SEC Chair Mary Jo White Announces Departure as Regulatory Shift Begins
U.S. Securities and Exchange Commission Chair Mary Jo White will depart her role coinciding with the end of the Obama Administration in January 2017.
Her resignation marks the symbolic shift in the composition of the Commission, as the bipartisan panel faces a minimum of three new appointments from president-elect Donald Trump. With her departure, just two of the SEC’s five commissioner seats will remain filled, with Kara Stein and Michael Piwowar continuing on in their posts. Recently, two nominees put forth by President Barack Obama have been stymied by a gridlocked Senate.
White, whose term had been scheduled to end in 2019, spent much of her nearly four-year tenure completing mandates created under the Dodd-Frank Act, considered to be one of Obama’s signature domestic policies.
Members of Trump’s transition team and his advisors, however, have indicated the possibility of “dismantling” Dodd-Frank through major revisions. His financial regulatory agencies transition team led Paul Atkins, for instance, is on record describing it as a “calamity.”
Still, few have called for its total removal, with Trump campaign advisor Anthony Scaramucci saying that the administration would review the law and “the worst anti-business parts of it will be gutted.”
The hope, Scaramucci said, is to reduce federal agency regulations by as much as 10 percent in an attempt to stimulate economic growth and help the flow of capital.
DOL Fiduciary Rule Under Fire?
Scaramucci identified another Obama administration initiative in Trump’s crosshairs as the DOL’s new fiduciary rule, which is due to take effect in April 2017.
Republicans previously attempted to kill the rule by passing a bill against it, but the effort had little teeth because of the nearly certain probability of an Obama veto. Though Trump has not spoken specifically about the DOL rule either during the campaign cycle or since winning the election, his advisers have voiced an intention of stopping it.
“It would be the next piece of major legislation to kill jobs and hurt investors,” Scaramucci wrote in a recent op-ed in the Financial Times.
Meanwhile, Texas Rep. Jeb Hensarling, chairman of the House Financial Services Committee, recently said he plans to take his Financial CHOICE Act, which would replace Dodd-Frank and kill the DOL fiduciary rule, to a vote after the election, and that Trump supports it.
Regardless of the specifics, it seems certain that Trump’s administration is focused on providing regulatory relief as it reshapes the way Wall Street is overseen by the SEC.
Under White’s tenure, the Commission brought more than 2,850 enforcement actions, and obtained judgments and orders totaling more than $13.4 billion. White also oversaw the increased prominence of the whistleblower program, which has awarded over $100 million since its inception.
White also increased SEC exam staffing by around 20 percent, shifted staff to heighten the focus on the investment management industry, and embraced the increased use and enhancement of technology tools in analyzing data and detecting potential misconduct.
“My duty has been to ensure that the Commission implemented strong investor and market protections, and to establish an enduring foundation for future progress in the most critical areas – asset management regulation, equity market structure and disclosure effectiveness,” she said in a statement. “Thanks to the hard work and dedication of the SEC’s staff, we have accomplished both.”
Some of that work, however, is likely to be undone.
Ascendant addressed some of the potential impacts and implications of a Trump presidency during our recent conference, A Commitment to Compliance: Climbing the Mountain of Regulatory Expectations, held in September in San Diego.
Additional guidance will be forthcoming during Ascendant’s December ComplianceCast. Click here to register.
Two-Thirds Expect Delay, Revisions to DOL Fiduciary Rule
With the presidential inauguration weeks away, there is little clarity about what the incoming administration will do in regards to the Department of Labor Fiduciary regulation.
President-elect Donald Trump’s pick to head the DOL, Andrew Puzder, so far has not yet commented on the rule, which would require financial advisers to retirement accounts to act in their clients’ best interests.
Ascendant recently polled a group of compliance professionals who attended our most recent ComplianceCast, “Highlights of 2016, A Look Forward to 2017,” with interesting results.
Of the group, nearly two-thirds (64%) believed that the rule would be delayed with a plan to revise. Meanwhile, 19% believe it will be implemented as scheduled on April 10, 2017, and 17% believe it will be withdrawn.
Because of the lengthy process involved in removing a regulation off the books, it may require some hard work if the Trump administration wants to kill it.
Still, there are some that believe that the withdrawal of the regulation could be ultimately beneficial for the registered investment adviser model.
Fred Reish of Drinker, Biddle & Reath makes that case here:
Over the years, more and more 401(k) plans have shifted to advisors who work in the RIA model because of its transparency, the focus on advice, and the avoidance of conflicts of interest. Part of that change was attributable to RIAs marketing themselves as fiduciary advisors. It’s possible that, going forward, RIAs will market their IRA services as fiduciaries, pointing out that non-fiduciary advisors have a lower standard of care (the suitability standard) and have conflicts in how they are compensated for selling certain products over others.
