Tags: SEC | enforcement | oversight | Ceresney

House Financial Services Subcommittee Grills SEC Enforcer

By    |   Friday, 20 Mar 2015 07:58 AM

The House Financial Services Committee's Subcommittee on Capital Markets and Government Sponsored Enterprises, chaired by Rep. Scott Garrett, R-N.J., held a hearing on the oversight of the Security and Exchange Commission (SEC)'s Division of Enforcement.
 
The sole witness was Andrew Ceresney, director of the Division of Enforcement, who answered the often-critical, hostile and sarcastic questions that he wanted to answer and punted the others with varying degrees of deftness and clumsiness.
 
In his opening statement, Garrett questioned the growing reliance, for nearly half of enforcement cases, of in-house administrative law judges, rather than federal district courts. The judges are hired by the SEC and have the authority to rule on what evidence is admissible and to determine issues of fact. At the end of the day decisions are subject to appeal to the SEC, which gives deference to the staff, and then to circuit courts of appeal, which give deference to the Commission. Garrett marveled the SEC won every single administrative case in 2014.
 
Rep. Stephen Lynch, D-Mass., brought up an arcane issue he has raised before, which is the policy of conferring a status called "Well-Known Seasoned Investor" (pronounced "wiksi") on corporate issues that allows them to take advantage of an expedited process called "shelf registration" when they issue stock. He singled out Credit Suisse as an example of a company that has continued to enjoy this status despite violations that Lynch contends should call for suspension.
 
This policy was defended by Rep. Randy Hultgren, R-Ill., who engaged in a colloquy with Ceresney to establish that the WKSI waivers are administered by the Division of Corporate Finance through a "rigorous" process.
 
Lynch also announced that he is preparing legislation called the SEC Revolving Door Restriction Act to keep SEC staff from going to work for people or companies that have worked on investigations or other business before the Commission for a period of a year and a half.
 
Perhaps the most intriguing issue of the day was raised by Rep. Ann Wagner, R-Mo. By way of background, the SEC has been dragged into a protracted struggle with the Department of Labor (DOL) over an administration proposal to create a single standard of liability that would apply both to broker dealers and investment advisers. The DOL is the lead agency by virtue of its jurisdiction over employee pension plans. Pending since 2010, the regulation is due to be re-proposed.
 
Wagner cited a leaked White House memo dated Jan. 13 from Jason Furman and Betsey Stevenson of the Council of Economic Advisers "that outlined the rationale for a new rulemaking to deal with conflicts of interest in the retirement advice market." She quoted Republican SEC Commissioner Daniel Gallagher as calling the memo "thinly veiled propaganda designed to generate support for a wildly unpopular rulemaking." Wagner said she is "worried about the effects such a rule would have on low- and middle-income Americans seeking financial advice for their retirement."
 
Ceresney responded that he is not aware of the memo and the Enforcement Division would not be involved. This writer would advise that the battle between the financial advice industry, tacitly backed by the SEC, and the DOL is bound to intensify.
 
(Archived video, witness testimony and the staff memorandum can be found here.)

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
Robert-Feinberg
The House Financial Services Committee's Subcommittee on Capital Markets and Government Sponsored Enterprises, chaired by Rep. Scott Garrett, R-N.J., held a hearing on the oversight of the Security and Exchange Commission (SEC)'s Division of Enforcement.
SEC, enforcement, oversight, Ceresney
542
2015-58-20
Friday, 20 Mar 2015 07:58 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved