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SEC Nominee Crenshaw Details Reg BI Compliance Priorities

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During her nomination hearing before the Senate Banking Committee Tuesday, Caroline Crenshaw pointed to two aspects of Regulation Best Interest compliance that she views as especially critical: ensuring firms are held “accountable when they are not appropriately mitigating conflicts of interest,” and that Form CRS actually provides “valuable” information.

Crenshaw, who would replace former SEC Commissioner Robert Jackson, a Democrat, was questioned by Sen. Sherrod Brown, D-Ohio, on ways “to get the most of the [Reg BI] rule to better protect Americans’ savings and investing for the future.”

Crenshaw responded that “it’s critical that the SEC work with the Office of Compliance Inspections and Examinations and FINRA to drive successful compliance of this rule. That means working with the firms to make sure Form CRS is actually providing information that is useful to investors and that it’s information that they can understand.”

Successful compliance also means “working with firms to make sure that their policies and procedures are appropriate to mitigate conflicts of interest. To the degree they’re not, we have to be willing to hold those firms accountable when they are not appropriately mitigating conflicts of interest.”

If approved by the full Senate, Crenshaw will replace Jackson, who left his SEC seat in February to return to teaching at New York University School of Law.

Crenshaw is an attorney at the SEC who worked in Jackson’s office.

Finishing Dodd-Frank mandated rules such as executive compensation should also be a priority for the commission, Crenshaw stated.

Hester Peirce Talks Capital and Crypto

SEC Commissioner Hester Peirce, a Republican, was also questioned during the Tuesday nomination hearing. Peirce was sworn in on Jan. 11, 2018. If confirmed by the full Senate, her second term would expire on June 5, 2025.

“I feel like the work that I came to the commission to do is not done,” Peirce told senators.

Peirce stated that part of her work will include “helping the economy come out of the current COVID crisis,” including through capital formation.

“That’s something I’ve been working on, and specifically trying to focus on, making sure that the entities that … don’t know a lot of venture capitalists, don’t have a lot of wealthy friends and family, those kinds of entities are able to get capital if they merit capital,” she explained.

That means looking “at our exemptions and making sure they make sense,” Peirce said, and “potentially adding some new exemptions, such as perhaps a ‘micro-offering’ exemption.”

Also, as to crowdfunding, has it “lived up to its potential or are there things that we could do to make them work better?” Peirce said.

Another priority, Peirce continued, is to “try to work on the commission’s attitude toward innovation, which has been highlighted when we consider crypto.”

Peirce has been dubbed “Crypto Mom” by advocates of digital currency.

Crypto, Peirce said, “is clearly going to be here to stay and I would like us to set up a regulatory framework that works well for crypto. I think we have some of the structure in place to do that, but we have a lot more work to do.”

— Check out Secure Act, Fiduciary Rules Set Up a Doozy of a Compliance Year on ThinkAdvisor.