Trump’s SEC Pick Brings Slew of Potential Conflicts to New Role

Paul Atkins, who spent years advising Wall Street and Silicon Valley giants targeted by US securities regulators, will be surrounded by potential conflicts arising from his consulting work and board positions once he takes charge as President Donald Trump’s SEC chairman.

For every industry policed by the Securities and Exchange Commission, there’s a good chance Atkins has worked for a registrant on the other side, either personally or through Patomak Global Partners, the financial services consulting firm he founded.

As Atkins prepares to take a full trip through the “revolving door” between Washington and Wall Street, critics led by Sen. Elizabeth Warren (D-Mass.) warn he’ll be largely unrestrained in his dealings with the same companies that paid for his consulting services and more likely to turn a blind eye to crypto and other firms that can place retail investors in harm’s way.

Ethics disclosures and court records give a flavor of what Atkins has been up to since he stepped down as SEC commissioner in 2008: consultant for financial services giants such as Bank of America Corp. and publicly traded heavyweights including Exxon Mobil Corp.; compliance monitor for Deutsche Bank AG after it was charged with swap reporting violations; expert witness for AT&T Inc. after the SEC accused it of selectively disclosing nonpublic information to Wall Street analysts; and board member of the Digital Chamber, which is lobbying the SEC over crypto trading regulations.

Meanwhile, Patomak advertises its services to other clients across SEC-regulated markets, including asset managers, broker-dealers, exchanges, and institutional investors.

“Looking the other way and dropping enforcement actions against legal or ethical violations in the marketplace is going to lead to potential problems in the marketplace,” said Jon Golinger, an attorney at Public Citizen focused on corporate influence in government. “Other than an ethics letter agreeing for a year not to be involved in a particular matter that he worked on, that still allows a laundry list of potential conflicts to potentially occur.”

The concern is more pronounced now that the SEC chairman and commissioners are set to exercise greater control over subpoenas issued in specific investigative probes.

Warren, the top Democrat on the Senate Banking Committee, is also pressing Atkins on his plans to sell Patomak, describing it as a chance for a buyer to pay a “pre-bribe.” Other senators grilled Atkins at his March 27 confirmation hearing about his work advising FTX before the crypto platform collapsed.

The committee confirmed Atkins in a Thursday vote, advancing his nomination to the broader Senate—a final step that would clear the way for him to assume the helm of the SEC.

FTX, Crypto Roles

Atkins’ consulting work caught the attention of Banking Committee member Sen. John Kennedy (R-La.), who said he would pounce “like a ninja” to assure the agency investigates FTX-related fraud and trading practices by foreign executives whose companies are listed on US securities exchanges.

If confirmed, Atkins will inherit an SEC that has already drastically scaled back crypto enforcement under acting Chair Mark Uyeda and announced its plans to embrace the industry through the new Crypto Task Force led by Commissioner Hester Peirce.

“I do think that Atkins, if he’s confirmed, will continue what Acting Chair Uyeda and Commissioner Peirce have been doing,” said Christian Schultz, a partner at Arnold & Porter and former assistant chief litigation counsel in the SEC’s enforcement division. “They both worked on staff for him in the past, they know him well, and I think they probably anticipate what would matter to him and instituted some of it ahead of time.”

That’s good news for the Digital Chamber, the crypto lobbying group Atkins advised until late last year.

At a February meeting with the Crypto Task Force, the lobbying shop shared a presentation from its Token Alliance, formerly co-led by Atkins, with specific action steps for SEC leaders to take in the first 90 days of the new administration to “start the process of regaining the trust of the global digital asset community,” according to agency records.

With Atkins nearly set to lead the agency and steer its approach to crypto oversight, the industry can look forward to having a friend in a high place.

“Lawyers don’t necessarily speak the same language as IT professionals, but he has the experience and knowledge from his various jobs that can effectively translate and anticipate issues, so he can bridge the gap,” said John Wu, the president of blockchain technology company Ava Labs.

Ethics Gaps

Atkins, like other industry consultants and executives tapped for government posts, had to take some basic steps to comply with federal ethics rules.

He agreed to step down from various advisory roles and sell some personal in crypto-related investments and other assets that could pose a conflict of interest, according to ethics disclosures showing he and his spouse had a net worth of at least $327 million. He’s also agreed to avoid particular matters such as enforcement actions involving his recent Patomak clients for one year after last services to a given customer, unless he is first authorized to participate.

But there’s nothing stopping Atkins from crafting industrywide rules affecting crypto and other companies he or Patomak advised, and he isn’t covered by some ethics restrictions because he provided mainly “behind-the-scenes” services to his clients.

Trump in his second term declined to reinstate a policy from his first administration requiring political appointees to sign a pledge going beyond the standard “revolving door” ethics rules, and Atkins rebuffed requests from Warren to abide by longer “cooling-off” periods for matters affecting his former clients.

Warren also pressed Atkins to disclose details about the planned sale of Patomak.

“It’s perplexing why he fails to disclose anything about the anticipated sale of his consulting company,” Golinger said. “To ensure the public trust in who’s making these decisions and that every company regulated by the SEC believes they’re getting a fair shake, there needs to be some transparency about real, legitimate conflict concerns and he provided virtually none.”