The Securities and Exchange Commission (SEC) will intensify its oversight on the largest and riskiest asset managers in the United States, according to chairperson Mary Jo White during SEC Speaks, an annual conference at the Practicing Law Institute on Friday.
In her remarks, White emphasized, “When I arrived, it was imperative to set an aggressive rulemaking agenda. Congress had seen to that and our own core mission demanded it. And, through the tireless work of the staff and my fellow Commissioners, we made significant progress.”
She enumerated some of the regulations adopted by the commission since day one when she became chairperson of the SEC including the identity theft rules, and cross-border swap transaction rules that govern the multi-trillion dollar global over-the-counter derivatives markets.
The commission also proposed rules to reform and strengthen the structure of money market funds, rules that would allow securities-based crowd funding, and new rules to provide protection for new investors and important data about new markets. It implemented reforms to the private offering market as mandated by the JOBS Act
Furthermore, the SEC also adopted the Dodd-Frank Act rule disqualifying bad actors from certain private offerings, and other rule makings.
According to White, “We have made significant progress on our rulemakings, although more remains to be done. But we must always keep the bigger picture in focus and not let the sheer number nor the sometimes controversial nature of the Congressional mandates distract us from other important rulemakings and initiatives that further our core mission as we set and carry out our priorities for the year ahead.”
Other critical initiatives
White said some of the critical initiatives of the SEC in 2014 aside from completing its rule making is to intensify its inquiry regarding the role and duties of investment advisers and broker dealers, and to enhance investor protection.
The SEC will also increase its focus on fixed-income markets and it will make further progress on credit rating agency reform.
“We will also increase our oversight of broker-dealers with initiatives that will strengthen and enhance their capital and liquidity, as well as providing more robust protections and safeguards for customer assets,” said White.
“Among the initiatives under near-term consideration are expanded stress testing, more robust data reporting, and increased oversight of the largest asset management firms,” according to White.
Financial Oversight Stability Council report
According to Reuters, several years ago, the Financial Oversight Stability Council requested the Office of Financial Research, a unit of economists within the Treasury Department to examine whether large asset managers pose a wider risk to the financial system. The Dodd-Frank Wall Street reform law created the council, which is headed by the Treasury secretary. The primary responsibility of the council is to review that market for possible risks.
In September, last year, the report of Office of the Financial Research indicated that some of the activities of large asset managers pose risk to the broader market. The SEC had concerns and initiated a public comment regarding the report.
According to White, the SEC’s plan to intensify oversight on large asset managers has nothing to do with the council’s report. She said, “It’s really a continuation of our regulation and assessment of risks across that space for asset managers. It is just part of our everyday duties.”