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Financial Regulators Offer Update on Audit Quality in Emerging Markets

Over the past several years, the exposure of U.S. investors and our capital markets to companies with significant operations in emerging markets, including China, has increased.[1] This increased exposure carries with it a number of significant risks and challenges, many of which we described in our statement of December 7, 2018[2] and our more recent joint statement along with other SEC staff, Emerging Market Investments Entail Significant Disclosure, Financial Reporting and Other Risks; Remedies are Limited, on April 21, 2020.[3]

Among other relevant issues related to emerging market investments, we noted that the Public Company Accounting

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Chairman Clayton Speaks on Putting Principles into Practice: the SEC from 2017-2020

It is wonderful to be back with the Economic Club of New York.  You are a sophisticated, experienced, outcome-oriented, tough and fair audience, interested in economic and wage growth and improving our society more generally.  Just the way it should be.

As John [Williams] noted, today’s program proceeds in two parts, (1) remarks from me on our regulatory activities over the past three-plus years (time flies) and—at the end of that part—a discussion of some of the areas that I believe need continued attention and (2) a Q&A session with market and policy experts Harold Ford, Barbara Novick, Gary Cohn

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SEC Chair Speaks on Simplifying Exempt Offering Framework

Today [November 2] we consider a recommendation from the Division of Corporation Finance that would harmonize, simplify and improve various structural and procedural aspects of our exempt offering framework under the Securities Act of 1933.  The recommended amendments reflect a comprehensive, retrospective review of a framework that has, over time, unfortunately become difficult to navigate, for both investors and businesses, particularly smaller and medium-sized businesses.  Some have referred to it as a “patchwork” – I will explain this in a bit more detail later.  Today’s amendments would rationalize that framework, increase efficiency and facilitate capital formation, while preserving or enhancing

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SEC Chair Clayton Speaks on Regulations for Funds’ Use of Derivatives

Today [October 28], we are considering a new rule to provide an updated and comprehensive regulatory framework for the use of derivatives by registered investment funds, including mutual funds and exchange traded funds (ETFs). I have spoken before on the importance of modernization—ensuring that the implementation of our time-tested, long term investor-oriented regulatory structure keeps pace with today’s marketplace—to the Commission’s mission and our markets more generally.[1]  I have no doubt that this commitment to modernization, which flows through the 4,500-strong SEC staff, greatly enhanced our ability and the ability of market participants more generally to both absorb and

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SEC Officials Issue Joint Statement on Complex Financial Products and Retail Investors

Retail investors have a wide array of investment options available to them, including an increasing number and type of investment products that are more complex than conventional stock and bond investments.[1] These complex products may be exchange-traded or sold directly to investors. Among these products are “leveraged/inverse” products, which seek to provide leveraged or inverse exposure to an underlying index by a specified multiple (e.g., 2x), generally on a daily basis, as well as products that provide investment exposure to less conventional assets, including commodity prices.  We believe that these leveraged/inverse products and other complex products may

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SEC Chairman Clayton Addresses Regulation Best Interest and Form CRS

Good afternoon and welcome to the SEC’s Staff Roundtable on Regulation Best Interest and Form CRS.[1] We hope that this event provides useful information to broker-dealers and investment advisers in complying with these key regulatory enhancements. Staff from the Commission’s Division of Trading and Markets, Division of Investment Management and Office of Compliance Inspections and Examinations, together with staff from FINRA, will present some insights and feedback as we approach the four-month anniversary of the June 30 Reg BI and Form CRS compliance date.

The Commission adopted Regulation Best Interest, or Reg BI, and Form CRS to enhance significantly

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SEC Chair Speaks on FY 2020 Results

Thank you, Stephanie [Avakian], for that kind introduction.  I am pleased that this annual event can continue in our new virtual environment.  Thank you all for taking the time to participate today and for your continued interest in the work of the Commission.  As always, these views are my own and do not necessarily reflect the views of the Commission, my fellow Commissioners, or the SEC staff.

At last year’s SEC Speaks, I spoke about our goals and accomplishments through the “eyes of management,” similar to what public companies do in the “Management’s Discussion and Analysis,” or “MD&A” section of

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SEC Chairman Clayton on Modernizing the Shareholder Proposal Framework

Over the past three years, we have engaged in a number of retrospective reviews of the rules that implement our securities law framework.  These reviews often, but not always, have yielded the unassailable conclusion that modernization is necessary and appropriate.  This should come as no surprise given how much has changed in the past 20, 30, 40 or more years since key rules were last comprehensively reviewed.  At a macro level, I note that interaction among market participants, including trading, disclosures and other information-based interactions, is now largely electronic, adding tremendous efficiencies but also new challenges.  Virtually all trading in

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SEC Chair Speaks About Enhanced Investor Protections in the OTC Market

Technology has driven many efficiencies in our markets.  Technology can also enhance investor protection.  Today, we recognize that, as a result of technological change, information can and should be made available to over-the-counter (“OTC”) market investors in a more timely manner.

Ensuring that investors have access to material information so they can make informed investment decisions is a cornerstone of our federal securities laws.  Information about companies in the OTC market is less available than it is for issuers that are listed on a national securities exchange.  Yet, OTC securities, which include securities referred to as “penny stocks,” are primarily

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SEC Chair Clayton Discusses Modernizing Framework for Disclosures

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission, under the Government in the Sunshine Act. I would like start today’s meeting by welcoming Commissioner Crenshaw to her first open meeting.

Today [August 26], we are considering amendments to modernize the description of business, legal proceedings, and risk factor disclosures that companies are required to make under Regulation S-K.  These amendments are part of the Commission’s broader efforts to retroactively review and improve our public company disclosure framework and related requirements.

