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SEC Chairman Announces 8 Core Principles

In his first public speech since becoming the U.S. Securities and Exchange Commission (SEC) chairman, Jay Clayton shared his eight core principles that he indicates will guide his oversight of the agency, with an emphasis on the “Main Street” investor. This speech is significant because it provides insight into how the agency may balance benefits to investors against costs to the markets under the commission’s enforcement and regulatory powers.

However, he also emphasized part of his plan to help individual investors is by increasing the public investments available to them. To that end, Clayton reminded companies considering IPOs that the JOBS Act benefit of submitting draft registration statements confidentially and gradually phasing in reporting obligations, previously available only to emerging growth companies, now applies to all companies seeking access to public capital.

The core principles Clayton addressed in his speech are:

  1. The SEC must equally emphasize all three parts of its mission to (1) protect investors, (2) maintain fair, orderly and efficient markets, and (3) facilitate capital formation

  2. That mission is guided by what’s best for the Main Street investor – the 401(k), long-term investor

  3. The SEC’s existing regulatory regime is sound and does not need major changes

  4. Increased regulations have resulted in a decrease in publicly traded companies which could result in, as Clayton said, long-term “not good” economic impact

  5. The SEC must evolve along with the market, including through use of technology, while also weighing the costs of regulatory change

  6. The SEC must not only adopt rules but continue to review how those rules are functioning

  7. Rules requiring companies to demonstrate compliance are part of the cost of new rules

  8. The SEC must coordinate with other financial regulators, especially the Commodity Futures Trading Commission in regulating over-the-counter derivatives

With these remarks, the chairman made clear his focus is on “Mr. and Mrs. 401(k)” — promising to punish fraud and announcing a plan for a Fixed Income Market Structure Advisory Committee to examine the fixed income market as “waves of Baby Boomers retire every month” looking for places to invest.



About this Author

Jeanine Kerridge, Litigation and Government Services, Attorney, Barnes Thornburg

Jeanine Kerridge is an associate in Barnes & Thornburg LLP's Indianapolis office. She is a member of the firm's Litigation and Governmental Services Departments. Ms. Kerridge has experience representing public and private clients on a wide variety of legislative, public policy and public sector issues at the local, state and federal level. Her practice involves litigation, administrative and regulatory compliance representations involving a wide variety of areas, including constitutional, administrative, ballot, voter rights, MBE/WBE, school law, gaming, land use/eminent domain,...