Commissioner Peirce’s Farewell Remarks Underscore a Central Constraint on SEC Authority

Commissioner Hester M. Peirce’s June 9, 2026 remarks at the U.S. Chamber of Commerce Capital Markets Summit should be read less as a farewell address than as a concise statement of administrative-law discipline for the Securities and Exchange Commission.

Although delivered in the form of a departure speech, Commissioner Peirce’s remarks identify a throughline that has defined much of her tenure: the SEC’s authority is substantial, but bounded. The Commission may protect investors, police fraud, require disclosure, regulate intermediaries, and pursue remedies only within the statutory and constitutional limits imposed on it. That proposition is not merely formal. It has direct consequences for rulemaking, enforcement, remedies, settlement practices, digital-asset regulation, and the agency’s broader relationship with U.S. capital markets.

Commissioner Peirce’s principal contribution has been to frame these limits as essential to effective regulation rather than as impediments to it. On that view, the Commission’s credibility depends not on the breadth of its asserted jurisdiction, but on the discipline with which it exercises the jurisdiction Congress actually conferred.

That discipline is not only intellectual. It is temperamental. Commissioner Peirce has often been described by reference to the positions she has taken, particularly in the digital-asset context. But the more important feature of her tenure may be the method behind those positions: curiosity before conclusion, engagement before prescription, and a willingness to test regulatory instincts against the practical realities of markets.

I saw that quality firsthand nearly ten years ago. I was a first-year associate in New York, working out of Sidley’s Midtown office, and already consumed by the legal questions surrounding digital assets. I reached out to Commissioner Peirce and asked whether she would be willing to meet for coffee. She did not know me. I was not a client, a policymaker, or anyone with institutional consequence. I was simply a junior lawyer trying to understand where crypto regulation was headed.

She responded with characteristic directness: if I could get downtown in twenty minutes, she had time.

I rushed out of the office, scrambled onto the first train to the Financial District, and met her at a Starbucks. The conversation was memorable not because she indulged a young associate’s enthusiasm, although she did. It was memorable because the discussion was substantive, generous, and genuinely fun. We talked about crypto regulation, market structure, custody, investor protection, and many of the same questions that would continue to drive the digital-asset debate for years to come: how existing securities-law categories should apply, where they fit poorly, what compliance could realistically look like, and how markets might develop if regulators failed to provide a workable path forward.

That is the kind of person and regulator Commissioner Peirce has been. She is thoughtful, curious, humble, and serious enough about markets to listen carefully even to a crypto-obsessed first-year associate with more questions than credentials. That quality helps explain why she has so often gotten the digital-asset debate right, or at least asked the questions that later proved unavoidable. Her views were not formed from slogans. They were formed from sustained engagement with the technology, the law, and the people trying to build within both.

That same method runs through her farewell remarks.

Capital Markets as the Starting Point

The speech begins with a defense of U.S. capital markets. Commissioner Peirce describes capital markets as institutions that allocate capital to productive use, permit risk and reward to be shared, and allow entrepreneurs without inherited wealth or privileged access to raise money from strangers. Her point is not merely economic. It is institutional.

Capital markets function because participants trust the rules under which they operate. Investors, issuers, intermediaries, and other market participants rely on a regulatory framework that is knowable, consistently enforced, and administered with a measure of neutrality. The SEC’s role in that system is significant. But the Commission’s function is not to substitute its own judgment for that of investors or operating companies. It is to administer the securities laws as enacted by Congress.

That distinction is central to the speech. Commissioner Peirce does not advance an argument against securities regulation. She advances an argument for lawful securities regulation. Fraud enforcement, disclosure obligations, books-and-records requirements, intermediary regulation, and market oversight remain indispensable. But those tools serve the market by preserving trust. They become more problematic when used to advance policy objectives untethered from the securities laws.

The practical implication is that market confidence depends on legal confidence. A Commission that exceeds its statutory authority may achieve short-term policy objectives, but it risks undermining the predictability that makes U.S. capital markets attractive in the first place.

Statutory Restraint as an Institutional Obligation

Commissioner Peirce’s remarks are grounded in a familiar but often contested principle: the SEC is a statutory agency. Its powers are delegated. They are not inherent. The securities laws authorize meaningful regulatory action, but they do not confer a general mandate to supervise all matters that affect public companies, investment advisers, broker-dealers, private funds, or digital-asset markets.

That point has particular force in modern markets. The Commission routinely applies statutes enacted in 1933, 1934, 1940, and later amendments to technologies and market structures that Congress could not have anticipated in detail. That interpretive work is unavoidable. But interpretive difficulty does not eliminate statutory limits. The agency may reasonably apply broad statutory terms to new facts, but it may not treat novelty as a substitute for authority.

