MARY JO WHITE has just completed her first 100 days as chairman of the Securities and Exchange Commission and by all indications, she has done a good job moving the agency forward on important reg-
ulations that had languished under former Chairman Mary Schapiro.
That said, it could be argued that she has simply plucked the low-hanging fruit.
Indeed, it won't be all smooth sailing for Ms. White. If she wants to leave a legacy that people will remember because the level of investor protection rose markedly and U.S. capital markets again became the envy of the world, she must keep pressing ahead without shying away from tough issues such as the fiduciary standard.
As InvestmentNews' Washington reporter Mark Schoeff Jr. has reported, advisers are frustrated with the SEC's slow pace on a fiduciary standard, even though Dodd-Frank gave the agency the authority to raise standards for brokers. While a rule has yet to be proposed — and may never be proposed — the SEC is in the throes of a much ballyhooed cost-benefit analysis of a potential rule.
Ms. White could use the formidable skills already on display to take action and settle the matter.
As astute as she is, Ms. White undoubtedly can see through the smoke screen that the cost-benefit proponents have thrown up. Don Trone, president of the Leadership Center for Investment Stewards, has called the cost-benefit effort simply a tool to “kick the can down the street another 20 months.” And nearly a year ago, the Peterson Institute for International Economics released a report suggesting that the financial services industry is misusing cost-benefit analyses as an intentional strategy to delay or defeat financial regulatory reforms.
It's called paralysis by analysis, and Ms. White, in her first 100 days, has clearly shown an ability to break that mold.
Take money market mutual fund reform, for example.
Ever since the Reserve Primary Fund collapsed in 2008 as the financial crisis was beginning, the SEC has been debating reform of this important corner of finance. In 2010, Ms. Schapiro managed to push through some changes, such as increasing the cash that such funds are required to keep on hand to meet redemptions and boosting the credit standards for the kinds of securities in which they invest.
FINAL STRAW
But last August, when three of the four other SEC commissioners refused to support her major push to make money funds more stable, Ms. Schapiro gave up. Some observers said at the time that her inability to get consensus on that issue was the final straw that led to her decision to stand down.
Ms. White, with a fresh approach that her fellow commissioners, —including Daniel Gallagher, who opposed Ms. Schapiro's money fund proposal — already have noted, moved her money market fund reform plan forward with unanimous backing.
“It's a whole new world, where we're having regular and iterative communication,” Mr. Gallagher said. “She's very engaging. I do think that is really going to help.”
SETTLEMENT LANGUAGE
In addition to money market reform, Ms. White has moved to change the agency's long-standing policy that allowed companies and individuals to settle enforcement actions without admitting or denying the charges — a practice that has drawn criticism from judges, as well as investor advocates.
And earlier this month, the commission approved, in a 4-1 vote, a rule that would allow advertising for private-placement securities offerings.
Areas where Ms. White has had less success include getting congressional approval for a substantial SEC budget increase, in part to hire 250 more investment adviser examiners.
Her efforts to be more inclusive and engaging with her fellow commissioners have already paid off.
Considering she will likely have two new commissioners soon — Democrat Kara Stein and Republican Michael Piwowar, who are slated to replace Elisse B. Walter and Troy A. Paredes, respectively — she will need to maintain, if not ramp up, that level of collegiality if she is to keep the momentum going.
At this stage, Ms. White deserves a conditional “A” on her 100-day report card — the condition being that she does not let up.
