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Regulation and Compliance > Federal Regulation > SEC

Lawmakers Scold SEC's Clayton Over Committees' Lack of Diversity

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SEC Chairman Jay Clayton and Rep. Maxine Waters. SEC Chairman Jay Clayton and House Financial Services Committee Chairwoman Maxine Waters.

Welcome back to Human Capital! I’m Melanie Waddell in Washington. The new year kicked off with the inaugural meeting of the Securities and Exchange Commission’s Asset Management Advisory Committee (AMAC). SEC Chairman Jay Clayton’s marching orders for the committee: Bring “diverse perspectives” to bear to help the agency fine-tune regulations for this segment of the financial services realm. House Financial Services Committee Chairwoman Maxine Waters, D-Calif., however, says the committee isn’t diverse enough.

Waters, along with Rep. Joyce Beatty, D-Ohio, chair of the Subcommittee on Diversity and Inclusion, aired their concerns in a Jan. 14 letter to Clayton that there’s an “ongoing lack of ethnic and racial diversity” on the agency’s four advisory committees — including the 23-member AMAC, which has no black members.

Thanks for tuning in to the first issue of 2020, another year in which we’ll pull back the curtain on the people shaping the financial services regulatory landscape. You can reach me at [email protected], and follow me on Twitter at Think_MelanieW.

Don’t forget to listen in on the first Human Capital podcast of 2020 with Brian Hamburger, CEO of the regulatory consulting firm MarketCounsel. Click here.

Clayton’s high hopes for AMAC: “to provide informed, diverse perspectives and related advice” from outside the Beltway to help set the commission’s policy decisions.

More specifically: AMAC will help ensure the “SEC’s regulatory approach to asset management meets the needs of retail investors and market participants” as the industry evolves rapidly.

Part of AMAC’s goal: to find ways to promote diversity and inclusion in the asset management industry. A critical component of the asset management industry’s success, Clayton said, is that it must “include women and men with diverse backgrounds and perspectives.”

(He also noted the agency’s recent appointment of Robert Marchmanas as senior policy advisor on diversity and inclusion.)

Waters and Beatty pointed to the “important role” that advisory committees play across the federal government in providing advice and recommendations.

The two lawmakers told Clayton: “To most effectively articulate industry concerns to the SEC,” its committees “should represent the diversity of the issue areas as well as reflect the demographic diversity of the businesses and consumers under SEC authority and purview.”

Bottom line: A Financial Services Committee review of the SEC’s current advisory committee demographics — the Investor Advisory Committee, the Small Business Capital Formation Advisory Committee, the Fixed Income Market Structure Advisory Committee and the Asset Management Advisory Committee — “reveals that only a limited number of Latinos and blacks serve as committee members.”

SEC Commissioners Weigh in on AMAC Priorities

Democratic SEC Commissioner Allison Herren Lee’s wish list for the AMAC: Help investors with the “ability to accurately assess, compare and invest in companies with sound policies on sustainability, ethical business standards and good governance.”

It’s been a decade since the commission addressed climate-related disclosure, Lee said. “I don’t want to see us fall behind the rest of world in ensuring that investors receive this sort of material information that the market is demanding.”

Another task: Help the agency determine what it should mean when a fund calls itself an ESG fund, Lee said.

On Republican Commissioner Hester Peirce’s AMAC to-do list: Find solutions to deal with “customer privacy and data protection and the unique and pressing challenges that these matters are now posing to asset managers.”

Asset managers are not only grappling with the European Union’s General Data and Protection Regulation (GDPR) and California’s Consumer Protection Act, which just took effect, but also “10 bills are being considered in Sacramento that could further alter the CCPA,” and many states “are now considering implementing or already have implemented customer privacy and/or data protection legislation,” Peirce said.

Some of CCPA’s obligations as well as those found in other state initiatives “would be preempted under Reg S-P and [the] Graham-Leach-Bliley [Act],” Peirce declared, but “asset managers are still faced with the cost and potential liabilities associated with determining just where and how they are to comply with the growing multitude of overlapping regulatory regimes.”


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