New Executive Orders Assert Increased Control and Oversight Over SEC and Other Independent Agencies and Promote Deregulation

On February 18 and 19, 2025, President Donald Trump issued two executive orders that are likely to have significant consequences for the Securities and Exchange Commission (SEC) and other administrative agencies. These executive orders follow a flurry of action by the Trump administration to assert increased control over federal administrative agencies, including historically independent agencies. The first order, Ensuring Accountability for All Agencies, establishes a degree of oversight and control of the SEC and other independent agencies that is without historical precedent. The second order, Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, seeks to end perceived regulatory overreach and overzealous enforcement by agencies and puts in motion plans to rescind or modify rules of the SEC and other agencies and to end or curtail certain enforcement actions. Both will meaningfully change the method and manner in which the SEC and other agencies fulfill their regulatory and enforcement mandates.

Ensuring Accountability for All Agencies

Since Executive Order 12,866 in 1993, administrative agencies have been subject to reporting and oversight by the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB). But Executive Order 12,866 explicitly exempted independent agencies like the SEC from many of its requirements. President Trump’s new executive order changes that, bringing independent agencies within the requirements of Executive Order 12,886 and putting them in unchartered waters. Thus, the executive order empowers the Director of OMB to oversee independent agencies in a variety of ways and requires “all executive departments and agencies, including so-called independent agencies, [to] submit for review all proposed and final significant regulatory actions to [OIRA] before publication in the Federal Register.” These changes are based on President Trump’s stated view that “so-called ‘independent regulatory agencies’” have been inappropriately allowed “to operate with minimal Presidential supervision.”

President Trump’s executive order also contains a variety of additional mechanisms to allow the President or senior Senate-confirmed political appointees to exert substantially more influence over independent agencies. For example, the executive order 

• requires “independent regulatory agency chairmen [to] regularly consult with and coordinate policies and priorities with the directors of OMB, the White House Domestic Policy Council, and the White House National Economic Council” 

• requires “heads of independent regulatory agencies [to] establish a position of White House Liaison in their respective agencies” 

• requires independent regulatory agency chairmen to submit strategic plans to the Director of OMB

• requires the Director of OMB to “establish performance standards and management objectives for independent agency heads”

• provides that “[t]he President and the Attorney General, subject to the President's supervision and control, shall provide authoritative interpretations of law for the executive branch”

The new executive order also establishes that “[t]he President and the Attorney General’s opinions on questions of law are controlling on all employees in the conduct of their official duties. No employee of the executive branch acting in their official capacity may advance an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law, including but not limited to the issuance of regulations, guidance, and positions advanced in litigation, unless authorized to do so by the President or in writing by the Attorney General.”

Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative

President Trump’s February 19 executive order announces his policy “to focus the executive branch’s limited enforcement resources on regulations squarely authorized by constitutional Federal statutes, and to commence the deconstruction of the overbearing and burdensome administrative state.” With those goals in mind, the executive order requires agency heads, “in coordination with their DOGE Team Leads and the Director of the Office of Management and Budget, [to] initiate a process to review all regulations subject to their sole or joint jurisdiction for consistency with law and Administration policy.” Similarly, the executive order requires agency heads, “in consultation with the Attorney General as appropriate,” to identify the following types of regulations for potential rescission or modification:

• unconstitutional regulations and regulations that raise serious constitutional difficulties, such as exceeding the scope of the power vested in the federal government by the Constitution

• regulations that are based on unlawful delegations of legislative power

• regulations that are based on anything other than the best reading of the underlying statutory authority or prohibition

• regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority

• regulations that impose significant costs upon private parties that are not outweighed by public benefits

• regulations that harm the national interest by significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives

• regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship

Turning to agency enforcement actions, the executive order directs agencies to “preserve their limited enforcement resources by generally de-prioritizing actions to enforce regulations that are based on anything other than the best reading of a statute and de-prioritizing actions to enforce regulations that go beyond the powers vested in the Federal Government by the Constitution.” For existing enforcement matters, “agency heads, in consultation with the Director of the Office of Management and Budget, shall, on a case-by-case basis and as appropriate and consistent with applicable law, then direct the termination of all such enforcement proceedings that do not comply with the Constitution, laws, or Administration policy.”

More Questions Than Answers

The first executive order addressed in this alert appears to be without any close historical precedent, so it is too soon to see how it will be applied in practice. And the second too could mark a significant departure from how agencies have historically promulgated rules and enforced applicable laws and regulations.  

In our view, the executive orders raise at least a dozen important questions for those subject to the SEC’s jurisdiction or who appear before it:

1. Although the first executive order requires the SEC to report additional information and coordinate more with other parts of the Executive Branch, in practice how much latitude will the SEC have to shape its regulatory agenda?
   
   
2. Will the requirement for independent agency chairs to “regularly consult with and coordinate policies and priorities with the directors of OMB, the White House Domestic Policy Council, and the White House National Economic Council” require the independent agency chairs to defer to those directors?
   
   
3. What performance standards will be set for the SEC chair, and how will the Director of OMB determine whether those standards are being met?
   
   
4. What responsibilities will the SEC’s new White House Liaison have? Will that position be filled by an existing employee or an outsider?
   
   
5. Will the requirement for OMB review apply to staff no-action letters, waiver requests, exemptive orders initiated by issuers or registrants, or self-regulatory organization rule and fee changes?
   
   
6. How will the Director of OMB “adjust [the SEC’s] apportionments by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities”? The executive order provides that the “adjustments to apportionments may prohibit independent regulatory agencies from expending appropriations on particular activities, functions, projects, or objects, so long as such restrictions are consistent with law.” Will that apply only to rulemakings or more broadly?
   
   
7. Will the President, the Director of OMB, or others have more of an influence over future enforcement actions and settlements, or will they defer to the judgments of agency heads?
   
   
8. Who will determine whether an enforcement action is “based on anything other than the best reading of a statute” or seeks “to enforce regulations that go beyond the powers vested in the Federal Government by the Constitution”?
   
   
9. Will the prohibition on advancing in litigation “an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law” effectively require the SEC to seek preclearance from the White House or Department of Justice?
   
   
10. Will the SEC or its staff now be more hesitant to provide regulatory guidance, given that an executive order states that only the President and Attorney General may “provide authoritative interpretations of law for the executive branch”?
    
    
11. Will the Supreme Court’s decision in Loper-Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), serve to check the ability of the President or the Attorney General to advance their own interpretations of federal statutes?
    
    
12. Will courts be less likely to defer to the SEC’s interpretation of a regulation it administers if the interpretation is based on the President’s or the Attorney General’s position instead of the SEC’s?

The answers to these and other questions will be extraordinarily consequential for the operations of the SEC and other administrative agencies as well as for market participants subject to the federal securities laws and enforcement investigations. We will continue to watch developments closely and would be pleased to consult with you on the rapidly evolving administration of the federal securities laws.