Abstract
Federal securities law aims to protect investors and the public from fraudulent securities transactions. If an actor violates these laws, the public bears the costs through investor losses, market volatility, reduced economic activity and growth, and general distrust in the market. Entities that face securities enforcement for violations bear sanctions like civil monetary penalties and disgorgement of ill-gotten gains. They also experience collateral consequences, such as disqualifications, that are automatically triggered by the imposition of sanctions or criminal conduct. The purpose of disqualifications is to enable the Securities and Exchange Commission (SEC) to safeguard investors and capital markets from issuers who are unable to operate within capital markets without causing harm. Disqualifications help the SEC achieve this purpose by either revoking securities offering exemptions from issuers subject to sanctions or disqualifying actors from serving in certain investment roles. Disqualifications from securities offering exemptions significantly restrict an issuer’s access to capital markets, therefore, avoiding these disqualifications is of high value to issuers.
The SEC has the authority, delegated to the staff of its Division of Corporation Finance (CorpFin), to waive automatic disqualifications if shown “good cause” by an applicant. SEC guidance on the waiver decision-making process emphasizes that to show good cause, the waiver must be in the interest of the public. Despite this public-interest focus, curiously many waiver recipients have been repeat securities or criminal offenders. CorpFin often grants waivers around the same time the Division of Enforcement or Department of Justice reaches settlements with offending entities—often large, recidivist issuers. The tendency to grant waivers to large recidivist issuers simultaneously with settlement announcements raises concerns that the SEC is too soft on powerful financial institutions, contrary to the interest of the public. This Comment argues that the waiver decision-making process must be reformed to increase transparency and ensure each waiver is determined independently on its merits, in turn increasing public integrity in the process and deterring corporate recidivism.
Recommended Citation
Kayla A. Winters,
Reframing the SEC’s Disqualification Waiver Decision-Making Process To Protect the Public Interest,
75
Emory L. J.
753
(2026).
Available at:
https://scholarlycommons.law.emory.edu/elj/vol75/iss3/4