For advisors, White's nomination to take over the SEC is the more consequential of the two pending appointments. On Tuesday, she left little doubt that if she wins Senate approval she will move swiftly to finalize open rulemaking proceedings, including the proposal for a uniform fiduciary standard, and continue efforts to beef up enforcement activities to root out bad actors and strengthen investor protections.
"If confirmed, I will vigorously carry out the SEC's mission to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation," White said, calling this a "crucial time for the SEC."
White praised the work of former SEC Chairman Mary Schapiro and Elisse Walter, who currently heads the commission on an interim basis, in strengthening enforcement, improving risk assessment and improving its technology, while at the same time stressing the need for rigorous, ongoing oversight of the financial services sector.
"Although the worst of the recent financial crisis may be behind us, none of us can be complacent," she said. "[F]ast-paced and constantly changing markets require constant monitoring and analysis. And when issues are identified, the investing public deserves appropriate and timely regulatory and enforcement responses."
WHAT'S AHEAD?
In answering the senators' questions, White shied away from offering specific pronouncements ahead of her confirmation about how she would proceed with various rulemaking proceedings pending at the commission under the provisions of the Dodd-Frank financial reform bill and the Jumpstart Our Business Startups (JOBS) Act, though she pledged to move ahead "in as timely and smart a way as possible."
"The SEC needs to gets these rules right, but it also needs to get them done," she said.
That includes the long-deferred proposal to extend the fiduciary responsibilities that govern the activities of investment advisors to broker-dealers. The SEC first floated that idea in a report issued in January 2011, but has since put the rulemaking on hold as it conducts a cost-benefit analysis of the potential economic impact of the new regulations. At the beginning of March, the commission put out a call for more input from industry members and other stakeholders to inform that analysis.
In addition to wrapping up the SEC's work on a uniform fiduciary standard, White indicated that she would move swiftly on a number of other proceedings pending at the commission, including enhanced oversight of previously unregulated private fund advisors and reforms to money market mutual funds.
White appeared to assuage the concerns that some lawmakers expressed about the prospect of SEC's authority over money market mutual funds being co-opted by the Financial Services Oversight Commission, or FSOC, an interagency panel that includes the commission but is organized under the Treasury Department and has been evaluating proposals for stabilizing the sector. Without weighing in on any of the specific reforms, White affirmed that jurisdiction over money market mutual funds properly belongs with the SEC, indicating that under her watch the commission would ultimately assume responsibility for the drafting and enforcement of any new regulations.
"Money market mutual funds, which are very important investment products, I think are in the heartland of the SEC's expertise," White said. "And I think it is the SEC's responsibility, as it is focused on now and has been before, in determining what additional reforms there should be to that investment product."
RIGOROUS ENFORCEMENT AHEAD
White, renowned as a tenacious prosecutor, also put the industry on notice that she plans to implement a rigorous enforcement regime at the SEC if she wins the blessing of the Senate.
"[I]f confirmed, it will be a high priority throughout my tenure to further strengthen the enforcement function of the SEC. It must be fair, but it also must be bold and unrelenting," she said. "Investors and all market participants need to know that the playing field of our markets is level and that all wrongdoers -- individual and institutional, or whatever position or size -- will be aggressively and successfully held to account by the SEC. Strong enforcement is necessary for investor confidence and it is essential to the integrity of our markets."
