Today, after a robust and constructive notice and comment process and based on decades of staff experience, the Commission approved a recommendation from the Office of the Chief Accountant to modernize several discrete aspects of our auditor independence rules.

Auditor independence is an important pillar of SEC regulation. High quality, reliable financial statements are the bedrock of our disclosure-based regulatory ecosystem, and audit quality, which is enhanced by our auditor independence framework, is a key driver of high quality financial disclosure.

Our auditor independence rules are far-reaching and restrictive. They should be, as even the appearance of inappropriate influence can undermine confidence. As markets evolve, however, far-reaching and restrictive rules can have unintended, negative consequences. In this case, the reach of our rules, particularly in the cases of a broad, diversified investment portfolio and certain consumer-finance transactions (such as student loans), is operating to limit auditor choice which, in turn, may adversely affect the important arms-length nature of the issuer-auditor relationship.

Today’s modest and tailored amendments reduce or eliminate those adverse effects on auditor choice without detracting from the independence obligations of auditors and issuers. This type of retrospective review and tailored action is important to the continued effectiveness and efficiency of our rules.

I am grateful to the Office of the Chief Accountant, the Division of Investment Management, the Division of Economic and Risk Analysis and the Office of the General Counsel for their high quality, engaged and transparent work in this area. In particular, I would like to thank:

• From the Office of the Chief Accountant: Sagar Teotia, Natasha Guinan, Diana Stoltzfus, Jenifer Minke-Girard, Duc Dang, Matt Hodder, Vassilios Karapanos, and Jasdeep Mangat
• From the Division of Investment Management: Alison Staloch, Brian Johnson, Alexis Cunningham, Jensen Wayne, and Pamela Ellis
• From the Office of the General Counsel: Bryant Morris and Omid Harraf
• From the Division of Economic and Risk Analysis: Vladimir Ivanov and Mengxin Zhao