Further clarity should be materialize in the coming weeks, but it seems clear that while change is possible and delay is likely, the weeks and months to come will bring plenty to keep an eye on.
ComplianceCasts are broadcast monthly, focusing on key areas of interest for compliance, operational, and management personnel. Recent editions include Portfolio Management and Trading, Due Diligence of Third-Party Service Providers, and Planning for the Annual Review and Reporting. The full archive can be accessed by clicking here.
The Current State of Market Manipulation in Financial Markets
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Where, When and How to Make a Disciplinary Disclosure in Regulatory Filings
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SEC Chair Mary Jo White Announces Departure as Regulatory Shift Begins
U.S. Securities and Exchange Commission Chair Mary Jo White will depart her role coinciding with the end of the Obama Administration in January 2017.
Her resignation marks the symbolic shift in the composition of the Commission, as the bipartisan panel faces a minimum of three new appointments from president-elect Donald Trump. With her departure, just two of the SEC’s five commissioner seats will remain filled, with Kara Stein and Michael Piwowar continuing on in their posts. Recently, two nominees put forth by President Barack Obama have been stymied by a gridlocked Senate.
White, whose term had been scheduled to end in 2019, spent much of her nearly four-year tenure completing mandates created under the Dodd-Frank Act, considered to be one of Obama’s signature domestic policies.
Members of Trump’s transition team and his advisors, however, have indicated the possibility of “dismantling” Dodd-Frank through major revisions. His financial regulatory agencies transition team led Paul Atkins, for instance, is on record describing it as a “calamity.”
Still, few have called for its total removal, with Trump campaign advisor Anthony Scaramucci saying that the administration would review the law and “the worst anti-business parts of it will be gutted.”
The hope, Scaramucci said, is to reduce federal agency regulations by as much as 10 percent in an attempt to stimulate economic growth and help the flow of capital.
DOL Fiduciary Rule Under Fire?
Scaramucci identified another Obama administration initiative in Trump’s crosshairs as the DOL’s new fiduciary rule, which is due to take effect in April 2017.
Republicans previously attempted to kill the rule by passing a bill against it, but the effort had little teeth because of the nearly certain probability of an Obama veto. Though Trump has not spoken specifically about the DOL rule either during the campaign cycle or since winning the election, his advisers have voiced an intention of stopping it.
“It would be the next piece of major legislation to kill jobs and hurt investors,” Scaramucci wrote in a recent op-ed in the Financial Times.
Meanwhile, Texas Rep. Jeb Hensarling, chairman of the House Financial Services Committee, recently said he plans to take his Financial CHOICE Act, which would replace Dodd-Frank and kill the DOL fiduciary rule, to a vote after the election, and that Trump supports it.
Regardless of the specifics, it seems certain that Trump’s administration is focused on providing regulatory relief as it reshapes the way Wall Street is overseen by the SEC.
Under White’s tenure, the Commission brought more than 2,850 enforcement actions, and obtained judgments and orders totaling more than $13.4 billion. White also oversaw the increased prominence of the whistleblower program, which has awarded over $100 million since its inception.
White also increased SEC exam staffing by around 20 percent, shifted staff to heighten the focus on the investment management industry, and embraced the increased use and enhancement of technology tools in analyzing data and detecting potential misconduct.
“My duty has been to ensure that the Commission implemented strong investor and market protections, and to establish an enduring foundation for future progress in the most critical areas – asset management regulation, equity market structure and disclosure effectiveness,” she said in a statement. “Thanks to the hard work and dedication of the SEC’s staff, we have accomplished both.”
Some of that work, however, is likely to be undone.
Ascendant addressed some of the potential impacts and implications of a Trump presidency during our recent conference, A Commitment to Compliance: Climbing the Mountain of Regulatory Expectations, held in September in San Diego.
Additional guidance will be forthcoming during Ascendant’s December ComplianceCast. Click here to register.
SEC Announces Record Year for Enforcement
With a continued focus on technology tools to filter data and detect illegal conduct in the markets, the SEC announced a record year for enforcement. In fiscal year 2016, it completed 868 total actions, an increase of almost 15 percent over just two years ago.
The 868 actions included 160 involving investment advisers or investment companies, and 98 independent or standalone cases involving investment advisers or investment companies, both records in a fiscal year. Another high mark came in enforcement actions related to the Foreign Corrupt Practices Act, with 21.
In all, the Commission obtained judgments and orders totaling over $4 billion in disgorgement and penalties, a number in line with each of the last two years.
Notable was the rise in standalone actions from 2014 until present day, ramping up from 413 to 548, an increase of nearly 33%.
“Over the last three years, we have changed the way we do business on the enforcement front by using new data analytics to uncover fraud, enhancing our ability to litigate tough cases, and expanding the playbook bringing novel and significant actions to better protect investors and our markets,” SEC chair Mary Jo White said in a statement.
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