House Financial Services Committee Examines SEC FY 2017 Budget Request

The House Financial Services Committee (“FSC”) examined the SEC's agenda, operations and fiscal year 2017 budget request at a hearing held on November 18th.

FSC Chair Jeb Hensarling (R-TX) urged the SEC to (i) simplify the disclosure regime and stop requiring “political disclosure”, which "is not within the SEC's core competency"; and (ii) stop the DOL from enacting the fiduciary proposal.

In her testimony, SEC Chair Mary Jo White outlined the SEC's recent activities and current initiatives as follows:

• the implementation of remaining congressional mandates and other significant rulemakings;

• the vigorous enforcement of securities laws by (i) leveraging data tools and analysis, (ii) executing "the admissions policy," which "require[s] admissions or other acknowledgements of wrongdoing where appropriate" and helps to identify cases of wrongdoing that the SEC "will be prepared to litigate if necessary," and (iii) enhancing the whistleblower program;

• building new initiatives for facilitating capital formation;

• the review of its disclosure requirements and the ways in which companies file their disclosures, as well as alternatives that could enhance the manner in which investors access the disclosures;

• the enhancement of risk monitoring and regulatory safeguards for the asset management industry through initiatives concerning (i) the use of derivatives by investment companies, (ii) transaction plans for investment advisers, (iii) stress testing for large investment advisers and large investment companies, and (iv) third-party compliance reviews;

• the enhancement of equity and fixed-income market structures; and

• personalizing the investment advice standard of conduct.