Welcome to Financial Advisor IQ
Follow

Trump Picks SEC Boss, Finra Reveals Exam Priorities

January 5, 2017

Wall Street lawyer Jay Clayton will lead the SEC under a Donald Trump administration, CNBC reports.

Clayton, a partner at Sullivan & Cromwell specializing in initial public offerings, has also served as an investment advisor to several high net worth families, according to CNBC. He will take over from current SEC chief Mary Jo White, who announced in November that she would step down in January.

Under Clayton, who has represented Goldman Sachs and Barclays, the SEC is expected to do a “180” from White’s aggressive pursuit of financial institutions, the Wall Street Journal writes.

In 2011, Clayton attacked President Barack Obama’s SEC and Justice Department for targeting American corporations that were bribing foreign officials, saying in a 2011 New York State Bar Association report that the policy caused “lasting harm” to U.S. companies and markets, according to the Journal.

Clayton’s SEC will certainly have less emphasis on enforcement than White’s, David Chase, a former senior enforcement counsel in the SEC Miami office and owner of an eponymous law firm, tells InvestmentNews.

Clayton’s appointment has already drawn criticism from Senate Democrats who say it goes against Trump’s campaign-trail promises to be tough on Wall Street, according to the Journal.

Meanwhile, Finra has announced its top exam priorities for 2017. The industry’s self-regulator plans to step up its scrutiny of firms hiring brokers with disciplinary records, with an emphasis on the firm’s supervision of such brokers. Last month, the Massachusetts Secretary of the Commonwealth, William Galvin, said that in his state only 6% of brokers with black marks were under heightened supervision.

President Donald Trump (Getty)

Finra also plans to devote more attention to protecting senior investors, particularly in regard to recommendations of complex products and microcap fraud schemes.

Finra will also focus on product suitability overall, with an emphasis on how firms carry out suitability reviews and monitor recommendations.

The regulator will also pay closer to attention to excessive and short-term trading of long-term products, outside business interests and the use of social media for business, with an emphasis on record retention.

Other areas of focus will include cybersecurity, financial risk and liquidity risk management, segregation of client assets and audit trail reporting, among others.

By Alex Padalka
  • To read the CNBC article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.
  • To read the Wall Street Journal article cited in this story, click here.