US Securities and Exchange Commission - VALIC

All Five Securities and Exchange Commission (SEC) Commissioners Testified on Capitol Hill

SECThe five commissioners testified in front of the House Financial Services Committee in a hearing entitled, “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat.”

“The SEC and its tripartite mission—to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation—are critical to the functioning of our economy and the well-being of millions of Americans. With a workforce of almost 4,400 staff in Washington and across our 11 regional offices, the SEC oversees, among other things: (1) approximately $96 trillion in securities trading annually on U.S. equity markets; (2) the disclosures of approximately 4,300 exchange-listed public companies with an approximate aggregate market capitalization of $33 trillion; and (3) the activities of over 26,000 registered entities and registrants including, among others, investment advisers, broker-dealers, transfer agents, securities exchanges, clearing agencies, mutual funds and exchange-traded funds (ETFs), who employ over one million people in the United States,” stated SEC Chair Jay Clayton during his opening written statement

Commissioner Robert Jackson focused on three gaps which allow corporate insiders to advance their own interests at the expense of shareholders.

“First, our disclosure rules have not kept up with the pace of today’s markets, specifically SEC rules give public companies four days before they must notify the market about market moving developments.”

Jackson noted that corporate insiders use those four days to trade the company stock while the rest of the shareholders are not privy to the information which will be released.

Second, Jackson noted, “Our rules incentivize corporate insiders to pursue stock buybacks that maximize executive pay but make no sense for ordinary investors.”

He said that executives engage in significant stock sales after stock buyback and that

Third, Jackson noted, “We should consider giving investors much more transparency on how companies spend their money on politics.”

During Commissioner Hester Peirce’s opening statement, she spoke about three principles which she applied in approaching her role at the SEC.

“Investor protection means more than just protecting investors from fraud; it also means protecting their opportunity. The second is that while enforcement is an important part of our mission, regulation is the key part of what we do. It’s our first step not our last step and  third is that as regulators that we can’t know everything.”

Commissioner Elad Roisman, in his opening statement, spoke about the ways in which the SEC protects investors.

“For example, the SEC’s Office of Compliance, Inspections, and Examinations has been instrumental in conducting exams in high risk areas across the industry as a regulator,” he said, “The Office of Investor Education and Advocacy has also played an important role in protecting investors through the bulletins, videos and outreach events.”

He said all the divisions have focused on protecting elderly investors, “One example, next week, staff from across the agency will host a roundtable on elder investment fraud with experts from the private and public sector.”

That event will be held on October 3 at the SEC offices in Washington D.C. The agenda for the event can be found here.

Commissioner Allison Herren Lee stated that SEC action should be viewed by how it strengthens the financial well-being of everyday Americans, “Although we deal with a large number of often highly complex issues and rules, from market structure to cyber security, they should all be viewed and analyzed through this lens: whether and how they will promote and strengthen the economic well-being of everyday Americans saving to buy a home, sending their children to college, and eventually retire and American businesses which need a fair marketplace with clear and manageable rules to facilitate growth.”