make it 
unattractive.
    With respect to smaller businesses, we need to make sure 
that our rules are fit for purposes that can encourage them. 
There are various provisions of those regs that we have that 
are meant to try to help small businesses have better access to 
it. So, that is a big effort that we will be making over the 
next couple of years to make sure that is encouraging them and 
helping them to tap those markets for capital.
    Mr. Williams of Texas. Well, small businesses have great 
opportunities this year to grow and take advantage of some 
things.
    Last thing: Entrepreneurs continue to face a challenging 
environment when it comes to securing growth capital, driven, 
in part, by rising regulatory compliance costs but also the 
concentration of investment activity and a handful of major 
financial hubs.
    Now, for many businesses operating outside of these 
traditional hubs accessing capital can present different 
structural challenges. These dynamics often constrain growth 
and limit economic development in communities that rely on 
entrepreneurial investment.
    So my last question would be, Chairman, how do capital 
formation challenges differ for businesses located outside of 
traditional financial hubs and how can the SEC help ensure 
capital markets arrive in Main Street as effectively as Wall 
Street?
    Mr. Atkins. Well, again, another important issue. In your 
State, for example, I mean, there is a lot more efforts, I 
think, for new entrants into financial services outside of the 
big money centers, New York and elsewhere. So, for example, the 
new Texas Stock Exchange there, and then also the New York 
Stock Exchange, the National Association of Securities Dealers 
Automated Quotations (NASDAQ) are moving operations to Dallas. 
So I think all of those sorts of examples will help, if you 
will, democratize access to the markets and in different 
regions of the United States.
    Mr. Williams of Texas. So what you are saying is Texas is 
the greatest State in America. Thank you for that.
    I yield my time back.
    Chairman Hill. The gentleman from Massachusetts is 
recognized, Mr. Lynch, who is the ranking member of our Digital 
Assets, Financial Technology, and Artificial Intelligence 
Subcommittee.
    Mr. Lynch. Thank you, Mr. Chairman.
    Mr. Atkins, I want to talk about Binance. So Binance, which 
is a major crypto exchange, was charged and pled guilty to 
providing finances to, among a number of groups, Hamas, ISIS, 
al-Qaida, Islamic Jihad, Hezbollah, the Islamic Revolutionary 
Guard in Iran, a bunch of sanctioned people in North Korea, and 
assorted criminal networks involving sexual--child sexual 
abuse. The SEC dismissed that case 2 months after you arrived.
    It gets worse. Two more months after you had arrived after 
that case was dropped, President Donald Trump gave an 
unconditional pardon to Chengpang Zhao, who was the CEO of that 
company. He did receive a 4-month prison sentence, but the 
record of his conviction was pardoned. The company did pay a $4 
billion fine, or we think they have paid most of the $4 billion 
fine.
    Then, in May 2025, after you were on board at the SEC, an 
Abu Dhabi state-backed investment firm, MXG announced that they 
had just purchased $2 billion in World Liberty Financial crypto 
from Trump's family. This is Eric and Donald, Jr., and Barron, 
and Steve Witkoff's son. So the President's company got a huge, 
huge benefit, massive benefit by being in that $2 billion 
transaction. They bought Trump coin and they invested it in 
Binance, Chengpang Zhao's company.
    So you are the cop on the beat. Explain to me how this 
happens without any enforcement action. Matter of fact, 
enforcement actions since Trump took office and you became SEC 
chair, they are now down--enforcement actions are down 60 
percent. Statutorily, your responsibility; number one 
responsibility is to protect consumers and to maintain trust in 
our securities industry.
    How does what you are doing protect the consumer? How does 
letting these crooks, letting them off, not prosecuting them, 
letting Trump's family do all this--explain yourself. I just--
it boggles my mind that this is going on and there are no 
consequences to what the President is doing.
    Mr. Atkins. Well, Mr. Congressman I cannot speak to any one 
particular case, and so----
    Mr. Lynch. You have got to be kidding me. That is a target-
rich environment. Start anywhere you want, but let us--this is 
all public, so you are not disclosing any secrets here. We all 
know what is going on. The one question that is out there is 
why you are not you doing anything about it. Why are you 
letting him--look, this is hurting the crypto industry. All 
these scams.
    I mean, look at crypto today, I think it is down 25 percent 
in the last month. People are losing trust in that. This is not 
good for crypto. It is certainly not good for consumers, and it 
is awful. The reputational damage that the SEC is suffering 
right now is unbelievable, and you are in the seat, sir. It is 
your responsibility, and I am just asking for an explanation.
    Mr. Atkins. We have a very robust enforcement effort, and 
we are bringing cases----
    Mr. Lynch. It is down----
    Mr. Atkins. I do not know where you get that from.
    Mr. Lynch. Let me give you a list of the cases you have 
dropped. You dropped them against, not only Binance, but 
Robinhood. There is a whole list of them here that--there are 
like 10 major cases that you have dropped.
    Chairman Hill. The gentleman's time has expired.
    Ms. Waters. Answer that question.
    Chairman Hill. The gentleman's time has expired.
    The gentleman from Georgia, Mr. Loudermilk, you are 
recognized, the vice chairman of our House Subcommittee on 
Financial Institutions.
    Mr. Loudermilk. Thank you, Mr. Chairman.
    Chairman Atkins, thank you for being here with us. I have 
been looking forward to this testimony for quite some time 
because I have, for years, been working on doing something 
about the Consolidated Audit Trail, and that is where my 
questions are going to be around.
    Let me preface that with my concerns of the Consolidated 
Audit Trail is, first and foremost, unconstitutional in the way 
that it is being operated, especially requiring the reporting 
of personally identifiable information (PII) information.
    At one point I asked my local banker a question. I asked 
him, I said, ``What if the sheriff walks in and he asks you to 
provide him with all of my financial transactions over a 
certain period, what would you do.'' He said, ``Well, I would 
ask to see a court-issued search warrant before I gave it to 
him.''
    So I went to a local judge, and I asked the judge, I said, 
``What if the sheriff came to you and he was asking for all of 
my financial records to be turned over, what would your 
response to the sheriff be before you issued a warrant?'' He 
said, ``I would need to see cause, right? He would have to 
prove to me that there is just probable cause for this.''
    My problem with the Consolidated Audit Trail is it is 
forcing this information to be put into a centralized database 
without cause, without reason.
    Your predecessor sat in that seat right there and I asked 
him, what is the purpose of this Consolidated Audit Trail that 
you are taking an individual who maybe buys a quarter share of 
Apple stock through Robinhood or one of the other platforms and 
his entire information is having to be put into this data base, 
which, beside the cybersecurity risk, is unconstitutional. He 
said, ``So we can peruse the data base looking for something 
that potentially is being done wrong.'' I said, ``Sir, that is 
exactly the definition of violation of the Fourth Amendment of 
the Constitution.'' With that said, this is something I think 
that we must address.
    Chairman, you announced in September of last year the SEC 
was undertaking a comprehensive review of the Consolidated 
Audit Trail. Can you comment on that and what you are finding?
    Mr. Atkins. Yes. Well, so that is active, that is an active 
matter, and we are definitely looking into that and working 
with various stakeholders in the industry to try to get this 
whole situation under control.
    Basically, it suffered from a lack of, let us say just a 
good view ab initio when it was started 15 or 16 years ago, 
whatever it was, and so--and it has grown like topsy as far as 
how much it has cost. So we are out to get that under control 
make so that it is gathering information that comports with the 
Constitution.
    Mr. Loudermilk. Well, I appreciate you looking at it and I 
also appreciate under your leadership the Commission has sought 
to cut wasteful spending. The Consolidated Audit Trail's cost 
overruns have deeply concerned me and many of my colleagues in 
Congress. What was originally supposed to cost $55 million has 
ballooned to nearly quarter of a billion in just 8 years. The 
issue especially given that the Consolidated Audit Trail's 
funding model was also found to be unlawful by the 11th Circuit 
Court of Appeals.
    Last week, I joined Chairman Hill and Subcommittee Chair 
Wagner in a letter urging the Commission to defer the approval 
of any new funding model until after the comprehensive review 
of the Consolidated Audit Trail (CAT) is complete, and I look 
forward to seeing those results.
    Mr. Chairman, can you please explain how the SEC's 
comprehensive review of the CAT aims to help rightsize the 
cost?
    Mr. Atkins. Well, I called the heads of all the members of 
the CAT committee, basically, that runs it to say that I am not 
joking, that we need to have this rightsized with a goal of 
getting it under a $100 million, and then justify all the 
information that we are collecting. I have been working with 
people internally at the SEC, our enforcement staff, and 
investigations staff as well.
    There are some things that have gone away, as far as like 
blue sheets and whatnot, information that comes that way. So we 
will make sure that whatever is replacing blue sheets in CAT, 
as what it is now, makes sense and is efficient, but then also 
comports with all of the points that you just raised.
    Mr. Loudermilk. Well, thank you. I think the--stopping the 
collecting of PII and deleting that we have will be a priority 
and look forward to working with you.
    Chairman Hill. The gentleman's time has expired. I thank 
the gentleman.
    The chair recognizes the gentleman from Texas, Mr. Green, 
who is our ranking member of our Oversight and Investigations 
Subcommittee. You are recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Thank the ranking 
member as well. I also thank Mr. Atkins for being here today.
    Mr. Atkins, sir, are you familiar with Trump Media and 
Technology Group?
    Mr. Atkins. I have heard of the name, but I do not----
    Mr. Green. You heard the name.
    Mr. Atkins [continuing]. know much about it.
    Mr. Green. Okay. It is a stock. It is on the stock market.
    Mr. Atkins. I believe so, yes.
    Mr. Green. Yes. The ticker symbol for it is DJT. Would you 
be surprised if it had a ticker symbol of DJT?
    Mr. Atkins. No. I mean, there are ticker symbols on all 
sorts of things.
    Mr. Green. Would it surprise you if that is the symbol?
    Mr. Atkins. Not necessarily.
    Mr. Green. So you do not know what the symbol is for it. 
Well, let me tell you, it is DJT.
    Are you familiar with what happened on April 2, 2025, when 
the President announced his liberation day tariffs?
    Mr. Atkins. He made that announcement.
    Mr. Green. Yes. Do you remember what happened in the 
market? Would it surprise you to know that the market declined 
some $11 trillion that day?
    Mr. Atkins. The market was very volatile around that time.
    Mr. Green. Yes. Eleven trillion dollars is very volatile.
    Would you agree that, later on, the President paused that 
announcement that he made on liberation day? In fact, he did it 
some few days later. Do you recall that, that he paused it?
    Mr. Atkins. I do not recall all the----
    Mr. Green. Now, you are the head of some organization that 
has something to do with these kinds of things, are you not, 
sir?
    Mr. Atkins. Well, luckily we do not deal with tariffs. That 
is outside the----
    Mr. Green. I understand but you are widely read, are you 
not.
    Mr. Atkins. I try to keep up with the news, yes, but I do 
not recall all the ins and outs.
    Mr. Green. Okay. So if I told you that the market saw this 
decline and that the President then, before the decline, he 
posted on Truth Social--did you know that the President is the 
owner of Truth Social? He has a large share of that?
    Mr. Atkins. Yes. I know he is involved with it, yes.
    Mr. Green. He does. Yes, sir. He does and here is what he 
posted, ``This is a great time to buy DJT.''
    Would you agree that the President's initials are DJT?
