Q&A with SEC Chair White

This Monday's SEC Daily Digest Bulletin included a transcript of a Q&A session between SEC Chair Mary Jo White and Steven Bochner, Chair of the Securities Regulation Institute. The Q&A was part of the Northwestern University School of Law’s 43rd Annual Securities Regulation Institute in San Diego, CA. The entire session is interesting throughout, but we wanted to highlight a few key components that may be of particular interest:

2015

When asked about the SEC's activity in 2015, White highlighted several areas that she felt represented accomplishments for the Commission. To start, she specifically highlighted "four major rules for enhancing oversight and the regulation of the asset management industry." Calling out these rules in particular–she will go on to say that their continuation is a 2016 priority–ought to be of note to anyone operating in that space.

She also called attention to the fact that 2015 was a record year for enforcement, both in terms of the number of actions (807) and in orders to return money to investors (over $4 billion). Beyond that, she praised the SEC's examiners who conducted almost 2,000 exams of broker-dealers and investment advisers last year. Chair White said last year's exam record was "... really high-quality, risk-focused exams, so very, very proud of that."

2016

Turning towards her vision for 2016, Chair White hoped to carry forward the aforementioned asset management rules. From a market structure standpoint, she also identified the SEC's plans for a consolidated audit trail as being "...a game changer in terms of regulators' window into the equity markets and others."

Finally, the agenda for 2016 includes a fiduciary duty for broker-dealers and advisers, as well as third-party exams for investment advisers. Many other initiatives are planned, and, as Chair White herself concluded, "It should be a very busy year."

Unconnected to any particular year, Chair White offered some unique insights into her tenure at the SEC, mentioning an area of challenge that she saw coming in, and one that was perhaps more of a surprise. Coming in, she knew that the SEC was about to enter a period of tremendous mandated rulemaking (over 100 new rules, mandated by both Dodd-Frank and the JOBS Act) and wasn't surprised by the pressure this placed on the Commission. She was, however, surprised by the impact of the Government in the Sunshine Act on her ability to work with fellow Commissioners. The act is meant to bring more transparency to government activity, by requiring that agency meetings be open to public observation. In her own words:

"It's why you see a Sunshine Act notice in advance of our rulemakings because we're doing them as we must at an open meeting. But what that actually means in practice, and the SEC really is quite -- a strict adherent to the requirements -- is that neither I, nor any of my fellow Commissioners, my other four fellow Commissioners, can talk to more than one of each other at a time. So what you see with envy, frankly, at least I do as Chair, is some old photographs with the five Commissioners sitting around a table discussing issues, business, and policy. We can't do that anymore. It's really a lot of shuttle diplomacy, and I think the transparency piece is great and important, but I think it really does, I think -- isn't built for efficiency and clear communications as I -- you'd like to see. So that's been more of an impact than I was anticipating, even though I knew of the Act and its requirements."

For an agency often accused of creating bureaucracy and inefficiencies at the institutions it oversees, it is interesting to hear that they themselves may feel burdened by outside legislation as well. While admirable in intent, it's possible for even the best legislation to create undue complications for those who must operate within its boundaries.