SEC Chair Testifies before Congress on Upcoming Asset Management Rules

June 27, 2016

Testifying before the U.S. Senate Committee on Banking, Housing, and Urban Affairs (the “Committee”) on June 14, 2016, Securities and Exchange Commission (“SEC”) Chair Mary Jo White spoke to the “Oversight of the [SEC]” and the current work and initiatives underway at the agency, providing insight into the timing of major regulatory initiatives affecting the investment management industry.

Chair White testified that she expects the SEC to finalize a number of proposed rules this year, including those addressing amendments to Part 1A of Form ADV; modernized registered investment company reporting requirements; liquidity management programs for mutual funds and ETFs; and the use of derivatives by registered investment companies and business development companies. Additionally, she confirmed that a proposed rule requiring investment advisers to create and maintain transition plans to prepare for a major disruption will be issued soon.

According to the Chair, the SEC staff continues to work on a proposal for stress tests for large investment advisers and investment companies. Chair White has directed SEC staff to prepare recommendations for potential modifications to the definition of “accredited investor.”

Chair White expressed concern that the SEC does not have the resources to adequately examine the growing field of registered investment advisers, explaining that she has asked the SEC staff to recommend proposed rules that would require independent compliance assessments for investment advisers to help address this.

Commenting on cybersecurity, Chair White indicated that SEC staff is building on its “cybersweep” exams from last year, and will focus on cybersecurity compliance and controls in 2016 as well. She added that SEC staff will conduct more testing this year to assess firms’ preparedness and the implementation of firms’ procedures and controls.

The Chair also emphasized the importance of effective disclosure, noting that she has directed the SEC staff to consider ways to improve the form, presentation, content, and delivery of investment companies’ disclosures. While the staff is in the early stages of prioritizing areas of focus, the Chair stressed that “they will include ways to leverage advances in technology to improve the presentation and delivery of disclosures and ways to enhance disclosure about fund strategies, investments, risks, and fees.”

Click here to access Chair White’s testimony.


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Investment Advisers, Investment Companies, Mutual Funds, Speeches & Testimony