    Mr. Atkins. Yes.
    Mr. Green. Okay. Good. Now we have DJT, the ticker symbol 
for his technology group that he owns a majority of the shares 
in, and also his initials. So he says it is a great time to buy 
DJT. Maybe what I am doing now is informing you and perhaps you 
will want to take some corrective action, but he says it is a 
great time to buy DJT.
    You would not be aware of this, I am sure, but DJT surged 
$415 million that day. Does that--have you heard about that?
    Mr. Atkins. I do not know all the specifics.
    Mr. Green. Do not know all the--it is very complicated 
stuff, is it not? The kind of stuff that you a person in your 
position would not have heard of or know anything about.
    Mr. Atkins. There is a lot of activity in the marketplace.
    Mr. Green. Yes, sir. This is the President of the United 
States of America.
    All right. Now that you know the President hustled $415 
million for a business that he has a majority of the shares in, 
and he--some people would call that market manipulation, but do 
you think that it merits some degree of investigation? Would 
you look into it?
    Mr. Atkins. Well, you know----
    Mr. Green. If what I said is true, would you look into it?
    Mr. Atkins. Our----
    Mr. Green. I am a whistleblower.
    Mr. Atkins. Well, so we get lots of whistleblowers----
    Mr. Green. Well, I blow loudly. I just informed you on TV, 
the world is going to know that you now know that the President 
made $415 million on a stock that he advised people to buy just 
before he manipulated the market and caused this surge in the 
market. So now you know.
    Mr. Chairman, we live in a world where it is not enough for 
things to be right; they must also look right. If for no other 
reason, the appearance of this, the appearance of this is 
something that we ought to be concerned with. Now, you are the 
chair. Would you look into it?
    Mr. Atkins. Again, I cannot confirm or deny anything as----
    Mr. Green. I understand.
    Mr. Atkins [continuing]. in the investigations.
    Mr. Green. I would advise you to look into it. Thank you.
    Chairman Hill. The gentleman's time has expired.
    Members are reminded that pursuant to House rule XVII, they 
should avoid engaging in personalities when speaking about the 
President. It can always be about policy, but it cannot be 
personal.
    The chair recognizes the gentleman from Wisconsin, Mr. 
Steil, who is the chair of Digital Assets, Financial 
Technology, and AI Subcommittee.
    Mr. Steil. Thank you very much, Chairman.
    Chairman Atkins, thanks for being here. Thanks for your 
service to the country. The United States has the greatest 
capital markets in the world, and in large part it is the 
oversight and regulations that are provided to the SEC to make 
sure we guide that to success.
    I want to touch base, in particular, on your memorandum of 
understanding (MOU) with the CFTC. The House passed the CLARITY 
Act to really provide a framework for regulation in the digital 
asset space to do two really important things, in my view. One, 
protect consumers and two, make sure that the United States is 
the domicile to be able to outcompete the rest of the globe.
    You engaged in an MOU with the CFTC. Sometimes we have seen 
the SEC and the CFTC not play well together. I think we are 
seeing a change under your leadership at the SEC.
    Could you provide a little additional clarity, for a pun on 
the term ``clarity,'' but a little more clarity on what this 
MOU is, how it is working, and how you are operating with the 
CFTC, in particular, as relates to the digital asset space?
    Mr. Atkins. Thank you very much. That is really near and 
dear to my heart, I am really thrilled that the President 
appointed Mike Selig to be chairman. He came from my office and 
obviously was chief counsel--or counsel for the Crypto Task 
Force, so he is well-positioned to do what he is doing there at 
the CFTC.
    So our intent is to harmonize the activities of the two 
agencies, particularly with respect to digital assets, and that 
is why we are hoping for a good statute to be enacted from all 
the discussions here in Congress.
    As far as the actual working together of the agencies, we 
are actively working on an MOU. It is kind of silly to think 
that two groups that are serving the taxpayer have to have an 
MOU as between them to work together, but be that as it may, we 
are out to get that.
    Mr. Steil. Well, I appreciate your leadership in this 
because making sure the CFTC and the SEC are working well 
together, not only at the principal level, at your level, but 
also through the staff is really important.
    Let us dive into an area of specific, which is token 
taxonomy. We put forward frameworks on this in the House. I 
know the SEC is engaged in this. There is obviously overlap 
with the CFTC. Can you provide clarity as to where you are on 
that work?
    Mr. Atkins. Yes. So I have outlined how I believe the two 
agencies will march ahead to bring clarity to this area. It 
will be constant with what is in the CLARITY Act that you all 
passed here in the House and hopefully what will come out of 
the joint work that you are doing with the Senate.
    So we will carry that forward, and basically it will help 
give certainty as to where the jurisdiction of the two agencies 
are. If we marry that with super--I like to talk about a super 
app where we will have recognition of substituted compliance 
between the two agencies. I think that will be the best.
    Mr. Steil. Thank you. In my final 2 minutes here, let me 
shift gears here to the proxy advisor duopoly. ISS and Glass 
Lewis dominate in this space. I have introduced legislation to 
regulate and to change the rules of the road for proxy 
advisors. I am concerned about conflicts of interest, 
ideological bias, a lack of transparency. We have an 
opportunity to fix that from a legislative standpoint. I think 
that is really important.
    While we are working through that process, what can you at 
the SEC be doing to address this concern, and do you share my 
concern on the risks posed to the capital markets by this 
duopoly?
    Mr. Atkins. Well, absolutely and anytime you have a 
concentrated industry, that is not necessarily good for the 
consumer of those products. Especially in this, as I alluded to 
previously, the two--the situation with those two firms is more 
of a symptom of the underlying problem, and that is, again, the 
weaponization of the shareholder proposals and that sort of 
thing.
    Mr. Steil. I agree with you on that, but I also think that 
there is a real conflict of interest between the ability to 
provide consulting services on one side of a so-called Chinese 
wall and then to be able to provide advisory on the other side. 
Do you think that those potential or real conflicts of 
interests should be disclosed for the capital markets to 
operate efficiently?
    Mr. Atkins. Well, not only should be disclosed, but 
obviously they need to be addressed. I think that is an issue 
that we definitely are concerned about.
    Mr. Steil. I agree. I appreciate your work in this area.
    Mr. Chairman, I yield back.
    Chairman Hill. The gentleman yields back.
    The chair recognizes the gentleman from Missouri, Mr. 
Cleaver, who is the ranking member of our Housing and Insurance 
Subcommittee.
    Mr. Cleaver. Thank you, Mr. Chairman. Mr. Atkins, thank you 
for being here today.
    We on this committee often talk about investor confidence 
kind of like an abstract concept but for millions of everyday 
Americans trying to buy a home, it translates directly into 
whether they can get a mortgage at a reasonable rate.
    Also, on that second row down almost at the end, in 2008 
when your predecessor, Chris Cox, Hank Paulson, Ben Bernanke, 
Sheila Bair came in to tell us what was happening with the 
economy, it was one of the worst days in my life to sit here 
and hear what was going on and not realizing that this 
committee had to address it.
    Investors, as you know, lost trust, markets collapsed, and 
a lot of ordinary everyday Americans paid the price. Credit did 
not just tighten. Like the chilly waters around Greenland, they 
froze. Congress and regulators, including the SEC, worked to 
restore that trust through a lot of measures, including the 
skin in the game risk retention rules and disclosure 
requirements for asset-backed securities. These rules were put 
in place to prevent securitizing--or securitizers from passing 
off low-quality assets to unsuspecting investors.
    Now, you have recently indicated an interest in rolling 
back or revising some of these regulations. My uncle, you do 
not know him, that is all right, Uncle Leroy, my father's 
oldest brother, had a company, and he did maintenance. He went 
to TA Litigants and Son Company; he was working with the CEO on 
this contract. So the CEO said, ``Now, if I give you this 
contract, will you be honest.'' My uncle said, ``I will never 
forget it, whether you give me this contract or not, I am going 
to be honest.''
    Before making any revisions, will you commit publicly that 
you will present to this committee those rollbacks that you 
have hinted that you wanted to do? Now, I admit, transparency 
makes us vulnerable, but transparency still should be done even 
if it is going to make us vulnerable. Will you commit to coming 
to this committee, or informing this committee, or discussing 
with this committee what your rollbacks will be?
    Mr. Atkins. Well, I am not sure that we will have 
rollbacks. I mean, as Mr. Sherman was talking about, the whole 
one part of the market has really frozen up because of--if that 
is what you are talking about.
    Anyway, but Fannie Mae and Freddie Mac play an important 
role in the housing market but as we saw in the financial 
crisis, they were a large reason for how that unfolded.
    So whatever we do, we have to be very careful with respect 
to these markets, but they are important in the whole economy 
of the United States; happy to discuss that with you and your 
colleagues as we go forth and formulate our proposals.
    Mr. Cleaver. Well, if we are going to--it may be semantics 
here, but if we are going to roll--if you are going to roll 
back or make any dramatic changes, my question, my interest is 
the communication and transparency.
    Mr. Atkins. We definitely--we go through notice and 
comment. I take that very extremely seriously, unlike sometimes 
in the past, but we want to have a good, robust debate and 
collect comments, and so happy to talk with you all about all 
of that. Whatever we do will be grounded as we talk to our 
colleagues----
    Chairman Hill. The gentleman's time has expired.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Chairman Hill. I thank the gentleman.
    The chair recognizes the gentleman from Kentucky, Mr. Barr, 
who chairs our Financial Institutions Subcommittee.
    Mr. Barr. Thank you, Mr. Chairman.
    Chairman Atkins, thanks for the great work you are doing at 
the Commission. As you know, for two consecutive Congresses, 
the House has passed and sent to the Senate digital asset 
market structure legislation, most recently known as the 
CLARITY Act, receiving overwhelming bipartisan support in this 
Chamber last July. That level of bipartisan agreement reflects 
a growing interest in providing long-term certainty for market 
participants.
    From your perspective, Mr. Chairman, how does durable 
digital asset market structure legislation like the CLARITY Act 
impact the United States' ability to continue to lead in 
financial market innovation and protect investors?
    Mr. Atkins. Yes. Well, thank you very much. Well, as you 
know, the President has set out the challenge that U.S. should 
be the crypto capital of the world, and I feel strongly that we 
can and should do that and achieve it.
    To do that, we have to have a framework that makes sense, 
that is fit for purpose. Unfortunately, traditional rules that 
the SEC has are not really fit for purpose here and has created 
a lot of uncertainty in the marketplace, thus, the CLARITY Act 
and thus, the true importance of the SEC to work very much 
hand-in-glove with the CFTC in order that there be no gaps in 
the oversight, but that, also, innovators have surety as to 
what they are doing and they are not going to get in a gotcha 
sort of situation like has happened in the past with some of 
the enforcement actions that the SEC has brought in that area.
    So we want to make sure that people know the rules of the 
road and can abide by it, and that those will foster innovation 
here in the United States.
    Mr. Barr. I know there are a few outstanding issues and 
points of disagreement in the Senate. We certainly encourage 
resolution of those points of disagreement to achieve what you 
said is so important, kind of a statutory framework for market 
structure so that, indeed, the United States can be the crypto 
capital of the world.
    Mr. Chairman, how do you ensure that SEC enforcement 
actions and investigations are conducted and completed in as 
timely and an expedited manner as possible and make sure that 
those investigations are driven by clear statutory and 
evidentiary standards and not by political, ideological, or 
personal considerations?
