Transcripts For CSPAN3 SEC Commissioners Testify Before House Financial Committee - PART 1 20240714

And discussions agencies priorities including senator training and distinction over cryptocurrency. He testified before the House Financial Services committee. The committee will come to order. Without objection, the chairs authorized weight recess of the committee at any time. This hearing is entitled oversight of the security and Exchange Commission. I inaudible recognize myself for four minutes with an Opening Statement. Good morning. I want to welcome back chairman clayton and welcome jackson,s placement and lee to this important hearing of the secs role in risk Capital Markets. Its the First Time Since 2007, that all commissioners at this Exchange Commission have testified before the Financial Services committee. I believe it is important for the committee to hear testimony from each of the commissioners including as chairman, because he told the vote of important rally authority in these matters. They are unique reviews that the committee should be aware of. This is especially important steps that the sec is not fulfilling as wall street calls and key rules like the open rule and the rollback and our moves to implement employment reforms on issues like executive conversation, which congress upended back in 2020 as part of the wall street reform and conservative protection act and name and complete. Other regulations such as the sec isnt best interest which failed to protect the save years of an scrutiny financial advisers. This is also clear that the resistance Securities Law ive been working and there are loopholes that and corporate insiders are taking advantage of. For example, executives of buying securities that their companies during the trading gap which will support the gap on the corporate event for the companionship required of the investors of that event. Executives are also used of stock facts to provide pockets of giving them pay grazes are investigating and companies. In addition, a Court Decision versus sec limited the secs ability to recover wrongful gains and fosters like bernie made off and to harm investors. I believe that the sec need longer to protect investors and published bad actors. Members have addressed a number of pills to strengthen the commission, and our security clause, and a number of these bills passed the committee are the role of the house. Today, we will have the opportunity to hear directly from the commissioners on these important issues, in addition and there is concerned about the facebook, and digital currency. It appears that facebook is working to create a new Global Financial system that is intended to rival the u. S. Dollar. I, antidemocratic on the committee have called for facebook to halt their plans until regulators in congress have an opportunity to examine these issues and to take action today. I hope to hear what today explicitly has taken to ensure that libra is regulated. I look forward to the testimony, and i now recognize the Ranking Member of the committee, the gentleman from North Carolina for five minutes for an Opening Statement. Thank you for holding todays hearings, i appreciate german clayton and the gang here joining you today. Interesting that you have that the whole commission is here. The sec has a three part mission, maintain fair an orderly and efficient markets, and third, to facilitate Capital Formation. All three pillars of those, the sec does, but i think the two first, protecting investors, and maintain efficient markets, on captured in that. Without Capital Formation, the other two could not exist and that means that, if you have no market to regulate, then people will not have the opportunity to invest. Without market for Retail Investors to participate in, there would be no need for Investor Protection. So, we need to help investors by focusing on policies that make our markets stronger, more attractive and more competitive. Not at a regulatory costs and we condemn. We dont have to look any further than the impact of mandatory disclosure after mandatory disclosure on the companies cant compliance crossed. Real, cost theres a real cost borne by real investors, making it more expensive to pay Public Companies. Companies heavily burdened by costs will stay in private marcus, ultimately, Retail Investors of choices and opportunities in the Public Market. To that and, im glad that the chairman, under chairman claytons leadership is focused on long overdue reforms that focus on Capital Formation that benefit Mainstream Investors. The renewed investment to revitalizing our public and Capital Markets through increased Capital Formation could not come at a more appropriate time and more crucial time. When considering Public Companies in which to invest, american investors have roughly half the number of companies that they did, compared to 20 years ago. To quote chairman clayton, the steady decline in the number of Public Companies is, quote, not good. Thats an understatement. I share chairman clintons concerned that a decline of our Public Market is a troubling trend for our countrys competitiveness and for american investors. And for Retirement Savings as well. The solution to this crucial problem is to focus on policies that will make Companies Want to go public and preserve option for raising much needed capital, all of which will lead to increased competitiveness and more Investment Opportunities for everyday investors to grow their savings. I would like to commend the commission for their efforts to improve Capital Formation for smaller companies. Particularly, by reexamining the executive offering Regulatory Frameworks. Many of these frameworks were created by the jobs acts of 2012, a landmark bipartisan act of legislation that is at a major impact on Capital Markets and Small Businesses. Now its time for the sec to revisit these private offering exemptions to improve the Regulatory Framework to better and grow Investment Opportunities. One exemption that warrants modernization is the crowd funding examined, included in the chops act, only a few pages long. 11 pages, in fact. I appreciate the sec and the hardworking staff creating 685 pitches worth of regulation around those 11 pages. The absurdity of this, i point out a number of times since then, so youve given at least the rhetorical value of talking about the burden of sec regulation, making