Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comAuthor: Scarinci Hollenbeck, LLC|August 15, 2017
Jay Clayton, the new chair of the Securities and Exchange Commission (SEC), outlined his agenda in a recent speech before the Economic Club of New York, which were among Clayton’s first public remarks as the head of the SEC provide insight into his regulatory philosophy.
In his speech, Clayton detailed the principles that will guide his leadership of the SEC. Many of the principles were expected, i.e. “the SEC’s mission is our touchstone.” However, there were also a few that stood out:
Clayton also discussed several initiatives that the SEC plans to pursue in the near term. He first addressed enforcement and examinations, emphasizing that he “fully intend[s] to continue deploying significant resources to root out fraud and shady practices in the markets, particularly in areas where Main Street investors are most exposed.” He specifically referenced affinity fraud, microcap fraud, pump-and-dump scammers, those who prey on retirees, and “increasingly, those who use new technologies to lie, cheat, and steal.”
“Turning to the more sophisticated participants in our markets, the Commission will continue to use its enforcement and examination authority to support market integrity,” Clayton stated. “Market professionals have a special place in our economy, do not take unfair advantage of it.”
Regarding capital formation, Clayton acknowledged that successful companies are increasingly electing to stay private. Accordingly, the SEC’s new chair stated that he hopes “to increase the attractiveness of our public capital markets without adversely affecting the availability of capital from our private markets.”
As for the burdens of regulatory compliance, Clayton highlighted the extension of the non-public review process to all IPO draft registration statements. He also issued the following reminder:
There are circumstances in which the Commission’s reporting rules may require publicly traded companies to make disclosures that are burdensome to generate, but may not be material to the total mix of information available to investors. Under Rule 3-13 of Regulation S-X, issuers can request modifications to their financial reporting requirements in these situations. I want to encourage companies to consider whether such modifications may be helpful in connection with their capital raising activities and assure you that SEC staff is placing a high priority on responding with timely guidance.
Notably, Clayton did not ignore the controversy surrounding the fiduciary rule, for which he had already sought public comments from retail investors and other interested parties. “With the Department of Labor’s Fiduciary Rule now partially in effect, it is important that the Commission make all reasonable efforts to bring clarity and consistency to this area,” he said. “It is my hope that we can act in concert with our colleagues at the Department of Labor in a way that best serves the long-term interests of Mr. and Ms. 401(k).” Further, in subsequent comments before the U.S. Chamber of Commerce, he indicated that he wanted to find “common ground” with the Labor Department’s rule requiring brokers who give investment advice to put their client’s interest ahead of their own potential commissions.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jeffrey Cassin, at 201-806-3364.
The Firm
201-896-4100 info@sh-law.comJay Clayton, the new chair of the Securities and Exchange Commission (SEC), outlined his agenda in a recent speech before the Economic Club of New York, which were among Clayton’s first public remarks as the head of the SEC provide insight into his regulatory philosophy.
In his speech, Clayton detailed the principles that will guide his leadership of the SEC. Many of the principles were expected, i.e. “the SEC’s mission is our touchstone.” However, there were also a few that stood out:
Clayton also discussed several initiatives that the SEC plans to pursue in the near term. He first addressed enforcement and examinations, emphasizing that he “fully intend[s] to continue deploying significant resources to root out fraud and shady practices in the markets, particularly in areas where Main Street investors are most exposed.” He specifically referenced affinity fraud, microcap fraud, pump-and-dump scammers, those who prey on retirees, and “increasingly, those who use new technologies to lie, cheat, and steal.”
“Turning to the more sophisticated participants in our markets, the Commission will continue to use its enforcement and examination authority to support market integrity,” Clayton stated. “Market professionals have a special place in our economy, do not take unfair advantage of it.”
Regarding capital formation, Clayton acknowledged that successful companies are increasingly electing to stay private. Accordingly, the SEC’s new chair stated that he hopes “to increase the attractiveness of our public capital markets without adversely affecting the availability of capital from our private markets.”
As for the burdens of regulatory compliance, Clayton highlighted the extension of the non-public review process to all IPO draft registration statements. He also issued the following reminder:
There are circumstances in which the Commission’s reporting rules may require publicly traded companies to make disclosures that are burdensome to generate, but may not be material to the total mix of information available to investors. Under Rule 3-13 of Regulation S-X, issuers can request modifications to their financial reporting requirements in these situations. I want to encourage companies to consider whether such modifications may be helpful in connection with their capital raising activities and assure you that SEC staff is placing a high priority on responding with timely guidance.
Notably, Clayton did not ignore the controversy surrounding the fiduciary rule, for which he had already sought public comments from retail investors and other interested parties. “With the Department of Labor’s Fiduciary Rule now partially in effect, it is important that the Commission make all reasonable efforts to bring clarity and consistency to this area,” he said. “It is my hope that we can act in concert with our colleagues at the Department of Labor in a way that best serves the long-term interests of Mr. and Ms. 401(k).” Further, in subsequent comments before the U.S. Chamber of Commerce, he indicated that he wanted to find “common ground” with the Labor Department’s rule requiring brokers who give investment advice to put their client’s interest ahead of their own potential commissions.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Jeffrey Cassin, at 201-806-3364.
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