Key Takeaways
- •Chairman Atkins outlined a three-pillar plan to revitalize IPOs by focusing on materiality in disclosures, depoliticizing shareholder meetings, and offering litigation alternatives for public companies.
- •Paul Atkins, SEC Chairman, committed to returning the agency to its core mission, focusing on investor protection, market efficiency, and capital formation by streamlining regulations.
- •Rep. Waters (D-CA) pressed Chairman Atkins on the SEC's dismissal of crypto cases, including Justin Sun's, questioning political influence and asking if prosecution would continue.
- •Republicans lauded Chairman Atkins for reversing "politicized rulemakings" and prioritizing capital formation, while Democrats accused him of politically motivated dismissals of crypto cases.
- •The SEC plans to issue an innovation exemption for tokenized securities this year and will continue reviewing rules for e-delivery and the Consolidated Audit Trail.
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Hearing Analysis
Key Testimony
On February 11, 2026, the House Financial Services Committee held a high-stakes oversight hearing titled "Oversight of the Securities and Exchange Commission," featuring testimony from SEC Chairman Paul Atkins. The hearing served as a platform for the Republican majority to laud a shift toward capital formation and deregulation, while Democratic members raised sharp concerns regarding potential conflicts of interest involving President Donald Trump’s business ventures and the dismissal of high-profile enforcement actions in the digital asset sector.
Overview
Chairman J. Hill (R-AR-2) opened the hearing by stating that the SEC had strayed from its statutory mandate during the Biden administration, moving toward "politicized rulemakings" and "regulation by enforcement." He praised Chairman Atkins for steering the Commission back to its core mission of facilitating capital formation, noting a 10 percent drop in publicly listed companies since 2021. In contrast, Ranking Member Maxine Waters (D-CA-43) characterized the new SEC leadership as a "Wall Street and billionaire holiday," accusing Atkins of withdrawing 14 major investor protection proposals and dismissing investigations into "Trump’s crypto billionaire friends."
Key Testimony
Chairman Paul Atkins testified that his administration is focused on three pillars to "make IPOs great again": re-anchoring disclosures in materiality, depoliticizing shareholder meetings, and providing litigation alternatives to shield companies from frivolous lawsuits. Atkins used a physical prop—a nearly 1,000-page 10-K filing from Entergy—to illustrate "information overload," arguing that such voluminous disclosures obscure rather than inform. He emphasized that the SEC is working to modernize and streamline reports to reduce the $2.7 billion annual cost public companies face in filing annual reports.
Overview
A significant portion of the hearing focused on digital asset regulation. Atkins announced that the SEC, in collaboration with CFTC Chairman Mike Seelig through "Project Crypto," is developing a "token taxonomy" and an "innovation exemption." This exemption is intended to be a time-limited, transparent "sandbox" for tokenized equities to trade on-chain. Republican members, including Rep. Ann Wagner (R-MO-2) and Rep. Andy Barr (R-KY-6), expressed strong support for the CLARITY Act and the INVEST Act, which aim to provide a functional framework for digital assets and reduce compliance burdens for small businesses.
Partisan tensions peaked during discussions of enforcement and ethics. Ranking Member Waters and Rep. Stephen Lynch (D-MA-8) questioned the dismissal of cases against Binance and the staying of litigation against Justin Sun, founder of the TRON network. Lynch highlighted that Sun had invested $75 million in World Liberty Financial—a crypto project tied to the Trump family—and noted that former Binance CEO Changpeng Zhao had received a presidential pardon. Rep. Al Green (D-TX-9) raised allegations of market manipulation, citing a surge in the "DJT" (Trump Media & Technology Group) stock following social media posts by the President. Chairman Atkins declined to comment on specific ongoing matters or investigations, maintaining that the SEC remains independent and focused on "real fraud."
The committee also addressed corporate governance and the proxy advisory industry. Chairman Hill and Rep. Bryan Steil (R-WI-1) criticized the "duopoly" of ISS and Glass Lewis, which control 95 percent of the proxy advisory market. Atkins agreed that the concentration in this industry is a symptom of the "weaponization of shareholder proposals" and indicated the SEC is reviewing the ecosystem to ensure proxy advisors adhere to fiduciary duties. Rep. Brad Sherman (D-CA-32) urged the SEC to reconsider Regulation AB II to revive the market for registered mortgage-backed securities not guaranteed by Fannie Mae or Freddie Mac, a proposal Atkins signaled was "high on the list" for review.
Key Testimony
Other policy areas discussed included the Consolidated Audit Trail (CAT) and the Public Company Accounting Oversight Board (PCAOB). Rep. Barry Loudermilk (R-GA-11) challenged the constitutionality of the CAT’s collection of Personally Identifiable Information (PII). Atkins testified that he has directed staff to right-size the CAT, with a goal of reducing its budget to under $100 million. Regarding the PCAOB, Rep. Bill Huizenga (R-MI-4) noted the recent 9.4 percent budget decrease and the reduction in board member compensation, which Atkins confirmed as part of a broader effort to streamline the agency.
Overview
The hearing highlighted a clear divide in regulatory philosophy. Republicans focused on the INVEST Act (which recently passed the House) and the Small Business Investor Capital Access Act to raise registration thresholds for private funds. Democrats, including Rep. Ayanna Pressley (D-MA-7) and Rep. Sean Casten (D-IL-6), argued that rolling back climate and diversity disclosures harms investors who view such data as material to long-term value. Pressley specifically advocated for her Greater Supervision in Banking Act (GSIB) to mandate disclosures from the nation's largest banks.
As the hearing concluded, Chairman Atkins committed to providing written responses regarding the SEC’s internal processes for reviewing Trump-affiliated ETFs and the status of various rulemakings. The Commission is expected to move forward with the "innovation exemption" for digital assets and a formal "regulatory flexibility agenda" later in 2026. The legislative next steps involve the Senate's consideration of the INVEST Act and the CLARITY Act, which Atkins described as essential to "future-proofing" the American capital markets.
Transcript
If we could ask everybody to take your seats, please. Committee on Financial Services will come to order. [Gavel sounds.] 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 five legislative days within which to submit extraneous materials to the chair for inclusion in the record. I now recognize myself for four minutes for an opening statement. Good morning. I want to welcome my longtime friend and our chairman of the 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 facilitate capital formation. At its core, this mission is about fostering public confidence in our markets. These are not suggestions, they're 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 towards 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's why in December, the House advanced the 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 fostering efficient, transparent, and innovation-friendly markets that protect investors, provide regulatory clarity that markets need, particularly in emerging areas such as digital assets. It's 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'll 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'll also assess the SEC's approach to the 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, Mrs. Waters from California, for four minutes for an opening statement.
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