Securities Regulation Daily Clayton details 2020 results, cooperative efforts despite COVID shutdown
Thursday, October 8, 2020

Clayton details 2020 results, cooperative efforts despite COVID shutdown

By Anne Sherry, J.D.

In remarks at SEC Speaks, Chairman Clayton described how the SEC continued its work and in some cases took on an increased workload despite the impacts of the pandemic.

SEC Chairman Jay Clayton told (virtual) attendees at SEC Speaks that the COVID-19 pandemic significantly affected how the Commission worked, but did not undermine the work itself. In some cases, the SEC saw new records for fiscal year 2020, such as by awarding 39 individual whistleblowers a combined $175 million and processing 13,000 unique comment letters. The chairman also noted the SEC’s continuing engagement with domestic and international regulators, saying, "recovery from the economic effects of COVID-19 is inextricably linked to the broader domestic and global economy."

Clayton began his remarks with a rundown of the work conducted by the SEC’s major divisions and offices. In addition to the record-setting whistleblower activity, the Division of Enforcement brought six COVID-related fraud actions and opened 150 investigations and inquiries related to the pandemic. Clayton praised the Office of Compliance Inspections and Examinations for continuing its engagement, including publishing eight risk alerts during the year, issuing a cybersecurity report, and conducting over 300 outreach events. "There are no statistics for ‘problems prevented,’" he said, "yet we all know the most effective regulatory environment is one that drives a culture of compliance. That is just what OCIE does."

Overall the SEC issued 20 proposals and 25 final rules in 2020, Clayton said, boasting that "no other agency does so much to maintain its effectiveness and efficiency in the face of change." Trading and Markets engaged in 10 rulemaking initiatives, Investment Management 14, and CorpFin 19. The Division of Economic and Risk Analysis undergirded these initiatives by conducting economic analysis of SEC rulemakings as well as of SRO rule filings, new products, and 10-year retrospective rule reviews. DERA also contributed to enforcement analyses and took on 12 risk-related projects concerning the economic shock of COVID-19.

Clayton also stressed the importance of engagement with other regulators. The chairman said that from the point of view of the pandemic and systemic risk, the SEC’s primary responsibilities are market function, market monitoring, and issuer disclosure. External engagement is critical, he said. The principals of the Financial Stability Oversight Council have met four times since the beginning of the pandemic to share information and discuss specific markets, and senior staff at FSOC’s constituent agencies have also conducted numerous meetings. The President’s Working Group on Financial Markets has also collaborated during the time of market stress, and Clayton directed Commission staff to consider the PWG’s recommendations focused on the risks of investment in emerging markets, including China.

The Commission also works closely with international partners through the Financial Stability Board and the International Organization of Securities Commissions. The SEC has had representation at over 50 FSB and IOSCO meetings since the start of the pandemic, and the IOSCO Monitoring Group, chaired by SEC Chief Accountant Sagar Teotia, published recommendations to strengthen the international audit and ethics standard-setting system.

Finally, Clayton discussed the Credit Market Interconnectedness Project, an agency initiative to understand the character and dynamics of the $54 trillion credit markets. The staff’s recent report analyzes interconnectedness among markets and market participants with a focus on risk distribution and transmission, in particular during the spring 2020 market turmoil resulting from the pandemic. The staff will host a roundtable on October 14 to discuss the report.

MainStory: TopStory Covid19 Enforcement GCNNews RiskManagement SECNewsSpeeches

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