    The context of that question is that the SEC in the past 
has encouraged applicants for registration with the SEC to 
reapply after denials due to ongoing investigations, but if an 
investigation drags on and on and on, the applicant is 
effectively barred or precluded from reapplying.
    Mr. Atkins. Yes, and that is a very important issue. I have 
a good tough head of enforcement, Judge Meg Ryan, so she is a 
military--from the Court of Military Appeals, and so she has 
been looking at the aging of, let us say, the inventory that we 
have. I did that as well, I started to when I first became a 
commissioner--chairman, and so we are--we are focused on that. 
That is very important but reputational risk and all of that to 
people who go through investigations is important, plus the 
cost, so we take that very seriously in this commission.
    Mr. Barr. Well, thank you for redoubling your efforts on 
that, because the enforcement functions, investigatory 
functions, and very important functions of the Commission in 
terms of ensuring the public's confidence in our capital 
markets, but lingering investigations do not facilitate the 
capital formation objectives, as you know, and I appreciate 
your attention to that.
    Since 2010, Mr. Chairman, the Dodd-Frank $150 million 
registration threshold for private fund advisors has remained 
stagnant, lacking an inflation adjuster, and this forces many 
small innovative funds to divert capital from emerging 
companies toward costly compliance. These funds often play a 
critical role in providing capital to emerging companies in 
niche markets that larger, more heavily regulated funds might 
overlook.
    My bill, the Small Business Investor Capital Access Act, 
was included in the INVEST Act, and that raises the 
registration threshold to $175 million, a very modest increase, 
but also indexes it to inflation. This will ensure that truly 
small enterprises are not crushed by unnecessarily Federal 
mandates meant for larger firms.
    Chairman Atkins, do overly burdensome compliance 
requirements stifle the growth of smaller private funds, and 
would adjusting the exemption threshold for small private fund 
advisors to accurately reflect changes in inflation help 
alleviate this problem?
    Mr. Atkins. Absolutely, and I salute you for doing that. I 
mean, all of these things add up, and it decreases competition 
and services to investors.
    Mr. Barr. Right. Thanks so much. I yield back.
    Chairman Hill. The gentleman yields back.
    The chair recognizes Dr. Foster of Illinois, who is the 
ranking member of our Financial Institutions Subcommittee.
    Mr. Foster. Thank you, Mr. Chair, and to our witness.
    I presume that you have been encouraged to use artificial 
intelligence in all of your workings from the White House, it 
was a general directive, and obviously, industry is moving very 
fast that way.
    Now, in terms of the 1,000-page prop that you have there, 
how long do you think it would take AI to summarize that as in 
one paragraph one page, 10 pages, whatever level of detail you 
wanted? You know, maybe a few seconds? I do not know. Probably 
neither of us are an expert on that, but I imagine it could be 
done in a few minutes.
    In terms of a burden on investors, it seems like having a 
lot of information there is not a burden on investors in an AI 
world. I think that is an important thing that should go into 
your thinking as to what the appropriate level of disclosure.
    Materiality, I believe, is best--that the investor is the 
best judge of materiality. If we err on the side of having a 
lot of--you know, probably 95 percent of what is in that stack 
of paper is not material, but there could be a footnote in 
there that is absolutely crucial. No human is likely to pick it 
up, as you point out, no human is going to read that stack of 
paper, but an AI can and find that footnote. So it seems like 
the whole narrative of let us get to less disclosure is going 
in the wrong direction for an AI world.
    I imagine that stack of paper is probably 90 percent 
generated by AI or soon will be if it is not. So that I think 
that it is a much better position if we have the AIs for IPOs 
and things like that, generate a lot of information, and then 
let the AIs of potential investors look at it in great detail, 
that you will end up with a more efficient market and less 
mistakes being made by investors due to lack of information.
    Have you been thinking about that sort of thing when you 
puzzle through the whole what is the right level of 
information?
    Mr. Atkins. Oh, absolutely, but again, there is--when you 
think of the cost and the amount of work that goes into this 
sort of disclosure with lawyers and everything else what sort 
of bang for the buck are we getting. Anyway----
    Mr. Foster. Lots of lawyers are going to get crushed too 
with AI. I mean, most companies have everything electronically, 
they just turn their AI loose on that and generate--it is 
coming at us fast.
    Mr. Atkins. That is a good point.
    Mr. Foster. Anyway, I really encourage you to think about 
that because I think that is going to be a much safer market 
where there is a lot of information, and that each investor, or 
the investor's personal AI advisor, will have access to that 
information, but summarize it.
    Just in the case of climate; a lot of investors are going 
to think climate is material, others will think it is 
immaterial, and we are in a better position if it is the 
potential investor talking to their AI advisor saying I do or I 
do not care about climate, and then getting a summary that 
reflects their preferences. It seems like that gets us to a 
better place than just these endless wars we have about what is 
and is not material at the level of Congress.
    Okay. Let us see. One of the things I have also been 
worried about is the orderly release of market-moving 
information by Federal officials and agencies. There have been 
some big mistakes. There was an issue where I think the Bureau 
of Labor Statistics (BLS) issued or leaked some information 
like half an hour early to some lucky participants of the 
market.
    It seems like for a long time we have needed a more orderly 
way of releasing that information that maybe could be 
governmentwide so that when whether it is Federal Reserve 
releasing information or the BLS or something, that you had a 
standard electronic way of saying, boom, the gate is now open 
and that information is there, because there is a lot of things 
that can go wrong.
    Is there any interagency discussion of that, trying to 
standardize the release of market-moving information and maybe 
make it more robust?
    Mr. Atkins. No. That is a very important issue and it is a 
little bit ad hoc now. For example, the Food and Drug 
Administration, the director has come to talk to me about it, 
and we--you know, so that is a great example. You mentioned 
some of the other agencies and the Fed and whatnot, so it is a 
very important issue and we have to--you know, each agency 
needs to be very----
    Mr. Foster. Well, if you need a nudge from this committee, 
I think this is a very useful nudge that we could do that would 
actually make the markets work better and make U.S. a better 
place to invest.
    A third area of concern that I do not have really a lot of 
time to go into is the use by Federal officials of privately 
owned social media accounts to release market-moving 
information like tariff policy, things like that, that move 
markets by trillions and effectively forcing every person----
    Chairman Hill. The gentleman's time has expired.
    Mr. Foster [continuing]. in the market to buy----
    Chairman Hill. I would invite the witness to provide his 
comments on that last question in writing.
    The chair recognizes the gentlewoman from Missouri, the 
chair of our Capital Market Subcommittee, Mrs. Wagner, for 5 
minutes.
    Mrs. Wagner. I thank you, Mr. Chairman.
    Chairman Atkins, your recent speech at the New York Stock 
Exchange detailed the stock drop in public companies and the 
need to reform our regulations to promote capital formation. 
Soon after that speech, the House passed our bipartisan INVEST 
Act to do just that.
    Now, the SEC is working to revitalize public markets by 
rightsizing disclosures and rethinking investment thresholds. 
How important is it for Congress to follow up on the 
Commission's work with statutory changes?
    Mr. Atkins. Well, I think, absolutely, with your INVEST Act 
and all the components of it I think are really--will be 
salutary to the markets and to help rationalize some of the 
practices there in our rules, so we welcome that, and look 
forward to working with you on that.
    Mrs. Wagner. It is key to codify them while we have the 
opportunity here. Many of these bills we have worked on for 10 
years and there have been rulings by the SEC, but we need to 
get them into statute. You would agree?
    Mr. Atkins. I agree, to future-proof that sort of 
principle.
    Mrs. Wagner. Thank you. You repeatedly mentioned, Chair 
Atkins, the importance of creating a disclosure regime that 
promotes, rather than hinders, companies going public. The 
INVEST Act would streamline disclosure requirements, as I said, 
expanding access to capital for businesses throughout the 
entire country, not just on the coast.
    In your opinion, how can Congress work with the Commission 
to ensure these changes are most impactful?
    Mr. Atkins. Well, so I invite your input, and as we go 
about reviewing our rules this year and making--you know, 
issuing proposals for rule changes to modernize and rationalize 
these disclosure rules; I would be thrilled to have you and 
your colleagues' input.
    Mrs. Wagner. Wonderful. Earlier in your tenure as chairman, 
you gave a speech directing SEC staff to remove the 15 percent 
limitation on close-end funds investing in private funds. The 
next day, an investment management staff removed the SEC's 
position for unlisted close-end funds. This was a welcomed 
change for Americans across the country who will now be able to 
invest in companies that for far too long had been restricted 
solely to the wealthiest Americans.
    Through my Increasing Investor Opportunities Act, which was 
included in the INVEST Act, we have also taken steps to codify 
this guidance and provide long-term certainty to close-end fund 
investors.
    To help provide clarity to investors, could you please 
comment on whether, in your view, the removal of the 15 percent 
limit also applies to listed close-end funds or whether 
additional Commission action would be needed to remove the 
limit for close-end funds?
    Mr. Atkins. Well, so--yes, I would love to discuss that. 
The reason why we addressed this is because that limit was 
completely staff driven. It was not part of a rule or anything 
else. So by changing that helped the filers to--and the 
innovators to make changes to how they were going out to 
market.
    So, anyway, if there are holes in the edifice, so to speak 
there, we are happy to address all that and work with you on 
that.
    Mrs. Wagner. Great. Wonderful. We look forward to doing 
that. So this is something that the SEC could take up under 
your leadership----
    Mr. Atkins. Absolutely.
    Mrs. Wagner [continuing]. and discuss more? Wonderful.
    Under current SEC rules, it is nearly impossible for large 
venture capital funds to invest in smaller regional funds. For 
example, if a large fund wanted to seed a smaller fund in St. 
Louis, that investment is capped at a tiny 20 percent 
nonqualifying basket. As a result, access to venture capital 
remains highly concentrated on the coast, leaving out wide 
regions of the country, including the Midwest.
    Chair Atkins, do you agree that this 20 percent limitation 
hurts companies in places like Missouri?
    Mr. Atkins. I am not familiar with the actual impact on 
various regions, but----
    Mrs. Wagner. It is a 20 percent cap.
    Mr. Atkins. Yes. So I think all of that needs to be 
revisited. These various caps are kind of artificial, and I 
think it all deserves review.
    Mrs. Wagner. Absolutely. Thank you so much.
    I have used my time, and I yield back, Mr. Chairman.
    Chairman Hill. The gentlewoman yields back.
    The chair recognizes the gentleman from Illinois. Mr. 
Casten, you are recognized for 5 minutes.
    Mr. Casten. Thank you, Mr. Chair. Thank you, Mr. Atkins, 
for being with us today.
    I have some real concerns about the SEC dropping their--
dismissing their lawsuit against Binance and staying, whatever 
you are doing, with Justin Sun and TRON. I understand from your 
exchange with the ranking member and with Mr. Lynch that you 
are not going to comment on ongoing investigations, and I 
understand that, but--and I also appreciate the chair's 
admonition not to engage in personalities, but I am extremely 
concerned with the integrity of U.S. capital markets.
    I just want to review a fact pattern here. It is a fact 
that Donald Trump was convicted of 34 felonies for financial 
fraud. It is a fact that he and his children have said that in 
the wake of that fraud they were, in their words, debanked and 
could not access conventional capital markets and that was why 
they turned to crypto. It is a fact that the UAE subsequently 
purchased World Liberty Finance tokens through bitcoin, that 
now contributes to substantially all of their wealth, and that 
substantially all of the Trump family's wealth is now in 
crypto. Much of--all of that has come since he became President 
in January of last year.
