Each year at the program “SEC Speaks,” the Commission’s and staff gather to discuss recent events at the agency and future directions. Comments by the Commissioners this year recapped past events and raised important issues for future discussion.

Chairman Schapiro reviewed recent reorganizational efforts and the agency as well as selected rule making. Those include:

  • Making better use of the available resources through a better hiring approach, increasing training, upgrading the case management system and improving systems;
  • Managing more effectively and improving agency operations;
  • Crafting a new approaches to try and head off threats by taking steps such as creating new groups in Corp Fin focused on the largest financial institutions, structured finance products and capital markets trends and reorganizing the enforcement division; and
  • Implementing segments of Dodd-Frank.

Commissioner Daniel Gallager focused his comments on issues regarding the question of failure to supervise:

  • A key question is frequently who is a supervisor and at what point can legal and compliance personnel be reasonably deemed “supervisors.” This issue has been raised in a number of Commission decisions which are not entirely clear, according to Commissioner Gallager. At the same time what those cases do stand for is the proposition that “once a person becomes involved in formulating management’s response to a problem, he or she is obligated to take affirmative steps to ensure that appropriate action is taken.”
  • The critical difficulty in this context is to encourage legal and compliance personnel to participate and lend their talents to the organization. “Unfortunately, robust engagement on the part of legal and compliance personnel raises the specter that such personnel could be deemed to be ‘supervisors’ subject to liability . . .”
  • This presents a challenge for the Commission and the SROs to create a framework to encourage participation by in-house legal and compliance officers.

Commissioner Luis Aguilar discussed the timely issue of political contributions and the Supreme Court’s decision in Citizens United in 2010. The Commissioner noted that “shareholders require uniform disclosures regarding corporate political expenditures for many reasons, including that it is impossible to have any corporate accountability or oversight without it.” The Commission has a responsibility to “ensure that investors are not left in the dark while their money is used without their knowledge or consent” the Commissioner stated.

Finally, Commissioner Tory Paredes voiced concerns regarding the Volker rule. Those include:

  • Investors could be disadvantaged by higher costs, fewer investment options, lower returns and less wealth;
  • The U.S. markets may become more volatile and less efficient;
  • Companies may find it more difficult to raise capital; and
  • Agencies, authorities, and instrumentalities of cities, counties, and states could end up struggling to raise funds to finance needed public works and infrastructure projects.
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