On November 8, 2017, SEC Chairman Jay Clayton gave the keynote address at the Practicing Law Institute’s 49th Annual Institute on Securities Regulation.[i] Chairman Clayton’s remarks shed considerable light on the SEC’s priorities in the near-term. We believe there are four key takeaways from the address for investment advisers:
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The SEC will deemphasize formal rulemaking and focus instead on enforcement actions that will improve “transparency in our securities markets”;[ii]
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The SEC will scrutinize whether investment advisers’ proxy voting decisions are maximizing value for their clients;[iii]
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The SEC will prioritize enforcement actions related to “complex, obscure, or hidden fees and expenses that can harm investors” (e.g., investing client assets in a mutual fund share class that charges a 12b-1 fee when a lower-cost share class of the same fund is available);[iv] and
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The SEC will help investors track bad actors by creating a website with a searchable database of “individuals who have been barred or suspended as a result of federal securities law violations.”[v]
Chairman Clayton is clearly signaling to investment advisers that the SEC, in the near-term, will focus its energy on whether they are making complete and accurate disclosures to their clients.
[i] SEC Chairman Jay Clayton, Remarks at the PLI 49th Annual Institute on Securities Regulation – New York, N.Y. (Nov. 8 2017), available at https://www.sec.gov/news/speech/speech-clayton-2017-11-08.
[ii] Id.
[iii] Id.
[iv] Id.
[v] Id.