    Setting aside the Emoluments Clause violations or 
implications there, if I am a foreign investor considering 
whether to invest in U.S. capital markets, I would like to know 
whether the SEC is going to prioritize the interest of 
investors, because these charges against--I mean, the charges 
against Sun are wash trading, money laundering. These are all 
deep structural funds in financial markets. When they look at 
the actions of your agency, they see multiple examples where 
you have not prioritized the interest of investors, but you 
have prioritized the interest of the Trump family.
    So my question is, can you point to an example under your 
leadership where you have put the interest of investors first 
and cost the Trump family money as a result? Just one example 
would be great.
    Mr. Atkins. Well, as far as what the Trump family does or 
not, I cannot speak to that.
    Mr. Casten. They have made billions of dollars--they 
pardoned CZ, for goodness sake, after the case was dropped, 
after this money went through. This is most of their net worth. 
Why should people not believe that you will prioritize the 
interest of this singular billionaire over investor protection?
    Wash trades are a problem in the markets. Why are we not 
prosecuting Justin Sun? You cannot answer that but is there any 
example where you have put investors first over the Trump 
family?
    Mr. Atkins. So, again, we put investors first every single 
day.
    Mr. Casten. Over the Trump family.
    Mr. Atkins. We have a very robust enforcement division that 
is going after fraud in the market.
    Mr. Casten. Okay. If you can find an example, it would be 
great to share it offline, and please publicize it because I 
care about the markets.
    I want to shift. In November, the SEC announced you would 
no longer review expressed views on company's no-action 
requests, and I want to understand a little bit of what that 
means. I understand there is some discretion on your end, but 
have you--are there any general rules, or are we going to rely 
exclusively on shareholder litigation under 14a-8?
    If a company--if shareholders came forward and said, I have 
got a proposal because I have concerns about potential 
conflicts of interest, appearance of corruption, reputational 
issues associated with management's business dealings, and 
management says, I want a no-action review, is that a categoric 
no or are you going to consider that on the merits?
    Mr. Atkins. Well, the whole no-action process with respect 
to shareholder proposals was an artifice by the Commission that 
built up over the years. There is nothing in rule or in statute 
that requires it. We were shut down for 43 days and 43 nights--
--
    Mr. Casten. No, no. I am asking--I want to come back 
because I am trying to give you an example for my first 
question. World Liberty Financial is trying to do this shell 
with BitGo, that is a publicly traded company. People there 
might be legitimately concerned that there is fraud happening 
because all of these billions of dollars are coming into World 
Liberty Financial in ways that are direct violations of the 
Emoluments Clause.
    If a shareholder in that entity said, I would like to have 
a vote on this, and management said, no, we are going to push 
for a no-action review, would you push back, or is that too 
dangerous because it would cause you to make Donald Trump 
angry?
    Mr. Atkins. Well, again, I cannot speak to any particular 
issue or company, but as far as--shareholders have their rights 
under State law, and if they want to vindicate those rights and 
push----
    Mr. Casten. I am out of time, but Milton Friedman said 
shareholders are ultimately in charge. Not management? I do not 
know why we are stepping on shareholder rights under your 
leadership.
    I yield back.
    Mr. Davidson [presiding]. I thank the gentleman for 
yielding.
    The gentlewoman from California, Ms. Kim, is now recognized 
for 5 minutes.
    Ms. Kim. Thank you, Chairman, and thank you, Chairman 
Atkins, for being here.
    For far too long under Gary Gensler's runaway rogue 
regulation, the Commission drifted away from its mandate of 
protecting investors and facilitating capital formation using 
regulation as enforcement. He single-handedly set back the 
crypto industry in this country by over a decade. Since taking 
office, President Trump and you have taken important steps to 
reverse that trend. Thank you for your work.
    In Congress, we have worked hard to assist those efforts 
with the passage of the GENIUS Act, and now we must continue 
that work by getting the CLARITY Act across the finish line. 
One way that the SEC has achieved that is through the Crypto 
Task Force and its focus on unlocking tokenization to promote 
innovation and efficiencies in our capital markets.
    Can you provide a brief update on the efforts to unlock 
tokenization, and the benefits tokenization promises to bring 
to the U.S. capital markets?
    Mr. Atkins. Well, yes, thank you very much. Tokenization, I 
think, is a very important innovation that is coming about. 
Tokenized securities that can be traded on-chain, I think, have 
a future benefit just for the transparency that distributed 
ledger technology brings to the issue, and then the prospect 
for a T+0 sort of payment versus delivery-type of regime on-
chain. So that can help de-risk the financial services industry 
by a lot.
    We want to encourage that and then have rules around this 
that protect investors, protect issuers, and other stakeholders 
in this whole effort.
    Ms. Kim. I know that one avenue exploring to unleash 
tokenization is the potential innovation exemption. How is the 
Commission approaching this innovation exemption, and is there 
a timeline to issue that exemption?
    Mr. Atkins. Well, we are planning to do that here this year 
and so we are hoping that you all will, in Congress, will adopt 
the CLARITY Act, or whatever, however you do it, and then that 
arrives on the President's desk. In the meantime, we are 
working at pace, and this innovation exemption I think will be 
a good watershed.
    Ms. Kim. Sure. One aspect of Crypto Task Force has been 
collecting industry feedback around topics such as 
tokenization. So how does the Commission plan to utilize the 
feedback that you collect on that issue from the Crypto Task 
Force?
    Mr. Atkins. Yes. We have done a number of roundtables, and 
we have received a lot of commentary coming in from all sorts 
of stakeholders in and around the digital asset industry. We 
are distilling that and using that to help refine our--what we 
will come out with respect to this innovation exemption.
    Ms. Kim. Okay. Outside of digital asset regulation, another 
area that you have charted the SEC in a more positive direction 
is in regard to Form PF. So as you review Form PF, will the 
Commission consider a new rulemaking to return Form PF to its 
original Financial Stability Oversight Council (FSOC)-focused 
purpose?
    Mr. Atkins. Absolutely. It is a joint rulemaking with the 
CFTC, and we have also been consulting with the Fed and 
Treasury in this regard.
    Ms. Kim. Thank you. With the limited time that I have 
remaining, as you know, I have been working hard to provide 
regulatory relief to the Office of the Small Business Advocate 
by exempting it from the Paperwork Reduction Act.
    Would you--would reducing onerous red tape like this 
provide the Advocate with better information on the State of 
American small businesses?
    Mr. Atkins. I believe so, and that is--obviously, Congress 
has put that in statute as far as the Office of Small Business 
Advocate, so whatever may help the work of that office I think 
would be very helpful.
    Ms. Kim. Well, thank you very much. That is all I have for 
you today, and thanks for being with us.
    I yield back.
    Mr. Davidson. I thank the gentlelady for yielding.
    The gentlewoman from Massachusetts, Ms. Pressley, is now 
recognized for 5 minutes.
    Ms. Pressley. Chair Atkins, I read an article where you 
once said, quote, The ultimate boss is the investor, unquote. 
Do you still stand by those words?
    Mr. Atkins. As far as--as far as the markets go, that is 
definitely true.
    Ms. Pressley. Well, I think we can all agree, if bosses are 
to make good decisions, they need to have access to good data. 
Unfortunately, as the head of SEC, you are denying investors 
access to information, you are changing the rules that have 
been put in place by limiting what data is provided to 
investors and reducing how frequently data is provided to 
investors.
    Now, I have had colleagues across the aisle complain about 
information overload and passed bills; colleagues so often, 
investors only have access to, quote/unquote, material 
information. The problem with that approach is that Republicans 
are arbitrarily choosing what information is material and 
immaterial to investors.
    Now, I have been on this committee 8 years, since I arrived 
in Congress, and I know that investors care about a wide range 
of information, ranging from executive compensation to costly 
climate-related disasters like floods and fires.
    I want to focus on diversity disclosure specifically. The 
SEC approved a rule that required public disclosure on the race 
and gender of board of directors. Now, this information was 
important to investors because study after study has confirmed 
that diversity is good for your bottom line. It is good for 
business.
    Can you explain why you believe investors should not have 
access to this information?
    Mr. Atkins. Well, investors should have access to material 
information. I mean, in general, it comes down to the company's 
decision as to what they believe is material or not. Then--
because, again, it is for the reasonable investor. It is not 
for particular investors to--you know, as the rubric, that is 
the way the court has ruled, so--anyway, so our rules are 
geared to the company, and it requires companies, issuers, to 
disclose material information to the public. So, you know----
    Ms. Pressley. Well--okay. Well, I will reclaim my time. I 
just--again, in order to make good decisions, you have to have 
good data. The majority of investors are saying that they want 
this information, and many reports and CEOs have affirmed that 
diversity is good for business and for the bottom line. So that 
answer is insufficient for me.
    I just--again, a study of institutional investors that 
handle hundreds of billions of dollars have found that 30 
percent of investors wanted to know if senior management was 
diverse. So that means roughly one out of three investors 
consider this information important. So I think that makes it 
material.
    Disclosures about diversity, climate risk, and use of AI, 
are essential for investors to make smart decisions. After all, 
in your words, the investors are the ultimate boss. So to 
reiterate, bosses need data to make decisions.
    Now, that is why I am reintroducing the Greater Supervision 
in Banking Act, or GSIB, to mandate disclosures by the biggest 
banks--Bank of America, Wells Fargo, J.P. Morgan, Chase, 
Goldman Sachs, and others. Investors and consumers alike 
deserve to know how these institutions are impacting climate 
change, how that is increasing costs in deadly natural 
disasters. Investors deserve to know whether these banks are 
rewarding themselves with large executive bonuses and investors 
deserve to know that the board of the directors of these 
companies represent them and their interests. They deserve it, 
and they want to know.
    Chair Atkins, can you commit to finding a way to ensure 
this information is available to investors when one out of 
three say this is what they want? Can I count on your 
partnership?
    Mr. Atkins. Well, again, so the court has held that 
information is material, not depending on what the proclivities 
of one or another----
    Ms. Pressley. Okay. I got it. You are sticking to it. Chair 
Atkins, I am trying to give you a win here. You do not have a 
stellar reputation on this front, the 2008 Great Recession when 
you were first the commissioner at the SEC, but we do not have 
to go back decades. I mean, just a few years ago, you were 
advising FTX when that company collapsed.
    So I really saw this as an opportunity for partnership, for 
you to redeem yourself there, Mr. Chair. I was trying to give 
you an easy alley-oop. I do believe we need fair, orderly, and 
efficient markets, and the American people deserve that, 
instead of another global financial crisis.
    I yield back.
    Mr. Davidson. I thank the gentlelady for yielding.
    The gentleman from South Carolina, Mr. Timmons, is now 
recognized for 5 minutes.
    Mr. Timmons. Thank you, Mr. Chairman.
    Chairman Atkins, it is good to see you and thank you for 
appearing before the committee. I appreciate your engagement 
with Congress as we work to restore a regulatory framework that 
supports competitive capital markets and long-term economic 
growth.
    After several years of rapid expansion in the SEC rule 
book, it is encouraging to hear you mention that some 
regulations have become bloated and, in certain cases, 
obstacles to capital formation. You have indicated that the 
Commission is now focused on reducing unnecessary compliance 
burdens while preserving strong investor protections.