First, I want to put this work in context.  The rules we adopt today

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SEC Officials Offer Update on the Consolidated Audit Trail

Today [August 21], the Commission proposed amendments to the national market system (“NMS”) plan governing the consolidated audit trail (“CAT NMS Plan”). The proposed amendments are designed to enhance data security related to the ongoing development and operations of the consolidated audit trail (“CAT”). In 2016, the Commission approved the CAT NMS Plan prepared by FINRA and the national securities exchanges (collectively, the “SROs”) which included various security requirements.[1] Today’s proposal would take additional steps to reduce cybersecurity risks and is the latest in a series of Commission actions to move the development of the CAT forward and enhance

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SEC Chairman Speaks on Amendments to Proxy Solicitation Rules

Good morning.  This is an open meeting of the U.S. Securities and Exchange Commission, under the Government in the Sunshine Act.  Today we have two items on the agenda, both continuations of our ongoing work to modernize and enhance the accuracy, transparency and effectiveness of our proxy voting system.[1]

I want to make two general observations.  First, today’s recommendations are the fruits of a rigorous and well-functioning rulemaking process where final rules reflect and benefit from the input of a wide array of market participants with a myriad of interests and perspectives.  The proposing release that the Commission issued

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SEC Chair Clayton Addresses the Financial Stability Oversight Council

Market Functioning and Monitoring

We have continued our efforts to help facilitate the orderly and fair market function, including in coordination with our colleagues at the Federal Reserve and Treasury.[1]

Market activity has remained active in June and thus far in July, but has declined from the peaks in late February and March.  By way of just a few examples:

  • On the last day of February 2020, we observed the second most shares traded ever, 19.3 billion shares.  In June, the average remained quite high by historical standards at 13.3 billion shares per day.  By comparison, in June of

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SEC Update on Regulatory Relief During the Pandemic

The U.S. Securities and Exchange Commission’s efforts in response to the COVID-19 pandemic are centered, first and foremost, on the health and safety of our employees and all Americans.  The Commission’s recognition of the corresponding need of market participants to also prioritize health and safety while ensuring the continuity of operations essential to the orderly function of our capital markets, drove the prompt actions of the Commission and its staff in the early stages of the pandemic’s effects in the United States.  We have assessed these actions in light of developments over the past several months, current conditions and our

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SEC Chair Speaks on Small Business Capital Formation

Welcome to the 39th Annual Small Business Forum. I want to thank Martha and the staff in the Office of the Advocate for Small Business Capital Formation – that includes Colin, Jenny, Jessica, Julie, Malika and Todd – for their significant efforts to forge ahead and organize this virtual forum.

Although I would have much preferred to have been out on the road as we have in the past few years, going to Austin, Columbus and Omaha, that is just not possible this year. Thanks to our Office of Information Technology and the good work of Martha and her

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SEC Chair Clayton Speaks on Municipal Securities Disclosure

Good afternoon everyone. Thank you to the Office of Municipal Securities for organizing this conference.  And thank you to all the panelists for taking time to join us today.[1]

State of the Municipal Securities Market

Since December 2018, when the Office of Municipal Securities last held a conference on disclosure for municipal securities market, there have been several notable changes in the municipal securities market.[2]

  • New municipal issuance for 2019 was over $450 billion.  Notably, taxable issuance increased to over $70 billion in 2019, largely in the second half of the year.
  • Retail ownership of municipal securities, including

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SEC Chairman Speaks to Fixed Income Market Structure Advisory Committee

Thank you, Michael [Heaney]. Good morning everyone, and welcome to this year’s second meeting of the Fixed Income Market Structure Advisory Committee. Thank you for joining us. I am glad we are able to meet virtually today.

I would like to welcome Mark Kim of the Municipal Securities Rulemaking Board as our newest member of the Committee, and I would like to thank the former MSRB designated representative, John Bagley, for his meaningful contributions to the Committee.

I will begin today by noting my appreciation for the work of the Committee and the commitment of its members. Your excellent service, … Read more

Chairman Clayton Speaks to SEC’s Asset Management Advisory Committee

I look forward to hearing the Committee’s insights into the effects of the pandemic on the asset management industry and, in particular, our long-term Main Street investors.[1]  An essential component of our national response to, and recovery from, COVID-19 will be the continuing, orderly operation of our markets and the continued flows of capital and credit throughout our economy.  The asset management industry has a pivotal role to play in both orderly market operation and the generation and absorption of capital flows.  Investment funds and advisers are an important link between these market realities and the interests of our

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SEC Chair Clayton Speaks on Market Function and Monitoring and Disclosure

From a systemic risk point of view, the SEC’s primary responsibilities[1] in this period of stress are three-fold:

  1. Market function. Using our authority, expertise and experience to help ensure the continuing, orderly and fair function of the securities markets—including equities, fixed income securities, funds and other products.
  2. Market monitoring. Monitoring market prices and price movements, flows of capital and availability of credit to assess functionality and resiliency of the capital markets—and taking action, including providing regulatory relief and guidance, as appropriate.
  3. Corporate and other issuer disclosure. Monitoring and providing guidance concerning, and emphasizing, timely and accurate

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SEC Chair Addresses Proposed Equity Market Data-Governance Reforms

Good afternoon.  This is an open meeting of the U.S. Securities and Exchange Commission on May 6, 2020, under the Government in the Sunshine Act.  The Commission today will consider a staff recommendation to issue an Order that would direct the registered equities exchanges and the Financial Industry Regulatory Authority (“FINRA”) to propose a new, single national market system (“NMS”) plan to govern the public dissemination of real-time, consolidated market data for NMS stocks.

Throughout my tenure as Chairman, I have discussed the need for the Commission to focus additional analytical resources on our ever evolving market structure.[1]  U.S.

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