Commissioner Peirce’s remarks identify several recent developments that, in her view, reflect either prior overextension or a corrective return to statutory boundaries. The examples include the rescission of the SEC’s no-deny settlement policy, the proposed rescission of the climate-disclosure rules, proposed revisions to Form PF, the concept release on the Consolidated Audit Trail, proposed amendments to Rule 15c2-11, the Commission’s approach to digital assets, and recurring questions concerning the scope of enforcement remedies and statutory antifraud provisions.

The underlying concern is the Commission should not rely on broad policy interests to obscure the question whether the statute authorizes the action taken.

Settlement Policy and Government-Conditioned Silence

The Commission’s rescission of its no-deny settlement policy is one of the clearest examples in the speech. For decades, the SEC required settling parties to agree that they would not publicly deny the Commission’s allegations, even where the settlement did not require admissions. That practice presented a structural tension. A party could settle without admitting the allegations, but could not publicly deny those same allegations after settlement.

Commissioner Peirce’s concern is not simply that the policy was inconvenient for settling parties. It is that government-conditioned silence raises constitutional concerns. The SEC has an important interest in protecting the integrity of its settlements and avoiding public statements that undermine final resolutions. But those interests do not eliminate the First Amendment implications of requiring regulated parties to refrain from criticizing or denying government allegations as a condition of settlement.

The rescission therefore has significance beyond settlement mechanics. It reflects a broader principle: enforcement efficiency does not displace constitutional constraint.

Climate Disclosure and the Limits of Materiality

Commissioner Peirce’s discussion of the climate-disclosure rules likewise turns on statutory authority. The difficult legal question is not whether climate-related information can be material. It can. For certain issuers, climate-related risks, transition costs, regulatory exposure, physical risks, or capital expenditures may plainly matter to investors.

The harder question is whether the Commission may impose a broad, prescriptive climate-disclosure regime on public companies under the securities laws as currently written. Commissioner Peirce’s answer is that the Commission’s disclosure authority must remain tied to materiality and the purposes of the federal securities laws. On that view, disclosure regulation crosses a line when it becomes a mechanism for influencing corporate conduct or advancing non-securities policy objectives.

This is not an argument that investors lack interest in climate-related information. It is an argument that investor interest alone does not define the Commission’s jurisdiction. The statutory disclosure regime is designed to facilitate investment decision-making. It is not a general corporate-governance code, and it is not a vehicle for converting public-company reporting into a comprehensive national policy instrument.

Regulatory Accretion: Form PF, CAT, and Rule 15c2-11

Commissioner Peirce also addresses a quieter but pervasive problem: regulatory accretion. Reporting regimes expand. Surveillance systems become more comprehensive. Rules designed for one market migrate into another. Each expansion may be defensible in isolation. Over time, however, the cumulative regime can become difficult to reconcile with the purpose that originally justified it.

Form PF illustrates the point. Adopted in the wake of the financial crisis, Form PF was designed to provide regulators with information relevant to systemic-risk monitoring. Commissioner Peirce’s concern is that the form has expanded well beyond that original conception. That expansion may be useful to regulators, but usefulness is not the same as statutory authority. Compelled reporting should remain tethered to the purpose for which Congress authorized it.

The Consolidated Audit Trail presents a related but distinct issue. CAT may provide important surveillance capabilities. But it also represents an enormous data-collection infrastructure involving sensitive trading information. A serious assessment of CAT must account not only for enforcement utility, but also for cybersecurity, cost, governance, privacy, and civil-liberties concerns. Commissioner Peirce’s point is that surveillance capacity should not be treated as self-justifying merely because it may assist enforcement.

Rule 15c2-11 provides a more technical example. The Commission’s recent proposal addressing the rule’s application reflects the practical consequences that follow when a rule developed for one market context is extended into another. The broader lesson is that rule migration can impose uncertainty and costs that were not contemplated when the rule was adopted.

Together, these examples show that administrative overextension often occurs incrementally. It rarely announces itself as a jurisdictional event. It emerges through forms, systems, interpretive positions, staff statements, and enforcement theories that gradually expand beyond their original legal foundation.

Internal Accounting Controls and Statutory Grammar

Commissioner Peirce’s remarks on internal accounting controls are among the most consequential portions of the speech. Section 13(b)(2)(B) of the Exchange Act requires issuers to maintain a system of internal accounting controls sufficient to provide reasonable assurances concerning authorization, recording, and accountability for transactions and assets. The statutory phrase “internal accounting controls” is not incidental. It limits the provision’s reach.

In recent years, the Commission has advanced theories that use the internal-accounting-controls provision to address conduct that is only indirectly, or not at all, related to accounting. The attraction of that approach is evident. Controls language is flexible, and many corporate failures can be described as failures of internal discipline. But if every internal control deficiency can be characterized as an internal accounting controls violation, the statutory term “accounting” no longer performs any limiting function.

