Low Tide at the SEC: From Five Commissioners to Two
Holland & Knight continues its SECond Opinions Blog Summer Series featuring posts written and researched by the associates from our Securities Enforcement Defense Team. This blog comes from Tysons Associate Laura Supple, who focuses her practice on white collar defense and investigations, as well as national security, defense and intelligence, and complex commercial litigation.
At the U.S. Chamber of Commerce Capital Markets Summit on June 9, 2026, SEC Commissioner Hester M. Peirce acknowledged that her days of giving the standard SEC disclaimer are "rushing to an end" and described herself as a "soon-to-be former regulator." Regent University School of Law previously announced that Commissioner Peirce will join its faculty as an associate professor this November following her tenure at the SEC. Commissioner Peirce, widely known in the digital assets community as "Crypto Mom" for her support of clearer regulatory frameworks for cryptocurrency and digital assets, has led the SEC's Crypto Task Force since early 2025. Although her precise SEC departure date has not been publicly set, her remarks underscore that the Commission may soon move from an already lean three-member body to just two commissioners, raising practical questions about how the SEC will continue to govern during a period of ongoing enforcement activity.
A Commission Designed for Five
The SEC consists of five commissioners appointed by the president, along with the advice and consent of the U.S. Senate. No more than three commissioners may belong to the same political party – a structural feature intended to preserve a measure of bipartisan participation in Commission decision-making. Commissioners serve staggered five-year terms – with one term expiring on June 5 of each year – and the president designates one commissioner to serve as chair. As a practical matter, the chair typically belongs to the same political party as the sitting president, giving the administration a 3-2 majority when the Commission is fully staffed.
The Current State of Play: Operating with Three
Since the departures of former Commissioners Caroline Crenshaw and Jaime Lizárraga, no Democrats have served on the Commission. President Donald Trump has not nominated replacements for either vacancy. As a result, the SEC has been operating with only three commissioners, all Republicans: Chairman Paul Atkins, Commissioner Peirce and Commissioner Mark Uyeda, who previously served as Acting Chair. On July 10, 2026, the White House stated that it had asked Senate Democrats for recommended nominees for the open SEC seats but had not received any names in response.
Commissioner Peirce first joined the Commission in 2018. She was renominated by President Trump in 2020 and confirmed to a second term that expired on June 5, 2025. Peirce has been serving in a holdover capacity, as commissioners may continue to serve for up to approximately 18 months after their terms expire if they are not replaced before then. Peirce's anticipated November 2026 start date at Regent University is consistent with her current holdover allowance.
Down to Two: Can the SEC Still Function?
If Commissioner Peirce departs before additional commissioners are confirmed, the SEC would be left with only Chairman Atkins and Commissioner Uyeda. That raises an immediate question: Can a five-member Commission legally act with only two members?
Under the SEC's quorum rule, yes. The default rule is that "[a] quorum of the Commission shall consist of three members." But the rule expressly provides that "if the number of Commissioners in office is less than three, a quorum shall consist of the number of members in office." It further provides that, where disqualifications reduce the number of participating commissioners to two, those two members constitute a quorum for that matter. 17 C.F.R. Section 200.41.
This rule, sometimes referred to as the "Rule of Two," was adopted during the Clinton Administration when the SEC similarly dropped to just two commissioners (then-Chair Arthur Levitt and Commissioner Steven Wallman) because the president was slow to nominate replacements. Its validity was challenged and upheld by the U.S. Court of Appeals for the D.C. Circuit, which concluded that the SEC's broad rulemaking authority under the Exchange Act included the power to define its own quorum. The U.S. District Court for the Southern District of New York similarly upheld the rule.
The practical effect is significant. A two-member Commission could continue to act on matters requiring Commission approval, including enforcement recommendations, settlements, formal investigative orders, rulemaking and other policy decisions. But the two-member Commission would have little margin for disagreement: Both commissioners would need to participate and agree. A one-to-one split would prevent action, and a recusal by either commissioner could leave the Commission unable to act on that matter.
Implications for Enforcement and Rulemaking
For registrants, the development warrants attention. During any period in which only two commissioners are in office, Commission-level decisions could be made solely by Chairman Atkins and Commissioner Uyeda. That would include enforcement action decisions requiring a Commission vote, settlements requiring Commission approval, rulemaking and other significant policy determinations.
This structure would not necessarily prevent the SEC from functioning. To the contrary, the SEC's quorum rule was designed to avoid paralysis when vacancies reduce the Commission below three members. But it would create an unusual period in which Commission action could be taken without any sitting minority party commissioner participating. That is a marked departure from the bipartisan structure Congress contemplated for a fully staffed Commission, even though vacancies themselves do not violate the statutory cap limiting any one party to three commissioners.
The SEC's newly announced 2026 regulatory agenda offers an early illustration of how a leaner, single-party Commission might operate in practice. On July 7, 2026, Chairman Atkins issued a statement describing an agenda designed to deliver on "President Trump's goal to ensure that the United States is the crypto capital of the world," including rules for capital raising with crypto assets and clarity on how market participants may custody and trade tokenized securities onchain, together with proposals aimed at reversing the decline in public companies and expanding retail investor access to private markets.
The agenda is a 38-item roadmap anchored by three crypto-specific rulemaking pillars: safe harbors for token offerings, amended broker-dealer financial responsibility rules tailored to crypto assets, and Exchange Act amendments addressing how alternative trading systems and national securities exchanges handle crypto-asset securities. The agenda also includes an initial public offering (IPO) and disclosure overhaul billed as an effort to "Make IPOs Great Again."
Notably, this agenda was formulated and unveiled while the Commission has already been operating with only three commissioners, all from the same political party. That timing suggests a further reduction to two commissioners would not necessarily slow the Commission's ability to advance the administration's crypto and capital-formation priorities without the need for minority-party buy-in.
The two-member dynamic takes on added significance in light of the U.S. Supreme Court's recent decision in Trump v. Slaughter, which overruled nearly 90 years of precedence and held that for-cause removal protections for commissioners of independent agencies like the Federal Trade Commission violate the separation of powers, thereby restoring the president's authority to remove such officials at will. The decision calls into question the tradition of removal protections SEC commissioners have historically enjoyed, raising questions about the degree of influence a president could exert over the Commission's direction going forward. Whether that translates into the Commission adopting the administration's preferences as a matter of course is a separate question, however, as the SEC and its chairs have long taken pride in a tradition of nonpartisan, mission-driven decision-making. That tradition may temper, even if it does not eliminate, questions about how the Supreme Court's recent opinion could shape the agency's work going forward.
The SECond Opinions Blog will continue to monitor developments regarding the Commission's composition and any nominations to fill the open seats. If you have questions about these developments, please contact the authors or other members of Holland & Knight's Securities Enforcement Defense Team.