Securities Regulation Daily White emphasizes SEC independence in look back, forward at agency’s work
Monday, January 23, 2017

White emphasizes SEC independence in look back, forward at agency’s work

By Mark S. Nelson, J.D.

Former SEC Chair Mary Jo White reiterated her belief in the strength and independence of the Commission in remarks she delivered for the Alan B. Levenson Keynote Address at the Northwestern Pritzker School of Law’s 44th Annual Securities Regulation Institute in Coronado, California. Wolters Kluwer Legal & Regulatory U.S. is a sponsor of the event.

A look back. White began a wide-ranging speech by emphasizing that the SEC remains a strong, independent agency that accomplished much during her tenure as Chair, but which can do more in several areas. Independence also was a key theme of White’s last speech as Chair before returning to private life. As for looking back at her term as Chair, White said there was "no such thing as a victory lap," but she offered a few examples of key achievements.

Overall, White said that for her the main priority was the Commission’s full mission. With respect to equity market structure issues, she noted the many ways the agency has improved its monitoring abilities by adopting technology tools. She also emphasized the adoption of the consolidated audit trail, Regulation SCI, and other rules for asset-backed securities and reforms for money market mutual funds.

She also recounted the SEC’s record number of enforcement cases, unprecedented monetary remedies, and the many first-ever cases brought by the agency. She said the SEC’s focus is now more on individuals and that enforcement is a "bold and unrelenting" aspect of the Commission’s work, a theme she also emphasized in a speech last November.

White explained that the Commission’s enforcement work also now emphasizes risk in ways that it previously did not. According to White, the Office of Compliance Inspections and Examinations has revamped how it does examinations by adopting a risk-based, data-driven approach.

Looking ahead. White spoke of the variety of issues that come before the Commission on a regular basis that raise enforcement and other questions on a daily basis and how this part of the agency’s work will continue regardless of a new Administration. White also said the next Chair will set the Commission’s agenda, which also may be impacted by Congress. White observed that her remarks were only her predictions.

On the derivatives front, White said the agency was ready to move ahead on more rules for security-based swaps, but could not obtain a quorum. Many Dodd-Frank rules for security-based swaps already have been proposed or adopted, but she said the timing of more rules was less certain, although predictability and harmonization would remain key themes for derivatives regulators.

According to White, security-based swaps rules on capital margin and asset segregation could be a nearer-term focus for the SEC and that she expected the Commission would eventually adopt these rules. Other areas of concern, such as trading requirements rules, could take more time or may even be impacted by legislation.

White also noted the significant investment of time the agency made on its disclosure effectiveness review and related concept release. White suggested the agency could look at two of its industry guides, including the one on mining disclosures to better align the existing guidance with current industry standards. She also said a request for comment on an update to the industry guide for banks was ready and is relevant to the disclosure review effort.

Other areas the new Commission may examine include clearance and settlement as well as fixed income markets as the U.S. interest rate environment changes. White said it would be harder to predict how the Commission will deal with executive compensation issues and the universal proxy proposal going forward. Open regulatory questions for the Commission include asset managers and the uniform fiduciary duty rule, which White said requires the Commission to "grapple" with tough questions. As Chair, White told Congress that she had concluded such a fiduciary standard should apply to "personalized securities advice to retail investors," a view she reiterated in her last appearance before Congress as SEC Chair.

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