That is Commissioner Peirce’s central objection. It is not a defense of weak controls. Nor is it a denial that cybersecurity, compliance, disclosure, or operational controls may be important to investors. The point is one of statutory fit. Congress enacted an internal-accounting-controls provision. The Commission may not convert that provision into a general internal-controls mandate.

The district court’s decision in SEC v. SolarWinds Corp. illustrates the force of this concern. There, the court rejected the Commission’s attempt to treat cybersecurity access controls as internal accounting controls. The decision underscores the distinction between a significant corporate risk and a risk that falls within a particular statutory provision. The former does not automatically establish the latter.

For issuers and counsel, the implication is significant. Internal-controls enforcement theories should be analyzed with attention to the statutory category at issue. The presence of a control failure does not end the inquiry. The question remains whether the failure concerns accounting controls within the meaning of Section 13(b)(2)(B).

Section 206(4) and the Definition of Fraud

Commissioner Peirce’s discussion of Section 206(4) of the Advisers Act raises a more subtle interpretive issue. Section 206(4) prohibits investment advisers from engaging in acts, practices, or courses of business that are fraudulent, deceptive, or manipulative, and authorizes the Commission to define and prescribe means reasonably designed to prevent such conduct.

The question is whether that authority permits the Commission to define negligent conduct as fraudulent, deceptive, or manipulative. Commissioner Peirce suggests that it should not. Fraud, deception, and manipulation historically carry a state-of-mind component. Although the Commission may adopt prophylactic rules reasonably designed to prevent fraud, that authority is not necessarily the same as authority to redefine fraud itself.

The distinction is important. Securities law recognizes negligence-based liability in certain contexts. But where Congress uses terms associated with knowing or intentional misconduct, an agency should be cautious before construing those terms to reach mere negligence. The practical concern is real: negligent adviser misconduct can harm investors. But the existence of investor harm does not resolve the statutory question.

Commissioner Peirce’s position does not foreclose negligence-based adviser regulation. It requires the Commission to identify the correct legal basis for it. That is a narrower, but important, point. Enforcement convenience cannot supply statutory meaning.

Pay-to-Play and Political Speech

Commissioner Peirce also identifies constitutional concerns with the investment adviser pay-to-play rule. The rule addresses a serious problem: the risk that political contributions may distort the selection of advisers for government clients, including public pension plans. That risk implicates public trust and investor protection.

But the rule also burdens political participation. It does not directly prohibit contributions, but it can impose significant economic consequences on advisers and covered associates who make covered political contributions. Because political contributions implicate First Amendment interests, Commissioner Peirce argues that the Commission should examine whether the rule is appropriately tailored and whether Congress charged the SEC with addressing the relevant anti-corruption objective in the manner the rule reflects.

The point is not that pay-to-play concerns are illusory. They are not. The point is that anti-corruption objectives do not eliminate the need for constitutional analysis. Where a securities regulation affects political speech or participation, the Commission should not assume that the securities-law context makes the First Amendment question disappear.

Disgorgement and Remedial Discipline

The speech’s discussion of disgorgement is particularly important for enforcement practice. Disgorgement is among the SEC’s most significant remedies. It is designed to deprive wrongdoers of unlawful gains and, where feasible, return money to harmed investors. But the remedy’s legal foundation has been contested for years.

In Kokesh v. SEC, the Supreme Court held that SEC disgorgement operated as a penalty for statute-of-limitations purposes. In Liu v. SEC, the Court held that the SEC could seek equitable disgorgement, but only subject to traditional equitable limitations, including net profits and return to victims where feasible. Congress later added express statutory disgorgement authority, creating additional questions about the relationship between statutory disgorgement and equitable limits.

Commissioner Peirce’s remarks address the Supreme Court’s recent decision in Sripetch v. SEC. The Court held that the SEC need not prove pecuniary loss to investors before obtaining disgorgement. That holding is important for the Commission. But it does not make disgorgement an unconstrained monetary sanction. The Court reiterated that equitable disgorgement is tied to wrongful gains, not total revenues, and that return to wronged investors remains central to the equitable remedy.

Commissioner Peirce reads Sripetch as both a win for the Commission and a warning. The Commission prevailed on the pecuniary-loss issue, but the Court’s disgorgement jurisprudence continues to impose meaningful limits. Net profits matter. Causation matters. The relationship between the defendant’s gain and the violation matters. The disposition of recovered funds matters. And if disgorgement is untethered from equitable principles, additional constitutional questions, including jury-trial questions, may follow.

For enforcement counsel and defense counsel alike, the lesson is that disgorgement should be treated as a legal remedy with defined boundaries. It is not simply a settlement number or an equitable catchall.

Digital Assets and the Difference Between Jurisdiction and Framework

Commissioner Peirce’s brief reference to digital assets fits the same pattern. The central question in crypto regulation has never been whether fraud should be policed. It should be. Nor is the issue whether certain digital-asset transactions may involve securities. They may. The harder question is whether the Commission can regulate broad segments of the digital-asset market through enforcement theories that do not provide a workable path to compliance.

Commissioner Peirce has long criticized regulation by enforcement in this area. Her concern is that telling market participants to register is insufficient if the Commission has not created a regulatory path that reflects the relevant technology, market structure, custody issues, disclosure questions, and secondary-market realities. A jurisdictional theory may support an enforcement action in a particular case. It does not, standing alone, create a functioning regulatory framework.

That distinction is likely to remain central as the Commission continues to address token classification, trading platforms, custody, disclosures, decentralized protocols, and coordination with other regulators. Some digital-asset activity falls within the securities laws. Some may not. In either case, the Commission’s approach must be grounded in the statutes it administers.

The Function of Dissent

Commissioner Peirce’s tenure also illustrates the institutional value of dissent. Dissents in administrative agencies are not merely symbolic. They preserve arguments, expose legal weaknesses, sharpen judicial review, inform market participants, and create a record for future Commissions.

That function has been particularly important in areas where the Commission has relied on aggressive interpretations of statutory text or broad assertions of regulatory authority. A Commission order can make a contested theory appear settled. A dissent prevents that effect. It clarifies that the agency’s position is an institutional choice rather than an interpretive inevitability.

Commissioner Peirce’s dissents and separate statements did not always prevail when issued. But many of the concerns she raised have since appeared in litigation, judicial decisions, policy reconsiderations, and Commission reversals. That is not a matter of personal vindication. It is a demonstration that carefully articulated legal objections can have institutional force over time.

The Limits of the Argument

A serious assessment of Commissioner Peirce’s remarks should also acknowledge the limits of her approach. Statutory restraint cannot become regulatory paralysis. Markets do not reliably self-correct fraud, manipulation, conflicts of interest, or serious information asymmetries. The federal securities laws were enacted because private ordering, standing alone, was insufficient.

Nor is statutory interpretation always as clear as restraint-oriented rhetoric can suggest. Congress often uses broad terms precisely because agencies must apply statutes to changing market conditions. Terms such as “security,” “dealer,” “exchange,” “fraudulent,” “manipulative,” and “in the public interest” require judgment. The application of old text to new facts is not inherently unlawful.

Materiality also evolves. Investor expectations, risk profiles, and market practices change over time. The Commission has long exercised judgment in determining what information investors need in public-company disclosure. Not every expansion of disclosure requirements is an improper exercise in substantive regulation.

These qualifications matter. They do not defeat Commissioner Peirce’s thesis. They define the relevant question. The issue is not whether the Commission should act. The issue is whether the Commission can explain why its action is authorized, reasoned, proportionate, and consistent with the statutory scheme.

A Serious Tribute

Commissioner Peirce closed by observing that the SEC will benefit from new voices and that no seat should be occupied by the same person for too many years. That was a fitting institutional note. Her farewell was not centered on personality. It was centered on principle.

The serious tribute to Commissioner Peirce is not to describe her as a persistent dissenter or a deregulatory voice. It is to recognize that she forced the Commission, the bar, and market participants to confront the legal questions that should precede regulatory action:

What authority has Congress conferred?

What does the statutory text permit?

When does disclosure regulation become substantive regulation?

When does surveillance exceed the regulatory need that justifies it?

When does a prophylactic rule redefine the underlying violation?

When does disgorgement become punitive rather than equitable?

When does enforcement become a substitute for rulemaking?

Those questions are not anti-regulatory. They are the questions that make regulation lawful.

Commissioner Peirce leaves the Commission as markets are becoming more complex, not less. Digital assets, artificial intelligence, private markets, predictive analytics, tokenization, cybersecurity, market surveillance, and evolving investor expectations will continue to test the federal securities laws. Some issues will fit comfortably within existing authority. Others will require new rules. Some will require Congress.

The Commission’s institutional temptation will be to treat urgency as authority. Commissioner Peirce’s final argument is that it cannot.

That argument is austere, but it is also essential. The SEC protects capital markets best when it enforces the law Congress wrote, mandates disclosure within the securities-law framework, pursues remedies within their legal limits, and resists the urge to convert policy preference into jurisdiction.

Commissioner Peirce’s tenure should be remembered for that discipline. She made statutory restraint a serious regulatory position. She made dissent useful. She made legal limits harder to ignore.

That is the work.