SEC in Practice

Three Tips for Newer SEC Practitioners In today's politically charged environment, navigating the complexities of the SEC and SEC practice can be especially challenging for newcomers. Here are a few (hopefully helpful) tips to help newer SEC practitioners as they brace themselves for the days ahead.  1.) Back to basics. The foundations of the securities laws never get outdated. Double down on materiality; the definition of a security, and anti-fraud concepts. 2.) Look Back. Understand what brought about the securities laws and why the SEC came about. SEC Historical Society is a great place to take a virtual tour. 3.) We’ve been through this before. The SEC has a history of grappling with and adapting to political change, new technology and novel financial products. The SEC is well-equipped to deal with these issues, with constructive industry engagement. 

Something for the SEC to consider? I always try to keep an eye out on the FCA and how it interacts with the firms it regulates. One way the FCA gets its thoughts out are via letters from senior officials directly to chief executives. In turn CEOs are expected to discuss the letter internally to determine whether the risks raised are present and if so how to address. This latest FCA letter is to CEOs of Asset Management firms and hits on various supervisory priorities including private markets and digital innovation including tokenization. The SEC may want to consider whether these types of Dear CEO letters would be worthwhile to add to its arsenal. https://lnkd.in/e7qJVRVQ #SECPractice

Rebuilding Bridges: Securities Practitioners and the SEC Letting Bygones Be Bygones With transitions come opportunities for reflection and a reset and this coming transition at the SEC is no exception. For both the SEC and securities practitioners, it’s crucial to consider how we can rebuild healthy and constructive engagement. The need for such engagement was understood as early as the SEC’s first chair, Joseph Kennedy and remains central to effective regulation. It is critical for any new SEC Chair to make re-establishing constructive engagement a top priority. The strength of the SEC is its talented staff and also securities practitioners who are encouraged to engage in regular, ongoing dialogue. When issues arise, one of the key action steps for regulated industry and securities practitioners should be we need to go in and speak to the SEC. Constructive Engagement= Effective Regulation 

1+1=3. We saw it with Lennon and McCartney. Tina Fey and Amy Poehler. Belichick and Brady. And now you can add SEC Commissioners Peirce and Uyeda. Another powerful joint dissent from the duo, this time in the context of SEC settlements with four companies and their disclosures related to the impacts of a cyber breach. The two Commissioners state: “The common theme across the four proceedings is the Commission playing Monday morning quarterback. Rather than focusing on whether the companies’ disclosure provided material information to investors, the Commission engages in a hindsight review to second-guess the disclosure and cites immaterial, undisclosed details to support its charges. Accordingly, we dissent.” This strong dissent follows a recent dissent by the pair related to off-channel communications. Expect more to follow over the next couple of months.  #SECRegulatory #SECPractice #SECUpdate 

Will the SEC be regulating like it’s 1934? Or maybe 1964? It’s too early to tell but definitely something to keep an eye on. The last few weeks have been extraordinary. The 5th circuit private fund case… The Jarkesy decision ..The demise of Chevron….The SEC is now faced with taking stock and assessing how it will move forward with advancing its regulatory policy and engaging with the regulated industry in light of these and other recent developments. The SEC has been through these self-reflection periods before.  ✔90 years ago when the SEC came about its first Chair, Joseph Kennedy spent considerable time assessing how best to establish the stature of the SEC as an institution and how it should undertake regulating the securities markets. He also gave a great deal of thought as to how he wanted the SEC to engage with the regulated industry. ✔Thirty years later, in the mid-1960s, the SEC under Chairman Manny Cohen (1964-1969) went through another period of self-reflection. Prompted by rapid changes in the securities markets, the SEC redefined its operations and the manner in which it approached regulation.  🔑Key in 1934 and again in the mid-1960s, was active and constructive engagement of the regulated industry, encouraged by the SEC. In fact, Chairman Cohen was known to use the phrase “cooperative regulation” to describe how he wanted to engage with the industry. So a lot to come in the aftermath of recent events and a time for self-assessment about how best to move forward. Hopefully, cooperative regulation will be called upon again to get us there.        I am starting a new Linkedin group called SEC in Practice. Through ongoing posts, discussion forums and other means we hope to create a community of SEC practitioners who enjoy discussing and educating one another about SEC practice. Feel free to join. https://lnkd.in/gvqEr2PY

SEC Practitioners-- this is worth a read or two. Warning, it is powerful. Commissioner Peirce’s remarks at last week’s SEC’s 90th Anniversary event: “How can the SEC exhibit similar vivacity at ninety? We can stop fearing market dynamics, competition, technology, and innovation. We can be as willing to acknowledge regulatory failures as we are to identify market failures. We can stick to our statutory mandates: protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. We can resist the temptation to regulate outside our statutory boundaries. We can treasure our staff of dedicated, hard-working, specialized, and knowledgeable public servants by empowering them to think through difficult legal questions about the application of securities laws to new circumstances. We can stop using our very important enforcement tool as a substitute for considered regulation. We can savor the wonder of the capital markets’ power to transform people’s lives and build a prosperous economy. We can recommit ourselves to good administrative process in our rulemakings, our exams, and our enforcement actions. We can frequently, seriously, and diligently seek input from investors, industry, and other interested parties. We can embrace a culture of humility, intellectual curiosity, and respect for divergent views. We can remember how immensely privileged we are to serve the American people." I am starting a new Linkedin group called SEC in Practice. Through ongoing posts, discussion forums and other means we hope to create a community of SEC practitioners who enjoy discussing and educating one another about SEC practice. Feel free to join. https://lnkd.in/gvqEr2PY