an exemption and a public lot, completely meaningless because of the impact of the costs. So, i encourage the sec to continue its efforts to expand investment, investor access to companies and to maintain its focus on companies from going or staying in our Public Markets. Stronger markets translate to more growth and greater opportunity for the investors to grow their savings and reach their goals of homeownership, retirement, or simply a better way of life. In conclusion, we will hear a lot of doom and gloom today, it is not all doom and gloom, the markets now appear healthier over the last two years. Investment opportunities are better now than they have been in recent years. I think there is a lot that is praiseworthy of the secs approach and how the market is responding to that. I look forward to your testimony and the questions that you will ask. I recognize the chair of the subcommittee on Capital Markets, mrs. Maloney, one minutes. Thank you for holding this important hearing. The sec has been active on issues such as cryptocurrency, and corporate governance. But by far the, most important action the sec has taken was in june, when they finalize regulation. This rule was intended to raise the standard of conduct for brokers, and offer Investment Advice to Retail Investors. Unfortunately, i believe the role was far too weak, and did not raise the standard for brokers nearly enough. And to make it worse, the sec also weakened the fiduciary standard for Investment Advisers, which was completely unnecessary and goes against the secs mission of protecting investors. So, i will be interested to hear from the commission about why they chose this path and i yield back. Thank you. I want to welcome the panel from the security and Exchange Commissions. Commissioner robert, j jackson junior who served since 2018, commissioner jackson came to the commission from New York University school of law, the commissioner has stir who was also served on the commission since 2018. At george mason university. Commissioner, served on the commission since september 2018 and who prior to joining the commission served as chief counsel for the u. S. Senate Commission Committee on banking housing and urban affairs. Commissioner alison aaron lee, served since 2017. She served on various roles and the sec, and most recently has written, lectured and taught classes on Financial Regulation and corporate law, internationally. Finally, chairman jay clayton, who served in the commission since january 2017. Prior to joining the commission, they were a partner at sullivan and, crumble part of the management committee. Welcome to you all. Before recognizing you for your testimony, i understand clemency man has a brief administrative statement. So without hesitation, you are recognized. Thank you chairwoman waters, and members of the committee for my fellow commissioners, i each provide our Opening Statements. Id like to give our usual disclaimer, which is easy laws will provide our only views and remarks, and do not represent those at the sec or our fellow commissioners. A few other statements. Id like to say that although all five of us are before you this morning, this is not a meeting of the commission under the statute known as the sunshine act. And, as a result, we planned to be mindful to avoid deliberating on business before the agency. We are also sensitive to the potential appearance of prejudgment. Although we may offer our views, share our concerns about general issues, we will avoid making a determination about the course of action that the commission should or will take about any particular matter. As with our usual practice, we will keep an open mind, look forward to reviewing a fully developed record before making our determinations. Also, consistent Longstanding Commission practices, we will not expected to comment on pending nomination. Thank you chairman waters. For purposes of testimony, each of you will have one minute to summarize your testimony. A yellow light will appear, at that time, i will ask you to wrap up your testimony so we can be respectful of both the witnesses and the Committee Members time. Commissioner jackson you, are now recognized for five minutes to present your oral testimony. Thank you chairwoman waters. Ranking member in the cannery and members of the committee. Thank you for the opportunity to join. Its my honor to join my colleagues to testify, protecting ordinary american investors. I will begin by expressing my gratitude for the special privilege of working with the tremendous sec staff we work with every day. I learned a great deal from them and everything we do and will discuss it is possible only because of the tremendous Public Service. German waters, before i joined the sec, network in government as a teacher, as a researcher, focus on the gaps and our Securities Laws. That allowed corporate insiders to spend shareholder money to advance their own interests, rather than those of investors. Because this committee is considering legislation that could address some of those gaps, i will identify three areas where, in my view, doing so will be especially critical foreign very investors. First, our Disclosure Rules are not kept up in the piece of these markets. Specifically, sec rules give Public Companies four days before they must notify the market about market moving Business Development on what is known as our form economy. A steady average before joining the commission filed evident a corporate insiders off in trade during this gap between key Corporate Events and when our rules require that identity real. Im grateful that this committee has taken a Bipartisan Legislation to close the gap and give investors the level Playing Field they deeply deserve. Second, hour rules and sent by corporate insiders to pursue stop that maxime lies executive pay but make no sense to investor. I provided evidence that investors engaged in sales of their company stocks, and i expanded upon that work in a letter to senator van hollen this spring, showing that when insiders sell stock, their companies performs worse in the weeks after the fire back occurs. The sec rules should not intensify the high ends and allow insiders to buy out they do not make sense for ordinary investors. Finally, we should consider giving investors much more transparency into how Public Companies spend their policies. It is not disclosed under the law we have today, since Public Companies can and do give investors money to him intermediaries that do not disclose their donors. Indeed, a study published in 2013 showed that just enter media spend more than 1. 