Congress shouldn’t overlook these adviser issues in rush for change

President elect Donald Trump and the Republican-controlled Congress have a lot of legislative promises to keep as they get down to business — the repeal of Obamacare, tax reform, rolling back some of the Dodd-Frank regulations, renegotiating trade deals, etc.
But there are several issues that must be addressed expeditiously, the first of which is the confirmation of a new chairman and two new commissioners for the Securities and Exchange Commission.
Without a new chairman the SEC will become rudderless when Mary Jo White steps down this month. The Senate needs to begin the process of evaluating Mr. Trump’s nominee, Jay Clayton, as soon as possible. The Senate also needs to confirm two new commissioners. Two nominees, Republican Hester Pierce and Democrat Lisa Fairfax, were not confirmed before the winter recess, which means that after Ms. White departs there will be only two commissioners until the Senate acts. That effectively cripples the agency.

(More: Jay Clayton, SEC chairman nominee, likely to shift focus away from rulemaking, enforcement)

CLEARING OLD BUSINESS

There are also several leftover legislative items that should be tackled quickly, some of which have already been passed by one house of Congress and should need little tinkering by the other. These measures should be reintroduced early in the new session to clear away old business before Congress gets to work on the new issues.
One that should sail through is a package of bills that would make it easier for startup companies to raise capital. The package was approved by the House of Representatives by the lopsided margin of 392 to 2. However, it was passed too late in the session to have a chance of Senate passage before Congress adjourned for the holidays. The package is designed to help with job creation by encouraging new startups and accelerating their growth through easier access to capital.
A key proposal would expand the definition of accredited investor as recommended by an SEC staff report. The new definition would include people who have relevant investment experience and certain professional credentials, such as investment advisers and brokers.

(More: Outlook good for expanded accredited investor definition after strong approval in House)

When the package of bills is reintroduced this year, it should once again sail through the House of Representatives and, given the size of the favorable vote there, should not need much debate in the Senate.

WHISTLEBLOWER PROTECTION

Of more importance is a bill that would provide liability protection to whistleblowers working in the financial industry who notify appropriate agencies of suspected elder financial abuse. Such abuse occurs, for example, when seniors fall victim to Ponzi schemes or are sold inappropriate financial products.
The bill, the Senior Safe Act, was passed by the House of Representatives in June, but though it had seven bipartisan cosponsors in the Senate it has been bogged down in the Senate Banking Committee and will have to be reintroduced in the new session.
Advisers would have to receive training from their firms on how to identify and report suspected elder financial exploitation to be immune from legal liability, the bill says. The issue of elder financial abuse, which costs seniors an estimated $2.9 billion a year, must be addressed soon by the passage of this law and its signing into law by the new president.
Another issue requiring congressional action is a proposed Treasury Department regulation that would increase estate or gift taxes in cases of “deathbed” transfers of closely held corporations or partnerships.

(More: New estate rule would affect tax strategies of ultra-wealthy)

This rule would affect estate planning for many owners of closely held family businesses. If the regulation is not finalized by Friday, Mr. Trump’s Treasury Department could nullify it. Failing that, Congress would have to act to kill it.
Unfortunately, the fact the Republican-controlled House of Representatives focused on limiting the independence of the Office of Congressional Ethics as its first order of business does not inspire confidence that it will address important holdover legislative or regulatory matters in a timely manner.
We can only hope that the Senate will be more focused and not get bogged down in fighting over the repeal of Obamacare and the details of tax reform to address the elder-care and SEC issues.