House Financial Services Committee Chairwoman Maxine Waters (D-CA) released a discussion draft of legislation that would amend the SEC’s approach to considering and granting waivers to automatic bad actor disqualifications.  If adopted, the “Bad Actor Disqualification Act of 2019” (the “Draft Bill”) would, among other things, introduce a 180-day temporary waiver period for an entity that demonstrates that disqualification would cause “immediate irreparable injury,” require a notice and comment period and public hearing for all waiver applications, prohibit the SEC or its Staff from providing applicants with advice as to whether a waiver is likely to be granted, and require the SEC to maintain a database of entities whose waiver applications have been denied.  The Draft Bill would further require the Commission to grant waiver requests only if it finds that such a grant would “promote[] market integrity” and be “in the public interest” and “necessary for the promotion of investors.”

Davis Polk Client Memorandum