SEC's Top Agenda Items

News Brief

By Cydney Posner

In a report on the "The SEC Speaks" conference, Compliance Week summarized the key agenda items identified by some of the SEC commissioners.

SEC Chair Mary Jo White once again discussed her plan to reexamine and revise the SEC's disclosure scheme. (See also my articles of 12/23/13 and 10/16/13.) According to White, this year we can expect to see specific recommendations from Corp Fin for updating the rules that govern public company disclosure. The SEC also plans to use a number of technology advances, such as text analytics, visualization, search and predictive analytics, to search for red flags.

Commissioner Daniel Gallagher wants the SEC to focus on its core mission and related rulemaking; failure to do so, he argues, just invites Congress to mandate additional actions. Gallagher hopes the SEC can find the right balance: "We cannot foster a nanny state ideal of securities law protection in which all investment decisions are insured and the government shields investors from all harm….Capital markets are risk-taking markets, and unfortunately a risk as old and as certain as time is that where there is opportunity, there will be unscrupulous characters trying to take advantage."

Commissioner Kara Stein hopes to review SEC's "bad actor" provisions, particularly the SEC's basis for granting waivers. She also wants to address the executive compensation rules, particularly the clawback provisions: "We should be empowering shareholders to take money back from executives who put their own personal gain ahead of the interests of shareholders and the firm….And we should be working with the banking regulators to finalize a rule that would help ensure that our largest financial firms don't have executive compensation structures that encourage risky and potentially disastrous behavior."

Commissioner Luis Aguilar believes that the SEC needs to reexamine the regulations governing….transfer agents. (Yes, you read that correctly, transfer agents.) He believes the JOBS Act increases the importance of their gatekeeper function as more companies will have unregistered shares trading in the secondary market.

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