5 billion dollars of investor money on politics over just a short period. Under the law we have now, ordinary american investors have no way to know whether the companies they own where a source of that money. That would be less worrying if executives interest and political spending were aligned with shareholders. When it comes to politics, insiders interests may diverge from those investors. Political spending has consequences that goes beyond, like investing insiders preferred political views. They may be influenced by those preferences. The standard securitys law solution to conflicts like this is a disclosure. That is why sec rules mandate clear disclosure of executive pay. Thats why our rules also require companies to give investors detailed information about transactions between insiders in the company. And that is why the case for requiring disclosure on spending on politics is so strong. Before joining the commission, i led a group of scholars to develop rules requiring disclosure of foreign political spending. Since then, more than 1. 2 million americans have written to that commission to adopt the roles, and a partisan group, including two former chairman have called our proposal i slammed on. But, because congress has used the appropriations process to block the commission from developing roles in this area, too Many American investors today remain in the dark about how Public Companies spend our money on politics. I believe that the critical part of the sec mission to our grand eyes a level Playing Field in the days markets. Gaps in our Securities Laws that allow insiders to trade for key information, stop by back that maximized executive pay but not executive performance and rules that allow insiders to spend investors mind on politics and around the trust that ordinary americans in our political system. On all these matters, i remain open to the use of my exceptional use on this commission and my privilege to be part of that work. Thank you for allowing me to appear before you today. Thank you. Commissioner peirce, you are now invited to present your testimony. Thank you members of the committee, its an honor to be here and and its a pleasure to be here with my colleagues. We all share a common passion for the Capital Markets because we believe they have the power to unleash talent all across the country, and that is good for all of us. Under chairman claimants leadership and with the help of our hardworking staff we are applying the shared passion for the potential of the Capital Markets to change peoples lives to to collaborate and think through a wide range of issues related to protecting investors, facilitating Capital Formation and protecting the integrity of the market. I like to talk to about three principles that i applied when i do my job. The first is that Investor Protection means more than just protecting investors from fraud. It also means protecting their opportunities. The second is that, while enforcement is an important part of our mission, regulation is the key part of what we do. Its our first step, not our last step. And, there are, three as regulators dont, and cant know everything. Investor protection is, of course, on our minds and everything that we do. One of the key purposes of the securities losses to make sure that investors get the Material Information they need to make decisions about where to invest their hard earned money, and they do that with the help of april confessional. Our advice to keep helps investors navigate the complex Financial Markets and, through our compliance and Enforcement Programs, we make sure that institutions and individuals involved in our markets are doing their roles in a way that benefits investors in the market. Our role is not to provide investors. Our best suited to serve which serves their goals. Only place unnecessary limits we risk substituting are just one for that of the investors. Overriding and thats their performances is not Investor Protection. This principle has been for my views of Digital Assets to private markets and professional development products. Flexibility in the attendant ability to respond to demand is key to making sure that they get what they want and need. We bring enforcement cases when people flout our rules, as we should, but enforcement is a poor way to announce policy. We need to be clear in writing our roles, and make sure that we provide the information as necessary. We understand it is regulatory humility. We can and dont know everything, we draw on the expertise of the staff and look outside of the building. We have a number of Advisory Committees that we arise on, we also hold round tables with industry and investor representation to talk to pressing issues of the day and we have investor town halls where we meet with investors. I am working on the security swapped regime, getting that up and running. And we are working closely with the Commodity Futures Trading Commission to make that happen. We are also looking at our rules all the time to see what needs to change, we sometimes need to write a rule to gratify executive orders that have been issued for a long time, or maybe the staff has been doing something by no action letter and we are going to adopt a rule to put a more permanent framework in place. I think Regulatory Committee comes into play, and we need to ask if youre doing something right. One area where i would like us to take a second look, to take a step back and look, its a consolidated audit trail. I want to ask you get ready for the government regulators to collect all the decisions of every Retail Investor in the United States, regardless of whether they are accused of any wrongdoing. So i will thank you for the chance to be here today, and i look forward on your thoughts on what we can do better and look forward to your questions as well. Thank you. Thank you commissioner peirce. Commissioner roisman, you are recognized for five minutes to present your oral testimony. Thank you. Chairwoman waters, Ranking Member mchenry, and members of the committee, thank you for inviting me today. Im honored to appear before you with my fellow commissioners. This month marks my one Year Anniversary as a