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When the U.S. Securities and Exchange Commission meets this week to overhaul the $27 trillion private-equity industry, Republican Commissioner Hester Peirce isn’t shy.
“Rulemaking is ahistorical, irrational, illegal, impractical, confusing and pernicious…”. . In the name of promoting competition, we are suppressing it,” she said.
Regardless, the reforms passed with a 3-2 majority. But her sharply worded and methodically dissented set the stage for possible industry lawsuits to drive them out.
Pierce is an Ohio-born attorney who has dedicated her career to fighting what she sees as unwarranted and ill-advised government intervention in financial markets.
She was originally appointed to the SEC by former President Donald Trump and has spent the past three years battling efforts by current Chairman Gary Gensler to impose a series of new restrictions on the financial industry.
“Hester believes in people and believes that, given good information, individuals will make better choices than governments,” said Jay Clayton, a former Republican SEC chairman who overlaps with her on the committee .
This approach made her an early supporter of the crypto industry. She believes the SEC should make it easier, not harder, for investors to participate in the industry, earning her the nickname “Crypto Mom.”
“Our role is not to be the gatekeepers of innovation,” she said. “We should be constantly trying to create an environment where people can innovate without spending all our time thinking about regulatory pitfalls.”
Pierce, whose father was a real estate broker and mother an economics professor who ran for governor of Ohio on the Liberal Party’s behalf, has been interested in finance for most of his life. As a teenager she loved charting stock prices and dreamed of becoming a securities analyst.
After studying economics at university, she entered Yale Law School. She then worked in private practice and with the SEC. There, she served as an adviser to Paul Atkins, another Republican commissioner known for his uncompromising attacks on regulation.
“Hester taught me everything I know,” he joked, before praising her vast knowledge of legal history and regulatory details. “She’s someone who can stand her ground.”
During and after the 2008 financial crisis, she served as an aide to Richard Shelby, the Republican leader of the Senate Banking Committee. While most members of Congress agree that the banks are in trouble because they are poorly regulated and that tighter regulation is needed, Pierce has learned a different lesson.
“It was a horrible time . . . I saw that if you put a bad rule in place, it could have a huge impact on people’s behavior,” she said, citing bank capital regulation that led some lenders to make big purchases that proved way of a security that is riskier than expected. “It made me approach the exercise of writing rules with more humility.”
The 52-year-old, who lives alone without even a pet, says running and baking are her hobbies. Colleagues and even her ideological opponents have praised her work ethic and passion for detailed research. She didn’t hesitate to thank the SEC staff for their hard work, even though she pointed out gaps in their work and voted against their recommendations.
“Hester is a conscientious public servant,” said Gensler, who has taken sides on nearly every policy disagreement. “Despite our policy differences, I am very grateful for her thoughtful contributions . . . In addition, she was always gracious and encouraging to staff.”
While Pierce has been reserved in personal interactions, she has been outspoken about her free-market beliefs in formal settings. She recently called the SEC a “paternalistic and lazy regulator,” and once complained about its “warped thinking.”
But Allison Herren Lee, a former Democratic commissioner, said: “She was smart and professional, and she was never unkind to me in our differences.”
Pierce’s staunch views have earned her fans and vicious critics, especially on the social media site X (formerly Twitter). When she voted against mandatory disclosure of more private fund information in January, the hashtag #FireHesterPeirce took off, with naysayers joining in attacks, including on her appearance.
Those who support Gensler’s regulatory agenda argue that Pierce’s constant dissent hurts the SEC because she calls into question the SEC’s purpose as a regulator and the sincerity of those who disagree with her. Such views, they say, undermine the design of an institution that requires two members from one party and three from the other to facilitate compromise.
“Hester is smart and nice, but uncompromising liberal views threaten the dominance of U.S. capital markets. Global investors have confidence in these markets because they are well regulated.” Dennis of financial reform group Better Markets Kelleher (Dennis Kelleher) said.
As vexing as a three-year loss might be, Pierce kept fighting. “I hope everyone agrees with me and that we’re not going to write rules that I don’t think we should. But that’s the world we’re in,” she said.
Atkins, her former boss and ideological ally, praised her commitment: “It’s a good thing for her that she lasted this long.” He predicted that the powerful conservative majority on the Supreme Court would eventually accept her. Argument and reward her for the fight. “There’s a long history of dissent being heard by the courts,” he said.
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