SEC Chairman Jay Clayton Recently Summarized the SEC’s Top Priorities for 2019
Securities and Exchange Commission (SEC or Commission) Chairman Jay Clayton summarized the Commission’s 2018 achievements and outlined the SEC’s top priorities for 2019.
Photo courtesy of
Tobias Schmücker (Unsplash.com)
In summarizing 2018 accomplishments, Clayton highlighted that the SEC advanced 23 of the 26 rules on the Commission’s near-term agenda. He specifically discussed Regulation Best Interest, which would require broker-dealers to act in the best interest of their retail customers and clarify the fiduciary duty owed by investment advisers to their clients. With respect to the SEC’s efforts to facilitate capital formation, Clayton cited the Commission’s amendments to the smaller reporting company definition, as well as rules that eliminate disclosure requirements that are outdated, overlapping, or duplicative of other Commission rules or U.S. GAAP.
The 2019 Initiatives
Chairman Clayton’s speech was also forward-looking since he outlined the initiatives the SEC plans to pursue in 2019. The SEC’s regulatory to-do-list includes: finalizing Regulation Best Interest and its mandatory plain language disclosures as well as addressing the regulation of proxy advisory firms.
Clayton explained:
There should be greater clarity regarding the division of labor, responsibility and authority between proxy advisors and the investment advisers they serve. We also need clarity regarding the analytical and decision-making processes advisers employ, including the extent to which those analytics are company or industry-specific. On this last point, it is clear to me that some matters put to a shareholder vote can only be analyzed effectively on a company-specific basis, as opposed to applying a more general market or industry-wide policy.
Also on the SEC’s rulemaking agenda is the so-called JOBS Act 3.0, which includes provisions to expand ‘testing-the-waters’ and study of the SEC’s quarterly reporting regime. Rulemakings relating to expanding Regulation A for public reporting companies is also coming in 2019.
Concerning capital formation and investment opportunities, Clayton indicated that the Division of Corporation Finance is looking at the private offering framework. According to Clayton, “Our ‘patchwork’ private offering system is complex and it is time to take a critical look to see how it can be improved, harmonized and streamlined.” Specifically, SEC staff is developing a concept release seeking industry input about key topics, including whether the accredited investor definition is “appropriately tailored to address both investment opportunity and investor protection concerns.”
Not surprisingly, distributed ledger technology, digital assets and initial coin offerings (ICOs) continue as a top focus in 2019. “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital,” Clayton said. “However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
From an enforcement perspective, Clayton stated that the SEC will continue to prioritize cybersecurity in its examinations of broker-dealers, investment advisers and critical market infrastructure utilities. “In assessing how firms prepare for a cybersecurity threat, safeguard customer information, and detect red flags for potential identity theft, for example, we have focused on areas including risk governance, access controls, data loss prevention, vendor management and training, among others,” Clayton stated. “And given the interconnectedness of our markets, we will continue to work closely with our counterparts at other federal financial regulatory agencies and the international community.”
Finally, Clayton noted that the SEC is monitoring three risk areas: the impact to reporting companies of the United Kingdom’s exit from the European Union (Brexit); the transition away from LIBOR as a reference rate for financial contracts; and cybersecurity.
If you have any questions, please contact us
If you have any questions or would like to discuss the matter further, please contact me, Paul A. Lieberman, at 201-806-3364.
Corporate Consolidation and Antitrust Issues in Mergers
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