commissioner, several used his opportunity to share my reflections on the past year. Ive often said that the u. S. Capital markets are the enemy of the world and the importance of the sec role not be overstated. Its really a privilege to go to work every day with a dedicated working staff of the commission. They embody and deliver on the as he s mission, to protect investors, maintain fair, orderly and efficient markets and facilitate Capital Formation. Protecting investors as front of mine for me as we dedicate time each day to review potential Enforcement Actions and potential rules. Our group is impressed by the matters of the staff, protecting investors in mind. I think its important to know that all of our divisions and officers, and not just enforcement are working to protect investors. For example, the secs office its been instrumental in conducting exams across the industry. Not only have i seen them respond to violations to our enforcement staff, ive seen them help us get ahead of such violations by directly engaging with the sec registrants, publishing materials that our Compliance Professionals can be used to do their job more effectively. The office of Investor Education and advocacy have played an Important Role in protecting investors, through bulletins, videos and outreach events. Ive been impressed at how all of the commissions have worked together. What is the one example, staff will host a roundtable on elder investor fraud, with exports from the public and private sector. I like joining to engage with everyone on how we can identify, prevent and fraud targeting older investors. I take this part of our mission very seriously. Market integrity is a priority for me, not only with respect to our equities markets but for a fixed income and tributaries markets as well. In this area, i generally appreciate a work that our division has done to closely assess how these markets are working, whether they work as intended and where there is room for improvement. Outside of the markets, the division has done an impressive work to streamline and improve regulation and important segments, the rich u. S. Retail investors are increasingly accessing securities markets. With regard to the final edition, encouraging in facilitating entrance of companies to our markets, especially Small Businesses, is incredibly important. I appreciate that for the past year the division has been working hard, hosting round tables, soliciting comments from the public, recommending rules to facilitate visibility, lowering the cost of capital, providing main Team Investors with more Investment Opportunities. I believe that participation is necessary component of the successful markets and one that has been hallmark since their inception. Its also reason that countless americans have been able to save for retirement, go to school and deal with unexpected financial burden and their lives. Also my interest and appreciation for this commission focus on the process, which i believe is a fundamental aspect of our Capital Markets. In closing, im grateful for the opportunity to share with you so my lights of my first year. Youre oversight of our agency helped us operate at our best, and i look forward to answering the questions you may have. Thank you. Thank you commissioner. Commissioner lee you are recognized to present your testimony. Thank you, chair waters, Ranking Member mckenzie and members of the committee, thank you for the opportunity to testify before you today. Im too much into my term as a commissioner at this point, and it has been a privilege to work with my distinguished colleagues here and with the dedicated staff of the sec. Having served the sec for over 13 years prior to my appointment, i have experienced firsthand and developed a deep appreciation and respect for their commitment and dedication of the staff to the mission at the agency. I can say that from my Vantage Point as a commissioner, that respect has only increased as i have met and worked with dozens of dedicated staffers in each of the divisions. People of developed extensive expertise through years of daytoday, hands on work with investors and other Market Participants. Im inspired by their commitment, as well as that of my colleagues here today and i am more determined than ever to do all that i can to help the agency do its part to protect and strengthen the economic wellbeing of americans and american businesses. Although we deal with a large number of often highly complex issues and rules, for Market Structure to cybersecurity, they should all be viewed and analyzed through this lens. Whether and how they will promote and strengthen the economic wellbeing of everyday americans, saving to buy a home, since their children to college and to eventually retire and american businesses, which get a fair market place with clear and manageable rules to facilitate growth. This committee has identified a number of Critical Issues for discussion today, increase in the amount of capital, versus Public Markets, the importance of ensuring that Public Companies disclosed in the most effective manner possible the information that investors need to make informed decisions about an era where pieces models in the relevant risks to those models are changing. The secs Enforcement Program and it ability to get money out of the pockets of fraud stores and back into the hands of their victims, Digital Assets and cryptocurrencies and the role of Financial Intermediaries and our markets. But all these issues, it is important for the sec to be held accountable by the investing public, by we regulate and, of course, by this committee and by congress. Whether mere making changes to the staffs long standing review process for shareholder proposals, assessing the fiduciary duties of investors with respect to proxy voting or considering how best to modernize and strengthen Public Company disclosure, we must be fair and transparent about the policy choices that we make and the data and information on which we rely and making those choices. I thank the committee for its interest and oversight in these important issues, and i stand ready to answer your questions and listen carefully to your thoughts and concerns. Thank you. Chairman clayton, you are now recognized to prevent your oral testimony. Thank you. And i will echo the top of my colleagues on the opportunity we have today and to note that their testimony