    I agree with that goal and want to begin by discussing how 
the Commission is addressing recent rulemakings that impose 
significant costs with limited benefits. One example is the 
2023 fund Names Rule amendments, which the SEC estimated would 
affect roughly 66 percent of funds and add substantial 
compliance and operational costs ultimately borne by American 
savers.
    My question is this: Consistent with your goal of reducing 
unnecessary burdens, how is the Commission or its staff 
reviewing or addressing these prior rulemaking excesses, and 
what principles are guiding your approach to recalibrating 
rules that may have gone too far?
    Mr. Atkins. Well, we are undertaking that, and all of our 
divisions with respect to reviewing old rules and, in 
particular, the corporation finance division with respect to 
Reg S-K, which is kind of the bedrock of corporate disclosure.
    You have named others as well with respect to mutual funds 
and whatnot. So all of those add costs to investors. 
Ultimately, they bear the cost, and so it is good to have a 
retrospective view of that to weed out things that are not 
really fit for purposes.
    Mr. Timmons. Thank you for that.
    Let me now turn to public company disclosure and capital 
formation. I understand last year, the Commission received a 
proposal from the U.S. Stock Exchange requesting that the SEC 
initiate a rulemaking to allow for optional semiannual 
reporting for public companies. The goal is to reduce reporting 
burdens and short-term market pressure while fully preserving 
material disclosures for investors.
    This proposal closely mirrors what President Trump called 
for last fall as a part of a broader effort to spur initial 
public offering activity and encourage more companies to access 
our public markets.
    At a time when fewer firms are going public and staying 
public, it is worth examining whether our disclosure framework 
has become overly focused on short-term results at the expense 
of long-term growth. Can you share how the Commission is 
thinking about potential changes to the public company 
reporting framework, including possible approaches to reducing 
short-term reporting burdens?
    Mr. Atkins. Yes, absolutely, we are looking at that. This 
debate has been going on for now a few decades. The requirement 
started out as annual reporting up until 1955 when it went to 
semiannual, and then in 1970, it went to quarterly, and then 
the U.K., which kind of followed suit with us, changed back to 
semiannual in 2014.
    So we are looking at all of this. I am agnostic on this. We 
want to hear comments from people as to what is the best, and 
we were considering doing this for smaller companies where 
perhaps, semiannual might be more appropriate for them. We will 
be seeking comments on all of this.
    Mr. Timmons. I think if the shareholders are in favor of 
it, it should be considered, and maybe even create a larger 
burden, maybe a two-thirds burden to achieve it but I think it 
is worth looking at. Thank you.
    Finally, I want to turn to venture capital and regional 
access to funding. When we talk about venture capital, it often 
seems like the conversation is limited to companies in New 
York, California, and Massachusetts. In fact, data from Carter 
shows that in 2024, California alone captured nearly half of 
all Venture Capital (VC) investment in the U.S. Meanwhile, 
entrepreneurs in my district and across the other 47 States 
continue to struggle to raise venture capital.
    So do you agree that the lack of geographic diversity in VC 
funding is a problem?
    Mr. Atkins. Well, I know there is a difference in 
distribution across the country and what the causes are, I am 
not sure.
    Mr. Timmons. Well, one way to address this challenge is 
through my bill, H.R. 4431, which is part of the bipartisan 
INVEST Act. The bill modernizes the definition of a qualifying 
VC fund under section 3(c)(1) of the Investment Company Act by 
increasing the beneficial owner limit from 250 to 500 and 
raising the capital cap from $10 million to $50 million.
    These targeted, commonsense updates would expand access to 
capital for startups outside traditional financial hubs while 
preserving strong investor protections.
    Thank you. I yield back.
    Mr. Davidson [presiding]. I thank the gentleman for 
yielding.
    The gentleman from New Jersey, Mr. Gottheimer, is now 
recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Mr. Chairman and Ranking Member. 
Chairman, thank you so much for being here.
    On August 2025, an executive order aims to--I am sorry.
    In August 2025, an executive order aims to increase access 
to, and I quote, competitive returns and asset diversification 
necessary for everyday Americans to secure a dignified, 
comfortable retirement, end quote. This order directs the 
Secretary of Labor to consult with the SEC to carry out its 
policy objectives.
    How has the SEC coordinated with the Department of Labor on 
this executive order so far?
    Mr. Atkins. We are actively working with them and the 
Department of Treasury on these issues, and it is a very 
important matter.
    Mr. Gottheimer. Thank you.
    The order also directs the SEC to revise existing 
regulations and guidance relating to quote, ``accredited 
investors and qualified purchaser status.'' Do you expect the 
SEC to pursue changes to these definitions?
    Mr. Atkins. Well, we will certainly look at them and see 
whether they need adjusting, given passage of time. There are a 
lot of, obviously, a lot of different ideas as far as what is 
an appropriate way to decide who is accredited and who is not?
    Mr. Gottheimer. Thank you.
    Switching gears a little bit, there has been much 
discussion about the SEC's forthcoming digital asset innovation 
exemption. You said that this exemption will, quote, allow 
registrants and nonregistrants to quickly go to market with new 
business models and services that do not neatly fit within our 
existing rules and regulations.
    Just yesterday, the founder of the SafeMoon token was 
sentenced to 8 years in prison for conspiracy to commit 
securities fraud. New services like Pump.fun make it very easy 
to launch tokens backed by absolutely nothing.
    I believe we need clear guardrails and rules of the road 
for digital asset innovation to flourish in the United States, 
but we also have to have strong consumer protections.
    Could you discuss the timing and scope of the innovation 
exemption and how you are building consumer protections into 
it.
    Mr. Atkins. Yes. Well, so fraud is fraud, whether it 
happens in the crypto world or in paper certificates, and so we 
take that very seriously. Like you say, that really is a 
detriment to investor confidence if we are not active in that 
area.
    So with the search of innovation exemption, it will be when 
we come out, the goal is to make it a cabin, limited time, type 
of exemption but to allow innovators to operate within those 
limits and under supervision.
    Mr. Gottheimer. You are concerned like I am about these 
tokens backed by nothing like these Pump.fun type things, 
right? I assume that is not what the SEC wants?
    Mr. Atkins. Absolutely.
    Mr. Gottheimer. Okay. I think it is very important we keep 
an eye on that. Obviously, we want innovation, but we also do 
not want scam artists out there and hucksters pushing stuff 
online, and I think we need to be very careful about that.
    The SEC has rightly been spending a lot of time and 
attention on digital assets, but there are many other 
opportunities for updating modernization. Electronic 
recordkeeping rules, e-delivery, cross-trading, Form PF 
reporting for private funds, co-investment by open and mutual 
funds, and many other areas are ripe, in my opinion, for 
modernization.
    Are these initiatives in your SEC still getting appropriate 
attention? How do you and your staff prioritize them, and how 
are you thinking about them?
    Mr. Atkins. Well, we have a lot on our plate, obviously, 
but I am really very pleasantly surprised, coming back to the 
SEC, how gung-ho the staff is in all the divisions to dive into 
these. I think we have restored confidence in the morale of the 
agency, and people are leaning into it.
    Mr. Gottheimer. Yes, I think the modernization piece is 
key. There are a lot of opportunities to do it.
    I appreciate that you have previously recognized that 
tokenized securities are and will continue to be securities. 
Would you agree that market making activity of tokenized 
security should be treated in a similar manner to traditional 
financial market-making activity?
    Mr. Atkins. Those are big issues of how to adjust the rules 
to deal with the new reality, but we definitely are looking to 
that in our trading and markets area, and we have been having 
roundtables in this regard and working, obviously, with the 
CFTC on it as well.
    Mr. Gottheimer. Thank you.
    Digital asset market actors consistently tell us that 
regulatory fragmentation between the SEC and CFTC creates 
uncertainty, discourages responsible innovation, and drives 
activity offshore. I appreciate the steps you have been taking 
in the CFTC to harmonize definitions and disclosure standards 
and supervisory expectations to reduce regulatory 
fragmentation.
    Can you discuss some of the challenges that market actors 
face navigating across conflicting regulatory frameworks?
    Mr. Atkins. Well, I like to use the analogy of SEC, CFTC, 
two fortresses of the No Man's Land in between. So 
traditionally that field there, that No Man's Land is littered 
with the bodies of would-be products that could never really 
make it through that gauntlet. So we are out to change that and 
to work in harmony.
    Mr. Gottheimer. Thank you so much. I yield back.
    Mr. Davidson. I thank the gentleman for yielding.
    I now recognize myself for 5 minutes for questions.
    Chairman Atkins, thank you for being here, and thank you 
for your leadership at the SEC in an effort to restore the 
Securities and Exchange Commission to its statutory mission: 
Protecting investors, maintaining fair and efficient markets, 
and facilitating capital formation in the United States.
    For too long, market participants, particularly in emerging 
and innovative sectors, have faced uncertainty driven by 
enforcement actions that have effectively substituted for 
policymaking and avoidance of rulemaking for areas where you 
could provide clarity. That approach undermined due process, 
chilled innovation, and drove investors out of sectors that 
they were interested in because of the uncertainty around 
capital formation.
    Your public commitment to moving away from regulation by 
enforcement and toward transparent rules-based frameworks is a 
welcome shift. Thank you.
    We saw former Chair Gensler seek to expand the SEC's 
jurisdiction over nonsecurity digital assets for years. He 
would avoid answering really basic questions about whether 
something is a security or not, and tell everyone to come in. 
He would just never allow them to leave and, in fact, would 
engage in enforcement action.
    So from your perspective, what should the distinction be 
between digital assets that tokenize world assets and 
securities? So you could have a tokenized security. You could 
have a tokenized commodity. You could have tokenized real world 
assets.
    Do we get a bright line test adequate in the CLARITY Act? 
Or how do you see that bright line? If you are calling the 
balls and strikes, what is your best way to describe it?
    Mr. Atkins. Well, ultimately, the real answer is harmony 
between the CFTC and the SEC so that nobody is uncertain where 
to go, and that has been a problem now for a long time. 
Basically, if we focus on tokenized securities through 
investment contract and that kind of analysis, but then also, 
concede that we have digital commodities, digital tools, and 
other digital types of tokens that are clearly in the CFTC 
realm, that will, I think, help bring clarity.
    The CLARITY Act takes great steps toward that and then the 
two agencies working in harmony can help.
    Mr. Davidson. I thank you for creating a task force to 
focus on that as well, so even once we pass a law, hopefully 
the Senate will pass something resembling what we have passed 
and get this across the finish line soon. There will still be 
rulemaking, so thank you for kind of front-lining us in that 
sense to work toward having clarity there.
    You have also previously stated, ``The right to have self-
custody of one's private property is a core American value.'' 
So I think self-custody is critical. You cannot really have 
decentralized finance without the decentralized part.
    Right now, there are, obviously, intermediaries who serve a 
function in the market, but they also take a pretty big rake. 
So a lot of the opportunities to make markets more efficient 
and get more capital for the investors or those that are 
raising the capital comes from disrupting the intermediaries.
    Where do you think we can do that and still ensure that we 
provide investor protection?
    Mr. Atkins. Well, that is an important issue that we 
definitely are focusing on, but as you say, the right to 
private wallets and that sort of thing is very important, and 
so, we want to make sure that is recognized in the rules that 
we develop. It already is to a large extent, with respect to 
the legislation that is being considered.
