Helping investors understand the differences between investment professionals is among the Securities and Exchange Commission’s multi-pronged list of goals that the agency wants feedback on — which includes protecting investors, innovating to keep up with technology and shoring up the securities regulator’s performance via new hires.
The agency said Tuesday that it’s seeking comment for 30 days on its Strategic Plan for fiscal years 2018 through 2022.
SEC Chairman Jay Clayton stated in releasing the three-part priority plan that “Congress, our fellow regulators, and others who focus on our performance” substantially informed the forward-looking plan that’s designed to make the SEC “even more effective, focusing on the most important goals and initiatives that will best position the SEC to fulfill our mission.”
The SEC is “presenting the plan in a more concise and readable format this year, which we hope will further encourage investors — particularly our Main Street investors — and market participants to share their views on how we can meet and exceed their expectations of our agency,” Clayton said.
Clear Up Investor Confusion
For Main Street investors seeking professional advice, “their choices all too often are not as clear as they should be,” Clayton said. “The distinction between investment professionals who sell securities and those who provide investment advice has become less clear. This lack of clarity makes it challenging for investors to understand what standards of conduct govern the investment professionals who assist them.”
The agency’s strategic plan comes as it takes comment on its standard of conduct proposals for brokers and advisors. Clayton told investors at a recent town hall in Atlanta that the proposed Regulation Best Interest for brokers “raises brokers’ advice obligations and changes the way brokers are allowed to operate today.”
Beef Up Cyber Controls
Noting that “technology has fundamentally altered consumer interactions with securities market participants,” data securities measures will be front and center, the plan states.
That includes examining strategies to address cyber and other system and infrastructure risks faced by the U.S. capital markets as well as market participants. “Data collection, storage, analysis, availability, and protection are fundamental to our capital markets, the individuals and entities that participate in those markets, and the SEC,” the plan states. “The scope and severity of risks that cyber threats present have increased dramatically, and vigilance is required to protect against intrusions and disruptions.”
Enhancing the SEC’s Performance
Also among the securities regulator’s goals is to strengthen its ability to attract and retain talent, while innovating to stretch the agency’s resources.
The Senate Appropriations Committee voted Tuesday to give the SEC a $1.6 billion budget for fiscal 2019, which includes $37 million for lease renewal costs for the New York regional office.
The plan also notes the agency’s intention to “expand and strengthen” its internal enterprise risk capabilities, by setting up a new chief risk officer position to lead and coordinate the agency’s various risk management efforts.
Clayton told lawmakers in early June that the agency’s $1.6 billion budget request would allow the SEC to hire additional staffers under the new chief risk officer “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 finds a more permanent candidate.
The chief risk officer post, Clayton told the lawmakers, is a “step to strengthen our cybersecurity and risk management efforts.”
The SEC, the plan states, also “must find ways to use data and technology to uncover risks to the markets and investors, as well as to conduct activities more efficiently. With the increased use of data comes risk and the practical risk mitigation imperative to collect only what we need to advance our mission, and institute proper procedures for protection of that data.”
— Check out SEC Chairman Is ‘Sick’ of How Much Retail Fraud There Is on ThinkAdvisor.