Upshot of SEC’s 2016 Goals – Active Year for Regulatory Rulemaking

In her opening remarks at the annual “SEC Speaks” conference held in Washington, D.C., the U.S. Securities and Exchange Commission (“SEC”), SEC Chairman Mary Jo White cautioned that the SEC should not be considered a mere “disclosure agency,” in that she noted that the SEC would use all of the tools at the SEC’s disposal to carry out its regulatory mission.  She observed that those tools have radically expanded recently, ranging from proprietary technology used to monitor and detect market fraud, to the enhanced regulatory authority that was granted under the Dodd-Frank Act.

Not that it has been lost on the financial industry, Chairperson White also pointed out that 2015 was a good year for the SEC.  The Enforcement and the National Exam Program again had record years. The SEC brought an unprecedented number of enforcement cases, secured an all-time high for orders directing the payment of penalties and disgorgement, performed exams at a level not seen for the past five years, continued to develop cutting‑edge cases and exams and utilized enhanced technology to identify and analyze suspicious activity.  She also noted that the SEC would remain focused on cybersecurity, market structure requirements, dark pools, microcap fraud, financial reporting failures, insider trading, disclosure deficiencies in municipal securities offerings, and protection of retail investors and retiree savings.

The speech was very focused on their accomplishments.  It also gave a heads up on a laundry list of initiatives, rule making and technology utilization that was on the table for 2016. But buried in the speech, Ms. White made a particularly important comment impacting investment advisers and broker-dealers when she stated “I will continue to work to develop support from my fellow Commissioners for a uniform fiduciary duty for investment advisers and broker‑dealers, and to bring forward a workable program for third party reviews to enhance the compliance of registered investment advisers.”

While it appears she has the general support of the two other commissioners for a fiduciary rule, it appears that there may be push back the proposal floated for the utilization of third party reviews of investment advisers to supplement the SEC’s exam program.  If this proposal gains traction, 2016 could see more regulatory activity for investment advisers than just the proposed AML Rules and proposed Form ADV Form revisions.

For the full text of Chairman White’s opening statement, click “here”.