    Mr. Davidson. Yes. I think that is one of the key things 
really that they are debating in the Senate on the CLARITY Act 
is fundamentally, Western civilization depends on private 
property. Right now, we have embraced this third-party doctrine 
where there is an intermediary between you and your assets in 
every scenario, whether it is a security, bank deposit, 
anything else and all this surveillance.
    I thought Hester Peirce, Commissioner Peirce did a great 
job with a speech back in the summer that she titled, ``Peanut 
Butter and Watermelon.'' Of course, I encourage everyone who 
has not read it to read it, but the point is that a party phone 
line where the operator had to connect two parties referenced: 
Oh, I know your grandpa is the guy that used to put peanut 
butter on watermelon. Well, that is an awkward thing. I just 
asked to be connected to my grandpa.
    There is always this intermediary there, and the technology 
is there for us to do it. I think we can do it with good 
investor protections. I really hope the Senate works through 
the issues in the CLARITY Act, and we have continued to work 
with them.
    I think the crux of it really comes down to self-custody 
because at the end of the day, if you always have to have an 
intermediary between your assets and yourself, you do not 
really control your own private property, and that is radical 
shift in Western civilization.
    I will have questions for the record. My time has expired 
and I yield.
    I now recognize the gentlewoman from Texas, Ms. Garcia, for 
5 minutes.
    Ms. Garcia. Thank you, Mr. Chairman.
    Mr. Atkins, I wanted to start by just reminding us that on 
December 11, the President said that affordability was a hoax, 
that it was made up by Democrats. Recently, in January, he says 
that Democrats do not talk about it anymore, that it is all 
solved.
    Do you think affordability is a hoax? Just yes or no.
    Mr. Atkins. Well, I am trying to address affordability 
through----
    Ms. Garcia. Sir, just a yes or no. Is affordability a hoax?
    Mr. Atkins. Well, I do not know if it is a hoax or not, but 
it is something that we need to be----
    Ms. Garcia. Why is it so hard to say yes or no? You are the 
head of the SEC. You are a lawyer. You are well-trained. You 
have dealt with these issues. You are talking about 
affordability. Do you talk about hoaxes all the time?
    Mr. Atkins. No, well, I mean, so I am focused on the 
reality of the situation.
    Ms. Garcia. So is it a hoax or not?
    Mr. Atkins. I think that affordability is an important 
issue that we need to address.
    Ms. Garcia. So you refuse to answer. All right. Well, let 
us move on.
    SEC candidate Atkins states that: quote, The SEC is an 
independent agency, and in performing their duties, members 
should exhibit a spirit of firm independence and reject any 
effort by representatives of the executive or legislative 
branches to affect their independent determination of any 
matter being considered by this Commission, end quote.
    Yes or no, again, yes or no, do you agree that the SEC is 
an independent agency?
    Mr. Atkins. Yes, it is defined that way in the statute.
    Ms. Garcia. No, but do you believe? I mean, we can all read 
the statute. You are a lawyer. I am a lawyer, but do you 
believe that it is an independent agency?
    Mr. Atkins. If Congress calls it that, then that is it 
but----
    Ms. Garcia. I am asking you if you think it is, sir, not 
what Congress thinks or not what the statement says, because, 
obviously, I read it.
    Mr. Atkins. Right. As you read, it is independence on mind, 
independence of thought.
    Ms. Garcia. So, again, you refuse to answer.
    Yes or no, has the President, his family, members of his 
Cabinet, or staff in the White House, have they ever asked or 
implied that you propose or implement a certain policy?
    Mr. Atkins. Have they--could you repeat that again? I'm 
sorry.
    Ms. Garcia. Well, yes or no, has the President, his family, 
members of his Cabinet, or staff in the White House ever asked 
or implied that you propose or implement a certain policy?
    Mr. Atkins. The President has issued executive orders so 
that----
    Ms. Garcia. So is that a yes?
    Mr. Atkins [continuing]. could, arguably, fall under what 
you just said.
    Ms. Garcia. So is that a yes?
    Mr. Atkins. He has issued executive orders.
    Ms. Garcia. Is that a yes, sir? Sir, why do you refuse to 
just say a simple yes or no?
    Mr. Atkins. It is not susceptible to a yes or no answer.
    Ms. Garcia. Well, as a lawyer I think--you know, I am 
offended that you would not respond.
    Yes or no, has the President, his family, members of his 
Cabinet, or staff in his White House ever asked you that take 
or decline any enforcement action?
    Mr. Atkins. No.
    Ms. Garcia. No? Great. We finally got an answer.
    How regularly do you consult with the President, his staff, 
his family, or members of his Cabinet?
    Mr. Atkins. Sorry. Say that again.
    Ms. Garcia. Well, let me try to be louder. How regularly do 
you consult with the President, his staff, his family, or 
members of his Cabinet?
    Mr. Atkins. I talk to people at the White House and in the 
Cabinet a lot. So I would say that is pretty regular.
    Ms. Garcia. Do you consult with them on any of the 
operations or dealings of the Commission?
    Mr. Atkins. No.
    Ms. Garcia. No?
    Can you commit here today that for every decision you make 
as SEC chair; you ultimately will make that decision yourself, 
free from outside pressure or influence from this 
administration?
    Mr. Atkins. Absolutely.
    Ms. Garcia. Well, good. We finally got some answers.
    Now let me ask you about the--I want to follow up with Mr. 
Lynch's questions. You have dismissed two, four, six, about 
eight cases: Coinbase, Binance, Gemini Trust, Ripple, Kraken, 
Consensys, American CryptoFed, Undue Finance. On what basis did 
you dismiss those cases?
    Mr. Atkins. Well, in general, it had to do with questions 
about registration and that sort of thing that was left over 
from the last administration.
    Ms. Garcia. I am not understanding. What kind of 
registration? Do you think the prior administration----
    Mr. Atkins. Section 5.
    Ms. Garcia [continuing]. filed frivolous lawsuits?
    Mr. Atkins. Section 5.
    Ms. Garcia. Do you think the previous administration filed 
frivolous lawsuits?
    Mr. Atkins. The SEC has a very mixed record on these, and 
we are trying to clarify these rules along with----
    Ms. Garcia. Did this protect investors in any way by 
dismissing these cases?
    Mr. Atkins. Those cases all have flaws and were dismissed.
    Ms. Garcia. It looks like you are not really wanting to 
give me any details, so we will follow up in writing.
    What about the closed investigations? Robinhood Crypto, 
OpenSea----
    Mr. Davidson. The gentlelady's time has expired.
    Ms. Garcia [continuing]. Crypto.com, Fused Crypto, a 
deposit insurance company?
    Mr. Davidson. The gentlelady's time has expired. I would 
encourage you to submit the questions for the record.
    Ms. Garcia. I will and I will submit all the questions you 
refused to answer.
    Mr. Davidson. I now recognize the gentleman from Tennessee, 
Mr. Rose, for 5 minutes.
    Ms. Garcia. Thank you, Mr. Chairman.
    Mr. Davidson. Mr. Rose is recognized.
    Mr. Rose. Thank you, Chairman Davidson, and thanks to 
Chairman Hill and Ranking Member Waters for holding this 
important hearing. Thank you, Chairman Atkins, for joining us 
today.
    My colleagues on the other side are citing press releases 
and enforcement actions brought by the former chair with large-
stated monetary penalties that the Commission did not ever 
collect.
    Chairman Atkins, given that it is a new day at the SEC, 
what is your enforcement philosophy on returning the SEC to its 
core mission?
    Mr. Atkins. Well, thank you, Congressman. We are focused on 
going back to basics, as is in our mission, so to build fair, 
orderly, and efficient markets, and investor protection and 
capital formation. Those are the three pillars. So we are 
calibrating our enforcement efforts to that.
    So no more sort of gotcha types of things, no regulation 
through enforcement. We are focused on, as we go about our 
rulemaking, to have it through notice of comment rulemaking, 
and regular order is to be returned. With respect to 
enforcement, I take very seriously that investor protection 
mandate that we have, and to go combat fraud out there in the 
marketplace, not chasing numbers and not chasing things that 
are not at that core.
    Mr. Rose. Thank you, Chairman. I appreciate very much that 
kind of clear-eyed view of what the purpose of the Securities 
and Exchange Commission is and thank you for your leadership in 
redirecting and refocusing that back on the purpose for your 
organization.
    Chairman Atkins, we have seen a troubling rise in so-called 
ramp and dump schemes, usually involving Chinese companies 
where fraudsters gradually promote a stock, and then rapidly 
sell off their holdings, leaving investors with significant 
losses. Many of those victims, including hardworking Americans, 
including those I represent in Tennessee.
    Given that the SEC can only suspend trading in such 
securities for up to 10 days, what additional tools does the 
Commission have to counter these manipulative schemes beyond 
that limited window and could you also speak to the role the 
exchanges play in protecting and preventing this kind of fraud 
and whether there are steps Congress and policymakers here 
could take to better support the SEC's efforts to protect 
investors here at home?
    Mr. Atkins. Thank you for that.
    Yes, section 12 of the Securities Exchange Act--our role is 
limited. So we have, as you mentioned, we can stop trading for 
up to 10 days, and so we have done that in 14--well, 13 
companies. In the most recent one, the 14th, we stopped trading 
for is on the New York Stock Exchange, the American Stock 
Change for 1 day, and then the Stock Exchange took over from us 
after that to investigate that.
    So these particular schemes can really be very costly for 
investors, but beyond that, we can only de-list the company if 
they have not kept up with their registrations and up-to-date 
filings and that sort of thing.
    It really is incumbent on the exchanges, the single-room 
occupancies (SROs), to police their markets, and so, we are 
working with them to try to ensure that happens.
    Mr. Rose. Chairman, I congratulate you on the great staff 
that you have been assembling, and I know they serve you well, 
but the SEC's organizational chart shows a large number of 
offices and divisions, many of which have closely related 
functions, as well as a significant number reporting directly 
to the chair. I suspect you are painfully aware of that.
    Is the Commission considering ways to improve efficiency 
and coordination, perhaps, by better aligning related offices 
and streamlining the number of direct reports to the Chair?
    Mr. Atkins. Absolutely. I am very focused on that. I still 
remember when I worked for Arthur Levitt back in the early 
1990s, and he looked at the org chart and just was astounded at 
how many direct reports he had. He had more then than I do now 
probably, but anyway, so, yes-it is-very much wanting to have a 
refresh as to the organizational chart.
    Mr. Rose. I am not sure we have time for this, but I will 
try to get it in.
    Under former Chair Gensler, the SEC embraced so-called 
stakeholder capitalism to the benefit of left wing shareholder 
activists but to the detriment of ordinary investors saving for 
retirement. I was glad to see the Commission issue staff 
bulletin 14(m) last year to rescind previous guidance that 
restricted companies' abilities to exclude extraneous 
Environmental, Social, and Governance (ESG)-related shareholder 
proposals.
    Can you please touch on that? I guess you will need to do 
that for record, as I am out of time.
    Thank you.
    Mr. Davidson. I thank the gentleman for yielding.
    I now recognize the gentleman from New York, Mr. Torres, 
for 5 minutes.
    Mr. Torres. Thank you, Mr. Chair.
    Chair Atkins, I have long been a believer in emerging 
technologies like crypto and blockchain, but as you know, every 
industry has actors good and bad. Crypto is no exception. So 
have you taken any enforcement action against any bad actor in 
the crypto industry?
