Page 13 - Investment Advisor June 2021

funding platforms, though my daughters costs and benefits of our rules on differ- the coming months.
would’ve had to set up his account and do ent segments of the population, Lee said. “Market events, of course, will dictate
all his marketing for him,” Gensler said. some of the agenda,” Peirce stated.
“The third part of the SEC’s mission — FINRA SEEKS FEEDBACK ON She added that the SEC staff is work-
‘facilitate capital formation’ — doesn’t pick DIVERSITY, INCLUSION BARRIERS ing on a report about the events “related
winners and losers,” he continued. The Financial Industry Regulatory to meme stock trading earlier this year,
“All companies, from small businesses Authority wants broker-dealers to weigh and some regulatory initiatives may
to high-growth startups to corporations, in by June 28 on FINRA rules, operations come out of that work.”
deserve access to our capital markets and administrative processes that may Gensler testified on May 6 during the
to fund their entrepreneurial ideas and create “unintended barriers to greater House Financial Services Committee
innovations, regardless of their race, diversity and inclusion” in the industry third hearing on market volatility relat-
gender, geography, or any other factor,” or that might have “unintended disparate ed to the GameStop trading incident.
Gensler said. impacts” on those within the industry. Peirce also said that as the agency
“As a society, we still have a lot of In Regulatory Notice 21-17, FINRA understands more about the failure
work to do to correct unequal access asks broker-dealers to provide feedback of Archegos Capital Management,
to capital for underrepre- “discussion about regu-
sented groups.” “If we do undertake specific policy latory changes might be

She opined that “com-
IMPACT OF RULEMAKING initiatives, for instance, to increase appropriate.”
ON MINORITY GROUPS mentators have gotten a
Indeed, SEC Commissioner access to capital for women- and head start and have identi-
Allison Herren Lee, minority-owned businesses, how fied a number of regulatory
a Democrat, stated in responses, including pos-
the meeting that the do we analyze whether our policy sible regulation of family
Commission “needs to choices will have the intended effect?” offices and enhanced dis-
confront how we go about closure requirements for
assessing the effects of our synthetic stock positions
rulemaking on these com- — SEC Commissioner Allison Herren Lee created through the use of
munities. Are there likely total return swaps and pos-
to be disproportionate costs to certain on five areas of its rules or market prac- sibly other derivative instruments.”
segments of our population from our tices that could impact the BD industry Preventing family offices “from los-
policymaking? How can we best ensure on the basis of national origin, language, ing their fortunes is not in the category
that the benefits of our rules will indeed age, gender, race, color, ethnicity, socio- of problems that the SEC needs to step
flow through to these communities?” economic status, religion or spiritual in to solve,” Peirce stated. “I am much
She added: “If we do undertake spe- practice, disability, sexual orientation, more interested in expanding access to
cific policy initiatives, for instance, to gender identity, family structure or vet- our capital markets so that less well-
increase access to capital for women- eran status or discourage participation heeled families can build their fortunes.”
and minority-owned businesses, how do in the industry. Financial regulators, she added, “do
we analyze whether our policy choices One question requests feedback on have a legitimate interest in risk man-
will have the intended effect?” whether the current collection and agement at regulated entities, and it
Noting her previous comments about publication of registered representative may be worth exploring whether there
the steps the SEC should take to “bet- background data, including that which were problems in this area that need to
ter incorporate diversity considerations relates to education, employment status, be addressed. But even here, such events
into its policymaking,” Lee added that tenure, and complaints and grievances, inevitably serve as lessons for risk man-
Andrew Harrer/Bloomberg Minority and Women Inclusion into our diversity in the industry. and firings that followed the Archegos
create an unintended barrier to greater
agers (underscored by the demotions
the first “is incorporating our Office of
failure), but they need not serve as justi-
rulemaking process to help ensure that
fications for more regulation.”
MORE CHANGES UNDER GENSLER
we’re leveraging all of our expertise on
Peirce noted during a separate speech
these topics.”
The second: incorporate into the SEC’s
recently that she’s anxiously awaiting
Washington Bureau Chief Melanie Waddell can
Gensler setting out his priorities for
economic analysis “an assessment of the
be reached at [email protected].
JUNE 2021 INVESTMENT ADVISOR 11