demonstrates the wide range of issues that the Commission Deals with every day. I want to thank this committee, for your support of the commission and in particular, the dedicated women who are our most important asset. The funding you provided to us for fiscal year 19 allowed us to lift our hiring freeze and make new hires and critical areas, including enforcement examinations, market oversight, separate security and a Small Business Capital Formation. Im pleased to report that we have filled approximately 100 new positions with high quality individuals that i expect will serve american investors very well. The fiscal 19 funding that you provided us also allowed us to continue to make significant investments to and upgraded and otherwise improve our i. T. Infrastructure, cybersecurity and risk management. We have made progress in these areas. However, our Information Technology needs and the related risks are ever changing, and the debris no doubt that substantial work remains. Returning to our mission. For me, the interests of our long term, Mainstream Investors are front of mind. I believe that our 4300 colleagues share the same perspective. I will highlight some examples of the recent work of the commission in this regard. Starting with our division of enforcement, our teacher and military Service Member initiatives that focus additional Education Resources on behalf of teachers, veterans and active duty military personnel. Unfortunately, these hardworking americans are too often targeted and fall victim to fraud, shady and self serving practices and other misconduct. My message is simple, if youre ripping off teachers, Service Members or veterans we want to get you, punish you and get them their money back. Returning funds to harmed investors continue to be our priorities for the agency, i previously testified about challenges, including legal impediments we face in obtaining funds from bad actors in cases with long running, well conceit fraud such as policy schemes. I want to recognize and thank the committee for his bipartisan work to address these challenges. Enhancing mainstream Investor Protection while preserving and improving access to Investment Opportunities also has been a priority. The Commission Adopted a long overdue package of rules an interpretation to put acquire candor and oppose other responsibilities on broker dealers and Investment Advisers and their dealings with our Mainstream Investors. For the first time, regardless of whether an investor to just an Investment Adviser, did that you will be entitled to a recommendation and the best interest and thats not place the interests of the farm or financial professional ahead of the investor the strong rule making package was informed by the expertise and decades of experience regulating inspecting and bringing Enforcement Actions in this space and also best benefited from direct shareholder engagement including seven town hall style invest around tables held across the country, we are already seeing the benefits of this work. We are also focused on the implication of potential changes that are taking place in our markets over the past two decades. For example, 25 years, ago the Public Market is dominated the private market on every measure. The private markets out takes the Public Markets and many measures. Our private markets, Mainstream Investors typically do not have the same access to investments as sophisticated professional investors. And, to, when they do have access, they typically do not have the same interests as they do in our Public Markets. In response, we continue to explore initiatives to increase the attractiveness of our public Capital Markets as places for companies to raise capital. At the same time, we are also exploring if we can increase the type and quality of Mainstream Investors in our private markets, while maintaining appropriate Investor Protection, including aligning the interests of Mainstream Investors with professional. I will directly to our written testimony that we are monitoring, around the globe. Thank you and i look forward your questions. Thank you very much, chairman clayton. Im going to deal with two issues here, as i recognize myself for five minutes for questions. First, i want to deal with Insider Trading. Im going to you commissioner jackson. Currently polls in the law allow corporate insiders to enrich themselves at the expense of their shareholders. For example, there is evidence that insiders are misusing sec rules to engage in illegal trading by changing their plans. By bill, promoting corporate standards act would require the sec to study this issue in demand this role accordingly. The bill passed the house on a bipartisan basis. Police gets whats important for Retail Investors to be fixed. Do you agree that the promoting transparent standards for corporate insiders act its a common sense fix to the apparent loophole in this role . Insider trading has been a problem historically. What do you think . Thank you. First of all, i want to thank you for focusing on this issue. The rule was adopted sometime ago. Its always a good plan. It was allowed to make trading decisions longlived and, not based on timing, and there is some academic evident to the degree that theyre taking advantage of investors, starting this makes a great deal of sense, without commenting on any legislation, im glad that the committee has focused on the issue. Thank you very, much and i too am including, im concerned about facebooks plan cryptocurrency. And their potential impacts on the Financial System. Treasury secretary mnuchin have raised concerns. Regulators from france and germany agreed to block lever from their countries. The two governments have stated that no private company can claim money what, does inherent to the sovereignty of nations, unquote. Can you talk about the Systemic Risk to investors that libra would falls . I would not comment on any cripple asset other then i will note that the intention that libra has raised is a good thing. Having discussions and regulars around the world are focused on. It Crypto Assets while, they have benefits, including elderly frictions and the likes and can present a great deal of risk. Particularly in cases where in form, they are the same as currencies or payment systems, but they are not regulated in the same way. We have developed and ecosystem of Financial Regulation over the years. That deals with a great deal of risk to inspectors, so the extent that it would be used to evade those regulations, every problem with the what are you doing now to take a look at libra and calibra . Are you looking at is you can understand what the risks are . We have a group at the commission that is focused on Digital Assets. Both the potential they have to add efficiency, but also the risks that they face. We saw this in the ico space, four billion dollars, put youre number, race most of it is gone. Not complying with our rules. I think we had a great effort from our division of corporation finance, as well as our Enforcement Division to say, hey, if you are selling securities, you have to follow our rules. We are going to do the same thing across all Digital Assets. So you have a committee of some sort that is taking a look at what is happening with the development of libra . Yes, all Digital Assets that come to our decisions were also looking at Digital Assets. What about the entire block chain phenomenon . What do you know about that what work has been done on that . Is there an opportunity to, perhaps, brief the legislators on the work that you may be doing, both looking at labor and also looking at all block chain . I will be very happy to do that. I will be very happy to do that with my colleagues at the commission. I cant speak for my other federal regulators but, jointly with them im happy to do it. Thank you very much, i now yields to the judgment from North Carolina the Ranking Member mr. Mackinnon. German clinton, lets start with digital currency. Chairwoman i have a similar thought process on raising the question. Based off of your analysis of the legal project, which is just an idea at this point. Chairman clayton, people of that libra is a security . Im not prepared to make a decision. Heres a look at how different assets function, to decide whether they will be a security, commodity or not. But of what you are doing is using a Digital Assets to raise capital for a project with the idea that you are going to, in return, as a result of investing in that project, thats a security. Lets acknowledge that there is a larger ecosystem to raise money globally, outside of u. S. Jurisdiction. It just drives off innovation from the United States, on the upside potential for investors. Is that correct . That is correct. And it appears youve done a significant amount of work in this space, but for cryptocurrencies, we see that block stack had theyre offering approved. Now looking through that process, mister pierce, the believe that we have a solid ecosystem for cryptocurrencies to exist in the United States and raise capital . I think we still have work to do to make sure that people can develop Digital Assets in the u. S. , in compliance with our rules. I would like to see us be a little bit more forward thinking in ways that we might accommodate unique asset of Digital Assets. For example, Digital Asset that are utility tokens, i dont know that the security law from that we have right now as they were appropriate law frame from them so i would like to see as think some kind of safe harbor again. Is there current law for the sec to write about that . We have authority that would enable us to work on Something Like that. I still am giving it a lot but i think we do have authority that could allow us to do that. German clayton, how do you respond . We have a lot of discussions about this. I agree that, to the extent that this Technology Facilitates chapel raising, consistent with our Investor Protection. Its been pretty good in the private space. I would like to have more access for a protected way. Im good with it. And im good with exploring ways to do that but what we saw and the ico space is something that i dont think anybody thinks that was a success. Lets move to crowd funding. I racist my Opening Statement. 11 pages of text we passed in a bipartisan way that without sitting votes but we have fewer than 15 votes in the house floor, and bipartisan nature. So investment grade, funding regulation crowd funding such as the limits on individual investment limits, the total amount raised and the overall goal of this. The sec is willing to really look at those 685 pages of regulations . I think we should. I think if we look at the market up Small Business Capital Formation and it shows that it can get started. I will talk about large evaluations, but small in the range of businesses. You can get up to 1 Million Dollar Companies Going with red crowd funding and other exemptions. Its really hard to grow a business from a 1 Million Dollar response to a 50 Million Dollar business because youre talking about individual investors Democrat Funding at 1 million, talk about professional investors at 50. Theres a big gap there. Things that we do that to facilitate gaps in that, so Small Businesses can become larger, thats a scenario we should focus on. To go more broadly, we have fewer public things that we did 20 years ago. That means mom and pop, Retail Investors to not have the same potential that they did 20 years ago for the long term savings. It is a concern to you and, if so, what are you going to do about it . Its a very big concern of mine, momentum investors are right alongside. I like to see Capital Raising in that, this group passed the jobs act, i think it helped encourage companies to go back. What weve been doing is looking at the jobs act and seeing if we can extend them. Thank you. The gentlewoman from new yorks, on the subcommittee of entrepreneurship and Capital Markets. As you know, of long been an advocate for using structured data, and i think that it helps investors and Public Companies and actually makes it easier for companies to raise capital. Last year, the sec adopted a rule requiring Public Companies to report certain financial risk information in socalled in line format, and i applaud the sec for taking this step. Today, im going to be a do introducing a bill with the Ranking Member mchenry, called the financial transparency act, that would direct financial regulators, including the sec to require that Companies Make their filings and structured data format. So i would like to ask you, chairman clayton in light of the secs work in this area, do you think that this bill is a step in the right direction, and complements the efforts of the sec in this area . The question of making data more usable, accessible