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SEC Chief Clayton Wants More Funds for Advisor Exams

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The Securities and Exchange Commission would use some of its $1.6 billion budget request for fiscal 2019 to restore seven positions to its Division of Investment Management to help advance “investor-focused rule-writing priorities,” such as its standards of conduct proposal for investment professionals, the agency’s chairman,  Jay Clayton, told lawmakers on Tuesday.

Clayton told members of the Senate Appropriations Subcommittee on Financial Services and General Government that the agency is going to “take at least the 90 days” for comments on the three-pronged advice standards package, “but I’m not going to take forever. This issue has been out there a long time, and I think it’s time to bring a focal point for the many regulators in this space.”

The FY 2019 funding would also be used to help the securities regulator to “continue to increase investment advisor examination coverage levels, while at the same time being careful to avoid decreasing examination quality,” Clayton said.

The funding, he continued, would restore 24 positions within the SEC’s National Exam Program, including six additional staffers for its Technology Controls Program, “which monitors critical securities market infrastructure for significant cyber events and outages. I believe this area will continue to warrant close attention, and I have shared these views with other regulators, particularly in areas where we have overlapping responsibilities and oversight.”

Cybersecurity, Clayton told the lawmakers, also continues to be “a priority area,” and the funding request would provide additional staff positions to enable the agency “to expand its cybersecurity protections, particularly with regard to incident management and response, advanced threat intelligence monitoring and enhanced database and system security, and to focus on the security of specific systems.”

The budget request, he continued, would allow the SEC to hire additional staff positions under the chief risk officer — a new position — “to strengthen and advance the agency’s risk management capabilities.”

Julie Erhardt was named on May 31 as acting chief risk officer, to serve while the agency completes its search to fill the new position.

The chief risk officer post, Clayton told the lawmakers, is a “step to strengthen our cybersecurity and risk management efforts.”

Erhardt will coordinate the SEC’s efforts to identify, monitor and mitigate key risks across the commission’s divisions and offices.

— Check out SEC Adopts Fund E-Delivery Rule, Seeks Comment on Updating Fund Disclosures on ThinkAdvisor.


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