White's SEC Has the Tools She Needs For Fundsters
   The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
Friday, May 8, 2015

White's SEC Has the Tools She Needs For Fundsters

"We have the tools that we need" to regulate the asset management industry.

Mary Jo White, chair of the Securities and Exchange Commission (SEC), shared that sentiment this morning in a post-breakfast Q&A with Investment Company Institute (ICI) president and CEO Paul Schott Stevens, at the ICI's 2015 General Membership Meeting (GMM) at the Marriott Wardman Park in Washington, D.C. White dismissed the idea that the SEC's capabilities under existing law are at all inadequate to address financial stability risks in the mutual fund business and in asset management in general. So Congress, no need to pass new laws targeted at asset managers, as the SEC's chair says existing tools are adaptable enough to do the job.

"All the financial regulators since the financial crisis, including the SEC, do have a lens of systemic risk and financial stability, and we should have that," White said, describing that lens as complementary to the SEC's "existing mission" to protect investors, maintain market integrity, and facilitate capital formation.

White also talked about the international Financial Stability Board (FSB), with which many central bankers are involved. Fundsters worry about FSB and FSOC (see below) pressure to regulate asset managers as "systemically important financial institutions," thus treating large asset managers more like too-big-to-fail banks. Yet White said that regulators "shouldn't get ahead of the train."

"Capital markets expertise really is needed, and I think the SEC is the strongest voice for that," White said, describing the FSB's role as "enormously important." "The more capital markets participation you have at the principal level, the better."

As for the Financial Stability Oversight Council (FSOC) here in the U.S., on which White sits, she reminded fundsters that, before any asset manager (say, a giant mutual fund company in New York City, Boston, Valley Forge, or Los Angeles) could be labeled and regulated as a SIFI, the FSOC first has to figure out if there are any "activities presenting systemic risk" in the first place. That's where her proposed enhanced data reporting initiative, which she floated back in December, comes in.

"Everyone recognizes that the tools [related to regulating SIFIs] might not be one-size-fits-all," White said, pointing to the impact of SIFI designation on insurers.

White and Stevens discussed a host of other issues, including White's revelation that later today acting investment management division chief David Grimm will officially be named the director of the division. Other topics included cybersecurity, the global role of the SEC, White's proposal to supplement the SEC's own RIA examinations with third-party exams, and more.

Printed from:

Copyright 2015, InvestmentWires, Inc.
All Rights Reserved
Back to Top