to various Market Participants, yes. In particular, doing it in a way that, depending on whether you are a very sophisticated or a real to investor you can have access to that data, im very supportive of that, i will note that, our data gets used has used over time and i would encourage everyone in the space to allow for flexibility in achieving the objectives of making data more accessible. Thank you. Commissioner jackson i, want to ask you about the commissions recent interpretation of the advisers act that it was adopted along with regulation best interest. I want to remind my colleagues why we vastly many Investor Protections in the first place. We did it because 8 Million People lost their jobs, 6 Million People lost their homes, and the crisis, the financial crisis, destroyed over 15 trillion dollars and wealth for middle class americans and pensions, savings, devastating effect on our country. Given all of this, the very last thing the sec should be doing is weakening rules that would protect investors against these kinds of lawsuits. But, unfortunately, that is what the commissions interpretation of the advisers act would do. It would weaken the longstanding fiduciary standard for Investment Advisers, and increased risks for Retail Investors. So, commissioner jackson, i know that you voted against this, you are opposed to the final interpretation of the act, so can you explain why you think the interpretation weakens existing law and poses more risks to investors and our economy . I was unable to join my colleagues in voting for those thank you very much, and possibly the are saying you see should revisit this and come back with a standards that president obama and supported and worked so hard for you. Thank you, digital gentleman from oklahoma is recognized for five. Minutes thank you. Id like to comment you in the commissioners for the tremendous progress the sec has made and completing the rules required by. As a final step they will have to address the application of these rules. My first question would be along the lines of an, interaction that occurs between parties fully outside of the United States, a u. S. Based employee will often help arrange negotiate and execute the transactions. These are referred to a any. I have long been in advocate of harmony between the sec in the fcc. I would encourage the sec to harmonize with the cftc. The the move jobs abroad, soak chairman clinton and commissioner peirce, can speak to the issue of harmonization with the cross border raids . Neither are. I would like to thank commissioner peirce, for taking the lead on this. Shes done a great job working with our colleagues. You raise one of the difficult issues, you have a transaction between two parties outside of the United States, but lets say that it is arranged in the u. S. Because thats where the expertise for this transaction is. And, in fact, it may involve what we would consider an asset or security that is important to the u. S. , like u. S. Interest rates or, in our case, a u. S. Security. At what point do we say that transaction the risk is off shore on the parties its something that we have an interest in regulating because it happens in the United States. Commissioner peirce and i are working with our colleagues here to make a line that makes sense, and deal with Systemic Risk. I would just add that we have been working closely with that cftc on this issue and other issues in the title seven space, and we can draw from their experience, what has happened in their markets because, obviously, there regime has been up and running, whereas ours has not. So we are talking with them, we are learning from, them and we are trying to achieve our position as well as substitute a compliance where that is appropriate. We live in 18 see where talent and resources are moved around the globe. I would like to express my appreciation in the work and supporting more efficient markets and serving u. S. Investors. So back to you chairman, we spoke several time on our active engagement with the crtc, could you elaborate on any other efforts where you would like to see further coordination . I think an area where there is room for improvement and we are doing well, is on inspections. We inspect some of the same farms and, on for the organization, including on reporting up information it doesnt make a lot of sense to require people to report to difference thats that has the same information. Those kind of things we can improve. And, amazingly, i will yield back the balance of my time. Thank you. The gentleman from california, mr. Sherman, is recognized for five minutes. Mr. Jackson, thank you for your presentation. It is outrageous that shareholder money is used to pursue political objectives that may not contradict what the shareholder wants, but is done in total secrecy so the shareholder doesnt even know how their money is being spent to make their country worse. The chair talked about cryptocurrency and they do have a few comments. The u. S. Dollar is extremely good currency. The medium of exchange and restores a value. It fails to meet the needs of terrorist, attacks evaders, sanctions advisers and drug dealers, and there is a market for an alternative, based on those for markets. And the tax evader market is the giant share of that market. The sec is going to have to construe laws and one principle is to do so in the Public Interest. It is not in the Public Interest for you to facilitate the creation of a device chiefly used by tax evaders, terrorists, and sanctions evaders. Its clear that the liberal will be a mutual fund, i will put it, Mark Zuckerberg has a lot of money, but no power to point more. He will have that power if libra fulfills its expectations. It will be called libra by then i call it the zuck buck. Please do what you can, it makes no need for anyone who want to follow our laws. And if you read the statement of those who want to disempowered the federal government, theyre thrilled with cryptocurrency and all of its developments. Now, a Small Business investor alliance, a Small Business Investment Company question. This congress, last year in a house report said that the exempt bbc from being covered by the rule dealing with expense reporting, given there are similarities to operating companies, which are not driven by that, role and a special role as Capital Providers for positive results for transparency. So i