The Securities and Exchange Commission, through its Office of Minority and Women Inclusion, has introduced its Diversity Assessment Report for Entities Regulated by the SEC. The Commission will also ask regulated entities to v oluntarily submit self-assessments of diversity policies and practices.

OMWI created the report to supplement standards issued by the SEC and five other federal financial regulatory agencies in June 2015.

The federal banking regulators, SEC, and Consumer Financial Protection Bureau jointly issued a formal policy for assessing the diversity policies and practices of the entities they regulate.

Section 342 of the Dodd-Frank Act required each of the agencies to each establish an Office of Minority and Women Inclusion, responsible for oversight of their diversity in management, employment, and business activities. The legislation also instructed each OMWI Director to develop standards for assessing the diversity policies and practices of the entities their agency regulates and their supply chain.

The Diversity Assessment Report is designed to help regulated entities conduct self-assessments of their diversity policies and practices, as envisioned by the Joint Standards, and provides these entities with a template for submitting information about their self-assessments to OMWI. The Joint Standards also encourage regulated entities to publish information related to their self-assessments on their websites.

As laid out in the final, 2015 policy statement, the assessment envisioned by the agencies is not part of the examination or supervisory process. Instead, the regulators call for a “model assessment” that would include a self-assessment by each covered entity of its diversity policies and practices; voluntary disclosure of the self-assessment to its appropriate regulator; and public disclosure of those diversity efforts.

Criteria for those assessments includes:

Whether company leadership maintains a commitment to diversity and inclusion and includes those considerations in the strategic plan. Do senior officials have dedicated resources to oversee and direct diversity efforts?

Are regular progress reports sent to senior management and directors? Is management held accountable for diversity and inclusion efforts?

Does the company use qualitative and quantitative metrics, such as those contained in annual EEO-1 Reports or Affirmative Action Plans filed with the Office of Federal Contract Compliance Programs, to evaluate and assess workforce diversity initiatives?

What other metrics are, or could be, used?

Other standards in the framework include:

Maintaining a diversity and inclusion policy that is approved and supported by senior leadership, including senior management and the board of directors.

Regularly conducting training on diversity and inclusion.

Having a senior level official, preferably with knowledge of and experience in diversity and inclusion policies and practices, who oversees and directs the entity's diversity and inclusion efforts.

Outreach to educational institutions serving significant minority and women student populations and participation in conferences, workshops, and other events to attract minorities and women and to inform them of employment and promotion opportunities.

Utilizing both quantitative and qualitative measurements to assess workforce diversity and inclusion efforts.

Holding management at all levels accountable for diversity and inclusion efforts, for example by ensuring that such efforts align with business strategies and individual performance plans.

In October 2013, the agencies published a proposed policy, accompanied by a call for public comments. Among concerns raised: the mandates exceed the regulators’ statutory authority and could be unlawful; references to “metrics” in the proposal were interpreted as quotas in hiring and contracting; that new requirements would impose a significant compliance burden, particularly regarding requirements to develop methodologies for assessing supplier diversity.


In the final policy, regulators addressed some concerns by adding the following language: “This document is a general statement of policy…it does not create new legal obligations; use of the standards by a regulated entity is voluntary.”

They also addressed concerns about how “diversity” is defined, clarifying that it refers to “minorities [black, Hispanic, Asian, Native American]… and women.” This definition “does not preclude an entity from using a broader definition” and include those with disabilities, veterans, and LGBT individuals.

Firms are also required to maintain a supplier diversity policy “that provides a fair opportunity for minority-owned and women-owned businesses to compete for procurement of business goods and services; methods to evaluate and assess supplier diversity (which may include metrics and analytics); and practices that promote a diverse supplier pool.”

"This is an important step in our efforts to understand the diversity and inclusion efforts of our regulated entities, as well as promote transparency and awareness in this area," said Pamela Gibbs, Director of OMWI, regarding the most recent announcement.

Use of the Joint Standards by regulated entities is voluntary. Likewise, conducting self-assessments and providing diversity assessment information to OMWI are also voluntary. The SEC may use the information from entities' self-assessments to identify which policies and practices reflected in the Joint Standards have been adopted by SEC-regulated entities and to highlight diversity policies and practices that have been successful.

SEC-regulated entities will receive an email from OMWI inviting them to complete the Diversity Assessment Report online using a secure web portal.

The process applies to the following firms regulated by the SEC:

? Brokers and dealers (including alternative trading systems)

? Government securities brokers and dealers

? Municipal securities dealers

? Municipal advisors

? Investment advisers (including advisers to hedge funds)

? Investment companies (including business development companies)

? Self-regulatory organizations

? Transfer agents

? Nationally recognized statistical rating organizations

? Securities information processors

? Security-based swap dealers

? Major security-based swap participants

? Security-based swap execution facilities

? Security-based swap data repositories

The Policy Statement focuses primarily on regulated entities with more than 100 employees. The submission form can be found here.