    Mr. Atkins. Yes. I mean, we have brought cases for outright 
fraud, and we are in litigation with some of those right now.
    Mr. Torres. Involving digital assets?
    Mr. Atkins. Involving digital assets. One actually up in 
your city, or up in New York.
    Mr. Torres. Understood.
    I want to make three observations about structural shifts 
in the stock market and then have you respond.
    First, the stock market is more passive than it has been 
historically since 2020. Passive strategies have accounted for 
a majority of U.S. equity assets under management.
    Second, the stock market is more concentrated than it has 
been historically. The top 10 account for 40 percent of the S&P 
500's market cap, about one-third of the S&P 500's total 
earnings, and about a majority or nearly majority of the S&P 
500's earnings growth.
    Finally, the stock market is less representative of the 
economy than it has been historically. The number of public 
companies, as you have noted, has fallen by around 50 percent 
since the 1990s. Many of America's most dynamic, highest growth 
companies have yet to go public, and many of them are content 
to remain private for longer stretches of time.
    So the stock market is more passive, more concentrated, 
less representative, than it has been historically. Since the 
stock market is structured differently than it has been, should 
we expect the stock market to perform differently than it has 
historically?
    Is the stock market of the 21st century qualitatively 
different from the stock market that has delivered an 
annualized return of 10 percent since 1959? What is the 
significance of these structural shifts, and what does it mean 
for the performance of the market?
    Mr. Atkins. Great questions. I do not pretend to have an 
answer, but that is exactly why we need to make it more 
attractive again to be a public company, so that we can have 
more of a diverse type of makeup there. In fact, there is this 
great story about--I was told by the CEO of a very, very large 
public pension fund where they got out of the private markets 
back in--after the financial crisis. They call it the dark 
years, where they lost--they went down from 90 percent coverage 
of their anticipated benefits down into the 70s, and they 
attribute that to not being involved in the private market.
    To have a well-diversified portfolio, you need to have 
exposure of private markets. If we can make IPOs great again, 
make public companies' makeup a much more diverse type of 
marketplace, I think we can maybe solve that part of the 
problem and get back to your point.
    Mr. Torres. I am cautiously optimistic about tokenization. 
I do believe tokenization has the potential to create a better, 
cheaper, and faster financial system, greater tradability, 
instantaneous settlement, greater liquidity, greater 
fractionalization of shares, and hopefully with it a greater 
democratization of finance.
    Just like digitization through the internet brought a wave 
of new customers, consumers to commerce, tokenization could 
bring a wave of new investors to the capital markets.
    Having said all of that, an innovation like tokenization is 
not without risk, and so, how do we pursue an innovation that 
disrupts traditional securities without destabilizing a 
traditional securities regime that has served our Nation 
reasonably well for more than 90 years?
    Mr. Atkins. I agree with you very much, and so that is why 
we will do this deliberatively. We will make sure that issuers 
have insight into where their securities are and that tokenized 
securities are securities and will be treated as such and that 
we need to adjust where we have to the rules, but to ensure 
that there are transparency and integrity to the markets and to 
make sure that the national market system is upheld.
    Mr. Torres. Do you have a timeline for the tokenization of 
securities?
    Mr. Atkins. It will be unfolding here over the next few 
years, but what we do now will be really seminal in making sure 
that it is done deliberatively and in good order.
    Mr. Torres. What are the implications of tokenized 
securities for corporate governance? It has been said that 
tokenized securities could mean the end of proxy voting. What 
is your sense of the implications?
    Mr. Atkins. I think it might be even more--it might be 
better for it, frankly, because then you will know where 
securities are. You will not know voting necessarily, but I 
think there will be a lot more accountability and transparency.
    Mr. Torres. I see my time is about to expire. Thank you.
    Mr. Davidson. I thank the gentleman for yielding.
    The gentleman from Indiana, Mr. Stutzman, is now recognized 
for 5 minutes.
    Mr. Stutzman. Thank you, Mr. Chairman, and thank you, Mr. 
Atkins, for being here today.
    I just want to ask really quickly, one of my colleagues 
asked you earlier about the Form PF. Do you have an update on 
when any rulemaking might be finalized?
    Mr. Atkins. Yes. We, of course, extended the deadline for 
the compliance with what action was taken a couple of years 
ago, but we are working actively with the CFTC. It is a joint 
rulemaking, and so that is a current issue that we are 
addressing.
    Mr. Stutzman. Okay, great.
    In August, President Trump signed an executive order to 
facilitate increased access to alternative investments for 
401(k) investors, empowering American workers with greater 
choice in how to grow their retirement savings. Since then, the 
Department of Labor has submitted rulemaking to the Office of 
Management and Budget.
    The order also identifies a role for the SEC in advancing 
the President's objectives. How has the SEC coordinated with 
the Department of Labor to carry out his order and what factors 
have shaped your approach?
    Mr. Atkins. Well, we are actively collaborating with them, 
especially IPSA, and we are also working with the Department of 
the Treasury on this, and we have met. Staffs have been in 
active collaboration, and also, I have met with the Secretary 
of Labor and the deputy and also, of course, talked to the 
people at Treasury as well, including the Secretary.
    So this is an important issue and has to be done correctly, 
and there need to be guardrails around it because as an 
investor in the private markets over many years, I know the 
good, the bad, and the ugly there, and so, we need to make sure 
that we are addressing this properly.
    As I just mentioned to Mr. Torres there, one cannot 
necessarily have a balanced portfolio in this current market 
without having exposure to the private markets. In fact, many 
ordinary employees already do through their pension funds have 
exposure to the private market, so why not extend it to 
401(k)'s.
    Mr. Stutzman. So the executive order also directs the SEC 
to consider parallel reforms to facilitate increased access to 
alternative investments, including revisions to existing 
guidance relating to accredited investor and qualified 
purchaser status.
    Do you expect the SEC to pursue changes to those 
definitions and are there any other potential changes or 
reforms that Congress should consider to enhancing investor 
access to alternative investments?
    Mr. Atkins. Well, I have been in and out of SEC now for 
about 36 years, and so, this issue comes--it is like Groundhog 
Day over and over and over, because it is a very--it is a bit--
it just needs addressing and updating, because of the lines 
that are being drawn. Why should a professor of economics who 
makes $100,000 a year not be an accredited investor, but 
somebody who just is a teenager or who has inherited some 
wealth becomes an accredited investor?
    So that does not make a lot of sense on its face. So we are 
exploring alternatives to the current situation.
    Mr. Stutzman. Great. Thank you.
    I know they called votes. I do not have any yes or no 
questions for you, unfortunately. So I will yield back.
    Mr. Davidson. I thank the gentleman for yielding.
    Pursuant to the previous order, I declare the committee in 
recess, subject to the call of the chairman. We will reconvene 
immediately following floor votes.
    Chairman Atkins does have a hard stop at 1:15, so we will 
try to get back as quickly as possible to squeeze in as many 
member questions as possible.
    So the committee stands in recess.
    Mr. Flood [presiding]. The committee will now come to 
order.
    I will recognize myself for 5 minutes.
    First of all, Chairman Atkins, thank you for being here. I 
would like to start by talking a little bit about the 
accredited investor definition. Currently, becoming an 
accredited investor is subject to requirements that revolve 
around income and wealth. I personally find this phenomenon to 
be a little puzzling because wealth is not necessarily an 
appropriate measure of financial sophistication.
    We currently have a narrow, merit-based pathway to become 
an accredited investor for investment professionals like those 
holding a Series 7 or Series 65 but I think there is a larger 
question at play here: Is it fair to gate-keep investor 
opportunity based on financial wealth or based on knowledge and 
merit?
    Chairman Atkins, do you believe that wealth is a poor proxy 
for financial sophistication?
    Mr. Atkins. Yes. I know a lot of dumb, rich people.
    Mr. Flood. My legislation, the Equality Opportunity for All 
Investors Act, which is also a provision within the INVEST Act, 
creates a new pathway to become an accredited investor through 
an examination created by the SEC and administered FINRA. This 
will certainly open the door further for knowledgeable people 
to get access to sophisticated investments, and if understood 
properly, can open the door for them to earn higher returns.
    Next, I would like to discuss an issue that I have heard 
has become a significant problem for businesses in my district 
in Nebraska. In recent years, there has been a growing and 
troubling trend of sophisticated third-party litigation 
financiers, many operating from foreign jurisdictions, backing 
predatory plaintiffs' lawyers to bring baseless claims against 
U.S. public companies.
    I have heard about this issue from trucking companies in my 
district and from insurers, but I think there is an interesting 
tie to our capital markets as well. These foreign investors are 
participating in our capital markets and may have access to 
nonpublic case-specific information about the litigation they 
fund.
    A bipartisan House Select Committee on the Chinese 
Communist Party (CCP) report, warned that foreign actors can 
use litigation financing to gain access to sensitive Internet 
Property (IP) and other commercially viable information. It 
follows that litigation funding also presents the potential for 
market abuse if litigation-related financial interests are used 
to inform edging, short positions, or other trading strategies 
tied to the outcomes of material legal proceedings.
    Mr. Chairman, from an investor protection and market 
integrity standpoint, does the Commission have specific 
concerns about potential intersections between litigation 
finance and trading activity?
    Mr. Atkins. Well, just speaking personally, I do have 
trouble with that, and I know that are ethical issues as well 
that have presented themselves over time. So whether or not 
that falls within our bailiwick or not, I think it bears some 
attention.
    Mr. Flood. Has the SEC, under your leadership, considered 
maybe the ramifications of these third-party suits? Is this a 
conversation that is happening at the SEC?
    Mr. Atkins. Well, I am happy to begin it. I think, like you 
said, I think that is an issue worth addressing.
    Mr. Flood. Just to give some context here, we are in 
Nebraska the home to some very large trucking companies, and 
tort reform is dearly needed in the American southeast but when 
you have got a foreign growth fund funding a plaintiff's lawyer 
to go after a trucking company and get $1 billion for a 
fatality--which is terrible, should always be prevented--it is 
really making it hard to do business in America and move the 
things that truckers move.
    So I appreciate that.
    I think there are a couple of potential bad outcomes here 
from a national security perspective, and I want to use my 
opportunity today to put this on the radar. Number one is the 
Select Committee on the CCP report indicates that it is 
possible that foreign entities could gain access to U.S. 
intellectual property as part of a civil suit.
    Number two, it is also possible for any foreign entity to 
use our legal system to try and delay the release of a new 
product or service in order to give a foreign competitor more 
time to get their products out there.
    So with that, I yield back.
    I recognize the gentleman from California, Mr. Liccardo, 
who is now recognized for 5 minutes.
    Mr. Liccardo. Chairman, thank you for your testimony today, 
and thank you to the chair.
    I represent a good part of Silicon Valley, and I know you 
are very familiar with the importance of capital markets there, 
both public and private. Certainly, there are great concerns, 
and I appreciate you are addressing some of those concerns 
about the challenges, particularly for early stage companies to 
be able to go public and certainly have been working with 
colleagues on the other side of the aisle as well and, for 
example, extending the ramp for emerging growth companies.
    I appreciate there are other things you have mentioned in 
your testimony, particularly about tying materiality more 
tightly to disclosures and other things that might reduce some 
of the burdens of going public.
