President Obama has nominated a pair of Senate aids to be SEC Commissioners. Dr. Michael Piwowar is the Chief Economist for the U.S. Senate Committee on Banking, Housing, and Urban Affairs, a position he has held since 2009. Dr. Piwowar was nominated to fill the spot held by current Commissioner Troy A. Paredes, for a term expiring June 5, 2018. Kara M. Stein is currently Legal Counsel and Senior Policy Advisor to Senator Jack Reed. Ms. Stein was nominated to fill the spot held by current Commissioner Elisse Walter, for a term expiring June 5, 2017.
It’s anyone guess as to whether the appointments will speed up, slow down, or otherwise impact the JOBS Act rulemaking. The SEC appears poised to tackle the tough issue of money market reform on June 5, so it appears SEC Chair Mary Jo White is moving forward. Why money market fund reform before the JOBS Act? It’s a rational choice by Mary Jo White, as it involves systematic risk to the economy, and FSOC is breathing down the SEC’s neck on the issue.
According to Bloomberg BusinessWeek, a former SEC attorney who is now chief executive of a crowdfunding service provider, said about the crowdfunding rules “We hear that the rules have been written by the staff and are just sitting in the in-box of the commissioners.” OK.
SEC Commissioner Luis A. Aguilar gave a speech where he talked about the JOBS Act and immigration reform. As to the risk of fraud associated with crowdfunding, he noted “Clearly, all investments bear some degree of risk, and it may never be possible to do away entirely with fraud. However, to the extent that Internet crowdfunding increases the risk of fraud, it will be incumbent upon the SEC and state securities regulators to counter such increased risk through robust investor education and outreach efforts, and through strong enforcement efforts, when fraud occurs.”
FINRA Chairman and Chief Executive Officer Richard Ketchum talked about the expected fragmented nature of crowdfunding and the difficulty in finding fraud according to the Bloomberg/BNA Securities Regulation & Law Report. He reportedly said “Without trade reporting,” it will be difficult “to find the needle in the haystack with respect to a hot offering that may raise issues,” and to find that offering quickly.
John Ramsay, acting director of the SEC’s Division of Trading and Markets, was reported as discussing the screening function of broker-dealers in the crowdfunding marketplace according to the Bloomberg/BNA Securities Regulation & Law Report . The screening would include “limiting the potential for bad actors” to enter the new market, directing participants to relevant areas, avoiding over-regulation “that is inappropriate to the nature of the function,” and ensuring that the limitations on holding funds and securities are observed.
According to MarketWatch, Commissioner Elisse Walter is in favor of lifting the ban on general solicitation, including for hedge funds, but is concerned about investor protection.