At this year’s Security and Exchange Commission (“SEC”) conference held on 21 February 2014, SEC Chair Mary Jo White discussed the SEC’s priorities for 2014. By way of background, the SEC is an agency of the US federal government which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation’s stock and options exchanges, and other activities and organisations, including the electronic securities markets in the United States.

Mrs White stated that the SEC agency is facing an unprecedented rulemaking agenda. Between the Dodd-Frank and JOBS Acts, the SEC was given nearly 100 new rulemaking mandates ranging from rules that govern the previously unregulated derivatives markets, impose proprietary trading restrictions on many financial institutions, increase transparency for hedge funds and private equity funds, give investors a say-on-executive pay, establish a new whistleblower program, lift the ban on general solicitation, reform and more intensely oversee credit rating agencies.

In 2014, in addition to continuing to complete important rulemakings, the SEC wants to intensify its consideration of the question of the role and duties of investment advisers and broker dealers, with the goal of enhancing investor protection. Increased focus will be placed on the fixed income markets and further progress is expected on credit rating agency reform. The SEC intends to prioritise its review of equity market structure, focusing closely on how it impacts investors and companies of every size. One near-term project that Mrs White will be pushing forward is the development and implementation of a tick-size pilot, along carefully defined parameters, that would widen the quoting and trading increments and test, among other things, whether a change like this improves liquidity and market quality.

One significant vulnerability was highlighted by Mrs White, namely the risk of cyber attacks which needs to be addressed across both the public and private sectors. Commissioner Luis Aguilar enumerated the glowing cyber-threats faced by registrants, the capital markets and investors. There has recently been a serious of high-profile cyber-attacks on American companies and financial institutions. Websites of several major US banks have been repeatedly knocked offline for hours or days at a time by denial-of-service cyber-attacks. The SEC will be holding a cyber security roundtable which will be open to the public on 26 March 2014 to encourage a discussion and sharing of information and best practices.

With regard to enforcement, the SEC has to date charged 169 individuals or entities with wrongdoing stemming from the financial crisis – 70 of whom were CEOs, CFOs, or other senior executives. At the same time, the Commission also brought landmark insider trading cases and created specialized units that pursued complex cases against investment advisers, broker dealers and exchanges, as well as cases involving FCPA violations, municipal bonds and state pension funds. In 2013 alone, Enforcement’s labours yielded orders to return $3.4 billion in disgorgement and civil penalties, the highest amount in the agency’s history. The SEC wants to maintain such vigorous and comprehensive enforcement of securities laws.

On investment management, the SEC’s new focus will be on risk monitoring of asset managers and funds. To enhance its asset manager risk management oversight programme, the SEC’s initiatives include expanded stress testing, more robust data reporting and increased oversight of the largest asset management.


On 3 February 2014, the Security and Exchange Commission (“SEC”) published a draft strategic plan outlining its strategic goals for fiscal years 2014 to 2018. The draft plan examines forces shaping the regulatory environment and outlines more than 70 initiatives that the SEC has designed to support its primary strategic goals. Comments had to be submitted by 10 March 2014.

Some of the initiatives outlined in the draft stategic plan include:

Engage in rulemaking mandated by Congress

The SEC will continue to fulfill its obligations under the Dodd-Frank Act and the Jumpstart Our Business Startups (“JOBS”) Act to develop and promulgate mandated rules and regulations with appropriate notice and comment and economic analysis.

Strengthen proxy infrastructure

The SEC will consider issues related to the mechanics of proxy voting and shareholder-company communications, including the role of proxy advisory firms.

Modernise beneficial ownership reporting

The SEC will consider how to modernise its beneficial ownership reporting requirements to, among other things, address the disclosure obligations relating to the use of equity swaps and other derivative instruments.

Analyse regulatory structures for investment advisers and broker-dealers providing personalised investment advice

The SEC will continue to analyse whether the different regulatory obligations that apply to broker-dealers and investment advisers providing personalised investment advice should be changed for the protection of investors.

Strengthen oversight of municipal advisors

The SEC will continue to enhance the program for registration and oversight of municipal advisors, with a particular focus on registering municipal advisors under the permanent registration rules and reviewing rule filings by the Municipal Securities Rulemaking Board to implement the permanent municipal advisor registration rules.

Build upon the establishment and successes of the Office of the Whistleblower

The SEC will continue to encourage individuals and entities with timely, credible and specific information about potential securities law violations to provide information to the Commission to further investigations and promote more efficient use of the Commission’s limited resources.

Update disclosure and reporting requirements to reflect the informational needs of today’s investors

The SEC will continue its efforts to enhance disclosure requirements for the benefit of investors, including a reassessment of current core corporate disclosure requirements. In proposing changes for the Commission to consider, the staff will seek to modernize disclosure requirements and eliminate redundant reporting requirements. The staff’s efforts will continue to include a review of proxy voting and shareholder communications to identify ideas and proposals for potential improvement to those rules.