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April 26, 2018

Five Questions for SEC Chair Clayton

This morning, Securities Exchange Committee (SEC) Chairman Jay Clayton will be testifying before a House Appropriations Subcommittee to discuss the fiscal priorities of the SEC for the 2019 Fiscal Year. Though it is centered around appropriations, Congress also has an opportunity to ask the chair of the SEC questions surrounding a number of important topics.

Here are five that we would ask (and we hope are asked) during today’s hearing:

On Market Structure:

  • It has been argued that retail investors are disproportionately and negatively impacted by some practices that high-frequency traders engage on. What should the Commission do to protect better retail and other investors against predatory high-frequency trading?

On the Revolving Door & Interest Groups:

  • The revolving door between the SEC and the Wall Street firms it is called to regulate is spinning as fast as ever. Do you believe that the revolving door between industry and the SEC is a problem? What would you do to ensure that those coming to the SEC have the public interest at heart and in mind?
  • How are you ensuring that both rulemaking and enforcement functions of the SEC are not compromised because of the revolving door?

On Cost Benefit Analysis:

  • Would you agree that any assessment of the benefits of regulation must include the benefits of avoiding financial crises, the benefits of maintaining investor confidence in the integrity of our markets, and the benefits of safeguarding investors from the collectively massive losses that arise from fraud and abuse.

On Repeat Offenders:

  • It is a requirement of SEC settlements that financial institutions agree not to breach securities laws in the future. However, there have been many examples of firms who have violated their pledges not to break laws, without suffering the consequences. How should the SEC effectively fight recidivism?
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