    I wanted to shift, though, to the other part of that, the 
phenomenon that we are seeing, which is this massive shift at 
least in the percentage of total investment from public markets 
to private markets, and the massive growths we have seen in 
private equity in particular and now increasingly exposing 
retail investors to private equity and secondary markets.
    I know there are many folks in Silicon Valley who 
themselves are quite sophisticated. They might be at Kleiner 
Perkins, for example, but are very concerned about the 
transparency, and, frankly, investor protection as we are 
starting to widen access to private equity.
    Is there anything that the SEC is considering or might 
consider to improve transparency and protect investors who are 
increasingly getting into those secondary markets?
    Mr. Atkins. Well, thank you. That is a very important 
issue, and I take it very seriously, that as we deliberate over 
how to allow more access to the private markets which have 
their own kind of special qualities and whatnot that are 
usually different than the public markets. We need to do this 
deliberatively with good guardrails.
    We, the Department of Labor and Treasury are very much 
focused on that aspect of investor protection. As I mentioned 
earlier in the hearing here, that it is because of the way the 
public markets have developed and how we have half the number 
of public companies as we had 30 years ago, we are now, the 
United States, is fully 50 percent of the world's 
capitalization, equity capitalization.
    So everything is spread among fewer companies, obviously, 
but we have really strong, robust private markets as well but 
there are a lot of buyer beware issues there in the private 
markets that we need to make sure that we are not just opening 
up retail investors to something that they are not necessarily 
ready for or aware of all the pitfalls.
    So a lot has to rest on the trustees and the other people 
who are managing 401(k) funds. So we have to really make sure 
that they are aware and that we set up parameters around which 
they may put their beneficiaries' money into markets that are 
not public.
    Mr. Liccardo. I appreciate that.
    As we are thinking about that significant shift from public 
to private, should we be concerning Congress? Should we be--are 
there particular actions we should be taking to try to redirect 
that percentage in some way to encourage more of those capital 
dollars into more transparent public markets?
    Mr. Atkins. Well, I do not know. I mean, I leave that to 
you, but Employee Retirement Income Security Act (ERISA) is a 
very strong tool, actually, and so that is why the Department 
of Labor is central to this, and I know they take that very 
seriously and the standards under which trustees are bound. So 
I think that itself is a good tool that we have to try to then 
put in the proper guardrails.
    Mr. Liccardo. Thank you. I yield.
    Mr. Flood. The gentleman yields back.
    The gentleman from Pennsylvania, Mr. Meuser, who is also 
the chair of the Subcommittee on Oversight and Investigations, 
is now recognized for 5 minutes.
    Mr. Meuser. Thank you, Chairman.
    Good afternoon, Chairman. It is nice to have you with us.
    I would like to focus on capital formation and how the SEC 
can ensure our public markets remain the strongest in the world 
for companies looking to raise capital. The INVEST Act I think, 
as you know, is a strong step in that direction, reducing such 
barriers for small issuers, strengthening private markets, and 
expanding capital formation opportunities.
    Under your leadership, working alongside President Trump's 
pro-growth agenda, IPO activity rose nearly 50 percent, 
increasing from 154 offerings in 2024 to 226 in 2025. So that 
is, of course, a very, very positive development.
    On January 28--I would like to ask you this question--we 
sent a letter requesting any recovered deleted text messages 
from the former Chair Gensler. This request stemmed, in part, 
from Chair Gensler's well-known lack of cooperation with this 
committee. These texts are of significant interest to our 
oversight work to fully uncover what was deleted.
    Can you comment on the current effort?
    Mr. Atkins. Well, we are actively looking to see what we 
can do to reconstruct the missing data because, obviously, 
there are statutes and other things that require us to keep 
that. So we are working on that, and I can keep you updated.
    Mr. Meuser. Thank you. I appreciate that.
    As you well know, the Consolidated Audit Trail, or CAT, is 
the massive trade tracking database the SEC mandated exchanges 
and broker dealers to build. Many Republicans have serious 
concerns about the scope of data collection and the privacy 
risks posed by such a large, centralized system that collects 
investor data.
    Does the SEC believe it has or should seek authority to 
reimburse the industry mandated to fund the CAT or eliminate 
the system altogether?
    Mr. Atkins. We are actively working with the members of the 
CAT committee to try to rightsize it, and then we have a lot of 
issues that need to be addressed. So we will be--we are 
actively working on this and ultimately will be talking, 
perhaps, to the appropriators about some of these issues.
    Mr. Meuser. Okay. Thank you.
    I appreciated your response to my letter on the 2023 money 
market fund rule. You noted the staff is working with industry, 
particularly on liquidity fees and institutional prime funds. 
Based on what you have seen so far, do you believe those 
concerns warrant reopening, rewriting, or eliminating portions 
of the 2023 rule?
    Mr. Atkins. Well, all of these things are open. The market 
has changed a lot, and I have my concerns about some of the 
aspects of that rule with respect to the markets and the funds. 
So, yes, we are looking at all of these issues.
    Mr. Meuser. I appreciate that as well.
    Crowdfunding is a critical way for early stage businesses, 
as you well know, to raise capital from the neighbors, friends, 
families. Unfortunately, small issuers are hit with onerous 
financial disclosure requirements as soon as they raise over 
$100,000. Do you agree we need to remove crowdfunding barriers 
for small issuers?
    Mr. Atkins. Absolutely.
    Mr. Meuser. Great. I am glad you agree because my 
legislation, the Amendment for Crowdfunding Capital Enhancement 
and Small Business Support (ACCESS) Act, does exactly this, 
which was included in the INVEST Act. So that is good to hear.
    You have stated before that you want to make IPOs great 
again. Exchanges I meet with say this year, minus the 
disruption during the government shutdown, have been terrific 
for IPOs. How have you achieved this success?
    Mr. Atkins. Well, I think part of it is just a change of 
tone, frankly, and to tell people that we are out to try to 
make it attractive again to be public and that we are serious 
about it. The three pillars that I mentioned earlier about 
trying to rightsize and modernize, rationalize the disclosure 
framework. Second is to focus on litigation reform, the few 
ways that I have in my toolbox to do that. Third, is to focus 
on weaponization of the corporate governance apparatus.
    Through those this might be at the margins, but I think 
just that tone has been able to attract people and increase 
interest. We will continue that and, as we put points on the 
board as we come out with proposed rules and then, ultimately, 
finalize them, I think that will help do it as well.
    Mr. Meuser. If there is anything within that or anything 
that you are working on that you recommend us to codify, we 
would very much appreciate your guidance and suggestions.
    Thank you, Chairman.
    I yield back, Mr. Chairman.
    Mr. Flood. The gentleman yields back.
    The gentlewoman from Michigan, Ms. Tlaib, is now recognized 
for 5 minutes.
    Ms. Tlaib. Thank you so much, Mr. Chair.
    Chairman Atkins, is it a coincidence that only weeks after 
Trump family owned World Liberty Financial launched its 
stablecoin that SEC's division of corporation finance that 
oversees released a statement declaring that stablecoins are 
not securities?
    Mr. Atkins. I do not think one has to do anything with the 
other but the stablecoin aspect came from ultimately the 
Guiding and Establishing National Innovation for U.S. 
Stablecoins (GENIUS) Act, obviously, which took stablecoins out 
of----
    Ms. Tlaib. So no coincidence.
    Let me tell you why my residents think it was not a 
coincidence. During the 2024 election cycle, nearly half, Mr. 
Chair, of corporate spending came from crypto industry. Did you 
know that?
    Mr. Atkins. Half of corporate spending?
    Ms. Tlaib. It says nearly half of corporate spending came 
from crypto currency--industry, the crypto industry into the 
2024 election cycle. Did you know that?
    Mr. Atkins. I have not----
    Ms. Tlaib. I can share with your team the report on that.
    So crypto intervened in dozens of elections across our 
Nation, spending more than banks and oil companies. Experts 
have called it, quote, one of the most aggressive corporate 
spending sprees in modern political history.
    Fast-forward to today, Mr. Chair, the SEC has dismissed, 
right, fast-forward, dismissed or stayed enforcement actions 
against major crypto-related donors or supporters of President 
Trump, such as Coinbase, Kraken, Binance, Justin Sun.
    The Commission has seen a significant reduction in 
staffing, of course, right, with, perhaps, one in five staffers 
leaving. Whistleblower awards are down dramatically, and 
policies are issued without allowing public comment.
    Do you see what I am saying here?
    The SEC has basically stopped its enforcement efforts in 
favor of a regulation by the CFTC, which has far fewer 
resources and staff.
    So my residents are asking is this a coincidence. I do not 
think so.
    Mr. Chairman, out of all due respect, I hope you understand 
the incredible importance of your position because it looks to 
me like cryptocurrency is getting a tremendous return in its 
political investments. I cannot fault anyone who thinks your 
agency is bought and paid for, especially my constituents and 
residents that watch again how the current administration is 
violating the Emoluments Clause and so much more in regard to 
running the business out of the oval office.
    I do not know. You answer this question. Folks are 
listening. Is it a coincidence that Trump pardoned the founder 
of Binance who was convicted of money laundering and now 
Binance holds roughly 87 percent of all Trump stablecoins in 
circulation worth $4.7 billion? Are you aware?
    Mr. Atkins. Well, Madam, we follow the law as far as 
actions.
    Ms. Tlaib. Of the GENIUS Act.
    Mr. Atkins [continuing].So we take our duty seriously on 
enforcement, investigations, and rulemaking.
    Ms. Tlaib. Mr. Chairman, why after Justin Sun invested $75 
million in Trump's World Liberty Financial did SEC drop its 
civil fraud case against them?
    Mr. Atkins. Well, I cannot address any particular----
    Ms. Tlaib. You just dropped it. Is there not enough 
evidence?
    Mr. Atkins. I cannot address any particular matter, 
especially ones that are still under consideration and 
investigation.
    Ms. Tlaib. No, you dropped the case. It is done. You said 
there is no fraud.
    Mr. Atkins. Not completely.
    Ms. Tlaib. So, not completely. That is good news.
    Mr. Atkins. So anyway, we dropped the registration issue, 
which I think is a red herring from the previous 
administration.
    Ms. Tlaib. Okay.
    So another one. Months after the firm tied to the Emirati 
royal family purchased 49 percent stake in World Liberty 
Financial--and just for folks to understand, Trump's World 
Liberty Financial worth half a billion dollars--the Trump admin 
then allowed the UAE to purchase 35,000 highly valued AI chips. 
Did you know that one?
    Mr. Atkins. Again, I cannot speak to any particular----
    Ms. Tlaib. Oh, it just smells funny. People still say that, 
right? No? I do not know. It just looks very suspicious, and it 
does not give us a lot of faith that you guys are not being 
influenced by the Trump Administration's World Liberty 
Financial investments.
    Mr. Chairman, I understand, but all of these dropping of 
cases and everything, just, poof, out of the window, it does 
not look right.
    Mr. Flood. The gentlelady's time has expired.
    I would like to thank Chairman Atkins for his testimony 
today.
    Without objection, all members will have 5 legislative days 
to submit additional written questions for the witness to the 
chair. The questions will be forwarded to the witness for his 
response. Chairman Atkins, please respond no later than March 
18, 2026.

    [The information referred to can be found in the appendix.]

    Mr. Flood. This hearing is adjourned.

    [Whereupon, at 1:26 p.m., the committee was adjourned.]
     

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