SEC Chairman Jay Clayton. (Photo: Andrew Harrer/Bloomberg)

Welcome back to Human Capital! After a Thanksgiving break as well as a few days off, we’re back to focus on Securities and Exchange Commission Chairman Jay Clayton’s declaration on Thursday that wrapping up the agency’s advice standards package is a “key priority” for the securities regulator in 2019.

What else is on Clayton’s “significant” regulatory to-do list? Cybersecurity, proxy access, digital assets and initial coin offerings, the accredited investor definition and no more Libor — so keep reading to hear more.

Not to dampen Clayton’s enthusiasm for a finalized advice standards package in 2019, but I’d be remiss if I didn’t note that AARP released a study on Friday finding that even “significant” revisions to the plan’s Regulation Best Interest consumer disclosure form would not clear up investor confusion about the differences between brokers and advisors.

Thanks for tuning in again this week! Don’t forget to check out what Clayton told me about the advice standards package as we nearly collided at a Georgetown University event last month.

Before getting to the agency’s plans for 2019, Clayton laid out why the agency’s 2018 Reg Flex agenda “was more focused” than in past years and included 26 different initiatives that the agency “could reasonably expect” to get done. During the last year, the commission advanced 23 of the 26 rules in the near-term agenda, “a good result on both a percentage basis (88%).”

The advice standards package is “a very important and long overdue initiative,” Clayton said. Many retail investors “do not have a firm grasp” of the important differences between broker-dealers and investment advisors, he said, noting that “this is a complex set of issues, no doubt, but we must also recognize that access to investment advice is increasingly important to our society.”

SEC staff has been “carefully reviewing” information culled from reports, investor testing and roundtables as well as the more than 6,000 comment letters “as they work diligently to develop final recommendations.”

The proxy “plumbing” is broken, panelists at a recent SEC roundtable confirmed. The system “needs a major overhaul,” relayed Clayton, while he encouraged market participants “to explore what such an overhaul would entail and to consider how technology, including distributed ledger technology, could improve the proxy plumbing.”

For proxy advisory firms, Clayton said he believes there’s “growing agreement that some changes are warranted.” For instance, “there should be greater clarity regarding the division of labor, responsibility and authority between proxy advisors and the investment advisors they serve.”

As in 2018, distributed ledger technology, digital assets and ICOs will occupy a “significant” amount of the SEC’s time. Clayton’s take: ICOs “can be effective ways for entrepreneurs and others to raise capital,” but ‘the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered,” securities laws must be followed.

As the agency’s new Strategic Hub for Innovation and Financial Technology (FinHub) shows, the SEC’s “door remains open to those who seek to innovate and raise capital in accordance with the law,” he said.

Transitioning away from Libor as a benchmark reference for short-term interest rates will likely happen after 2021. “It’s likely that banks currently reporting information used to set Libor will stop doing so after 2021, when their commitment to reporting information ends,” Clayton said.

Cybersecurity will continue as a priority in exams of broker-dealers and investment advisors, Clayton said, with the agency’s Cyber Unit dedicated to targeting cyber-related misconduct and assessing potential violations like “intrusions into retail brokerage accounts, the submission of false regulatory filings and hacking to obtain material nonpublic information.”

As to capital formation and investment opportunities, SEC staff is gearing up to solicit input via a concept release on whether the SEC’s “accredited investor definition — a principal regulatory threshold for participation in private offerings — is appropriately tailored to address both investment opportunity and investor protection concerns,” stated the SEC chief.