In a wide-ranging conversation at Northwestern University, Securities and Exchange Commission Chairman Mary Jo White detailed her thoughts on a variety of topics, offering fresh perspective for those trying to anticipate the agencies priorities for the months ahead.
Her comments, from a Jan. 26 conversation with Steven Bochner, chairman of the at Northwestern University School of Law’s Securities Regulation Institute, were posted on the SEC’s website this week.
Looking forward, White reiterated that rules regarding a fiduciary duty for broker-dealers and advisers, and third-party exams for investment advisers remain on-track priorities. “We hope to finalize our very important plan for a consolidated audit trail, which will really be a game changer in terms of regulators' window into the equity markets and others,” she said.
White referred to the SEC’s ongoing disclosure effectiveness review as among her “most important priorities.”
“Next in the flow in terms of the order of things in the short term is probably a concept release on S-K,” she said. “We're also doing some technical amendments of our rules primarily related to financial statements, addressing some redundancy, some overlaps, perhaps some contradictions with what's required by U.S. GAAP. We're focusing on the industry guides, particularly Industry Guide 7, the mining and the bank holding company industry. That's Guide 3, as well as Guide 7.”
Foreign tax disclosure is an area “where where we may need better and greater disclosure, not just eliminating redundancies,” White said. “Other issues that have been raised, for example, are where we don't have line item requirements, for example, in cyber-security, for climate change, other things of that nature. What the disclosure effectiveness review gives us is the opportunity to look at the current state of disclosure really in all areas, see what it is, and see whether there is room to improve it in either direction really in terms of adding or subtracting.”
A Dodd-Frank Act required review of the current accredited definition is likely to lead to new recommendations in the near future. “I think the rule needs changing,” White said. “I don't think, at least alone, that the net worth and income criteria by themselves are a very good or at least not optimal proxy for who doesn't need the protections of the Securities Act and who can fend for themselves in the marketplace. There are number of alternatives that are discussed in that study that are being considered.”
White also discussed another Dodd-Frank mandate, a rule requiring executives to return incentive based compensation in the event of a financial restatement. Questions to be addressed with the proposed “clawbacks” rule are greater clarity on who is covered, what compensation is covered, and how much board discretion should there be. “We're working through all of those issues,” she said.
The full conversation, including Whites views on capital-raising, the IPO marketplace, and Board/shareholder issues, can be found here.