Displaying items by tag: SEC


President Biden wasted no time in appointing a new Department of Labor chief. He has named Martin Walsh as Secretary of Labor. Walsh is currently the mayor of Boston and his history offers some insights into what his agenda may be. The Democrats have made very clear that one key component of their agenda is to undue the current DOL 2.0 rule and revamp it with a much stricter Obama era-like rule. That said, the naming of Walsh slightly complicates that picture. He was a union leader in Massachusetts and Biden has celebrated that Walsh is the first union member to lead the DOL in over half a century. Therefore, most think his immediate focus will be on workers’ rights issues and the gig economy rather than on wealth management.

FINSUM: It is hard to say how this will play out, but the naming of Walsh certainly makes it seem like a new rule may be slower in coming than some have feared.

Published in Wealth Management
Friday, 15 January 2021 14:46

Biden May Overturn Reg BI


The general understanding among wealth management regulatory experts has been that the Biden administration was not overly likely to overturn Reg BI. However, that faith might be waning in the face of some developments out of Congress. The House Financial Services Committee, led by Maxine Waters, has been adamantly pushing for Biden to completely overturn the rule and bring in new legislation. To this point, most thought Biden would simply install a new SEC chair that would become a stronger enforcer of the rule rather than trying to write an entirely new one. And with the name of former prosecutor Preet Bharara as the rumored next head of the SEC, the focus on enforcement makes sense.

FINSUM: We wonder to what extent Biden might reward his Democratic allies in Congress by pushing an agenda that writes an entirely new rule. On the one hand, it does not appear too farfetched, but on the other, it seems Reg BI may be way down the priority list given the pandemic.

Published in Wealth Management
Monday, 11 January 2021 14:11

SEC Makes a Big Move to Tighten Reg BI


The SEC just made its first big move to tighten regulations ahead of Biden’s inauguration. While the SEC did clarify digital marketing rules a couple of weeks ago, that shift was largely welcomed as the previous guidelines were vague and very outdated. The big change this week is that the SEC is beefing up its Reg BI compliance program. Specifically, it is scaling up its testing program to make sure firms are complying with Reg BI. According to a note from the SEC, “Division staff has assessed the results of its initial Regulation Best Interest examinations and now that approximately six months have passed since the Regulation Best Interest compliance date, the Division intends to begin its next phase by conducting more focused examinations … beginning in January 2021”.

FINSUM: Enforcement of Reg BI has been pretty lax to date, but this feels like a new phase is beginning. Most insiders in the business think the Biden administration’s approach will be to intensify Reg BI enforcement rather than write a new rule, so this step makes logical sense within that.

Published in Wealth Management
Wednesday, 06 January 2021 19:10

SEC May Make Big Changes to the Muni Market

(New York)

One of the big risks to the muni sector that has gone underappreciated by the financial media and investing community is the threat of the soon-to-be revamped SEC making some big changes to the asset class. The reason for concern is that Elad Roisman has just been appointed interim chief of the SEC. Roisman has long had a focus on transparency in fixed income markets, which he and others at the SEC feel is too opaque. This has raised the risk of new regulation in the space. That said, his short term before likely being replaced by Biden will limit his time frame to change any policy.

FINSUM: Roisman is a Republican and was previously chief counsel at NYSE Euronext, which gives him a very significant command of market structure. This would certainly equip him with the know-how to overhaul fixed income markets, but unless the Biden administration wants that to be a focus, it doesn’t seem he will have enough time. Bullet dodged or opportunity missed?

Published in Bonds: Munis
Tuesday, 29 December 2020 13:23

The SEC Has Big Changes in Store for Advisors


As of last Wednesday, Trump-appointed SEC chief Jay Clayton has departed, with an interim head now in place. That means the Trump era is effectively over at the agency. It is now Biden’s turn to take the reins, and according to industry experts, that likely means two big changes. The first is the type of SEC chief he will choose, and the second is the nature of Reg BI. On the chairperson front, it is rumored that Biden with choose Preet Bharara, a former prosecutor, which would be more in line with Obama era chief Mary Jo White. This would be a departure from Clayton, who is also a lawyer, but worked on behalf of corporate clients. Secondly, the nature of Reg BI would likely change in substantial ways. “Best interest” seems very likely to be defined under Biden; and additionally, enforcement efforts will likely be stepped up considerably versus the status quo.

FINSUM: Our instinct is the SEC is going to be a totally different animal under Biden, as a definition of “best interest” and rigorous enforcement efforts would significantly change the general wealth management regulatory environment. Plus, a prosecutor as head of the SEC sort of says everything you need to know what about what the enforcement regime might look like.

Published in Wealth Management
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