Are Changes Coming to the SEC?

Posted on 04.11.17

Are Changes Coming to the SEC?

By Christopher L. Wallace, Business Assurance & Advisory Services Partner | Financial Services Team Leader

On April 4, 2017, Jay Clayton, a Wall Street mergers and acquisition attorney, took the first Congressional step to assume the role of Chairman of the Securities and Exchange Commission (SEC) through a 15 to 8 approval vote by the Senate Committee on Banking, Housing and Urban Affairs.  Mr. Clayton will be subject to a full vote by the Senate later this month.

How might Mr. Clayton’s leadership change the focus of the SEC? How might his agenda differ from outgoing chair Mary Jo White? 

These are questions that will need to be answered in the future.   His two hour and twenty-five minute testimony before the Senate Committee focused almost exclusively on potential conflicts of interest rather than his leadership style or beliefs in regulating financial markets.

  • Republicans tout Clayton as well qualified and a leader that will provide the SEC with both a strong regulatory presence as well as a focus on ineffective regulations that inhibit job creation.
  • Mr. Clayton has indicated that he sees part of his role as encouraging capital formation rather than simply acting as Wall Street’s top cop.
  • Democrats are concerned with any regulatory roll back.  Former chair, Mary Jo White, expressed her concerns over the weakening or reversal of many of the regulations that were implemented during her time as SEC Chairwoman.

Over the last several years, I have worked with many financial service clients, small and large, on compliance with various financial regulations, including the Dodd Frank Act.  It is my experience that many of these regulations, while potentially beneficial to investors in the largest of America’s corporations, have inhibited small business growth and often times added unnecessary compliance costs.

  • I have seen middle market financial service firms make decisions to avoid compliance with Dodd Frank by simply taking their business off shore.
  • I have seen other firms “work around” regulations by structuring agreements that serve essentially the same economic purpose, but add complexity and unnecessary costs simply to comply with Dodd Frank.

Unfortunately, it is the smaller businesses that have been hurt the most by numerous regulations over the last decade. We will have to wait and see whether Mr. Clayton will be able to oversee changes that could have a positive effect on middle market businesses and financial service firms through reduced regulation and a common sense approach.

Learn more about Jay Clayton, SEC Chairman nominee, in Reuters article, Trump's SEC pick Clayton points to capital formation, not enforcement.

Questions on compliance or regulations affecting your financial services firm? Contact our Financial Services team. We can help. Email | 804.747.0000

Source: Reuters

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.

Posted by: Christopher L. Wallace, CPA

Chris serves as the leader of the Firm’s Financial Services Industry Team, and in that role oversees services to the Firm’s broker dealer, hedge fund, private equity fund, real estate fund, and other financial service clients. Chris has over 15 years of experience in public accounting providing audit and consulting services to clients in various industries. He is also the Practice Leader of the Business Assurance and Advisory Services Group. Read more of Chris’ insights on our blog.