SEC Chairman Jay Clayton’s controversial tenure will conclude at the end of this year, it was announced on Monday.
The move opens the door for Joe Biden to name a replacement to the high-profile regulatory role.
Clayton was sworn in 2017, and was criticized by Democrats and consumer advocates for what they saw as his industry-friendly approach, most notably with Regulation Best Interest, which many consider a toothless version of the Department of Labor’s stricter fiduciary rule.
Rumors have swirled in the past week about tougher candidates to oversee Wall Street, with Bloomberg reporting Preet Bharara, Manhattan’s former top federal prosecutor, was in the running for the job.
“Working alongside the incredibly talented and driven women and men of the SEC has been the highlight of my career,” Clayton said in a statement. “I am proud of our collective efforts to advance each part of the SEC’s tripartite mission, always with an eye on the interests of our Main Street investors. The U.S. capital markets ecosystem is the strongest and most nimble in the world, and thanks to the hard work of the diverse and inclusive SEC team, we have improved investor protections, promoted capital formation for small and larger businesses, and enabled our markets to function more transparently and efficiently.”
During his time at the commission, it brought over 2,750 enforcement actions, obtained more than $14 billion in financial remedies, distributed approximately $3.5 billion to harmed investors, and paid awards of approximately $565 million to whistleblowers.
Reg BI’s future uncertain
But his signature regulation, Reg BI, will most likely not survive the Biden Administration. According to a section titled, “Guaranteeing a Secure and Dignified Retirement,” in the 2020 Democratic Party Platform draft released last summer, Reg BI would likely be struck down in 2021 in favor of a true fiduciary standard.
“Democrats believe that when workers are saving for retirement, the financial advisors they consult should be legally obligated to put their client’s best interests first. We will take immediate action to reverse the Trump Administration’s regulations allowing financial advisors to prioritize their self-interest over their clients’ financial wellbeing,” the draft stated on page 24 of the 80-page document.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