would hope that there was a positive development when you issued your proposed fund of funds rules. I will hope that you will take steps so that bt sees can be for full investments of mutual funds and get the kind of analysis by analysts that are doing the work that will do the work as. Well any comment on bdcs . There is the tension there, and multiple layers of fees, or closer to an operating company. I want to commend our staff for the way they are looking at this . Its closer to an operating company, but thats not just me, thats a house report. I understand, and i just wanted to frame the issue. Speaking of cecil, our current institution call for government power to be exercised by those who are elected, and exercise as government power, but not only are they elected, theyre not even Government Employees. They derive their power from you, and i talked to mr. Roisman in my office, and he was of the view that, perhaps, you should not exercise any oversight over substantive decisions. That would be a constitutional travesty to think that you could go to jail for violating a roll promulgated by someone who isnt even a Government Employee or elected official and that that rule would not be reviewed. But worse, its an accounting theory, its a terrible proposal, and its adoption will cause banks to have higher reserves than the Bank Regulators want to impose. And i would say that, please do not use your power to delegate powers to sticks to impose a Bank Regulations that they think is appropriate when we have already established a bank regulator. I have a lot of questions for the record, and i yield back. Thank you very much, the gentleman from florida, mr. Policy is recognized for five minutes. Thank you very much, madam chair. I appreciate your and the Ranking Members leadership, in holding this hearing. The work of the subsidiaries condition, is important to protecting investors and i also want to thank each and every one of you for appearing today. It has been nearly ten years since al stanford was arrested for running the second largest pontiffs game in the history of the United States and the collapse of that group. Over 21 thousands, mostly hardworking middle class americans some of whom resigned in my district, have, not been repaid in any meaningful way, at all. The sanford victims have received four and a half cents on the dollar while the seemingly more influential, or well connected victims of that scheme half received 75 cents on the dollar, of recovery. This result is really difficult for the public and me, quite frankly to understand, and obviously its not acceptable,. After more than five billion dollars in losses, the point of receiver has received 750 million. What is more appalling than that is that nearly 50 has gone to the public of the receiver. If it cant get any worse the, receiver recently use his authority to empower individual investments on the banks of potentially aided and abetted the fraud. In fact, one of my constituents and a dozen other victims recently wrote to the receiver and asked if they might consider changing their course to which the receiver did not even give them the courtesy of a reply, so i would like you all to express to me, or respond to the question of whether or not you think it is appropriate to barr investor claims indicates that has returned investors only four and a half cents and ten yards, and we can start with mr. Roisman and go right down the line. Thank you for being this topic up, its a travesty being the right word and if there is a means for collecting any wrongdoing we need to ensure that is something that people can count on to collect if we dont have an adequate system. It creates questions and shakes our confidence on services of the oversight. Commissioner peirce im happy to look at that issue about the issue of the receiver barring investors from pursuing claims against banks and im happy to look at that and get back to you. Thank you. Chairman. I tried to be brief to give my colleagues time but ive spent a lot of time on this and ive met with the victims of the groups and i went down to meet with the examiner about ten days ago and this is not an acceptable result at all. With respect to your specific question about the bar. There is a judgment to be made and lions can differ on this issue and continuing to look at that and rest assured ive been fully briefed on this is you. Do i have the understanding that youre going to do more than observe it and do you have any engagement or do you foresee coming to helping the victims. Im looking for any opportunity to help the victims get more money back faster. Well have another question about the solutions that will be thinking about in the meantime. Commissioner jackson. Thanks for bringing this to our attention this looks like its id be happy to look at this one briefly and what is most troubling is that you have a constituent they didnt have the results than any american involved in this situation will be looking into that for us. Congressional early. I will say that in my experience i have seen firsthand the damage that is done to the victims of your constituents and i find it extremely troubling that will support any effort we can to return more money to those investors and work my colleagues. My times about to expire so ill get to us the other question but i would appreciate it if you would let my office know of any possible solutions you have in mind or anything that you think congress could do to do something about this. My time is up and i yield back my time. Thank you very much. The gentlemen mr. New york mr. Meeks as a Consumer Protection of institutions as written for five minutes. Thank you. Let me try to get into a few the issues and one is that i am concerned about which is the growing practice of activists hedge funds which is closed in funds. These contests and related lawsuits are not about a proven governance. They are about coercing funds that could not adequately protect the service. These hedge funds are invading 3 limits from the 1940 act and multiple intermediaries so this causes the closing funds to be liquidated or severely impaired for solitary profits. They are there fire mom and pop retail so mr. Commissioner jefferson, would you agree that this practice is a one illegal and to, what is the sec doing these activities . Thank you congressman. Without commenting on any particular pack just, years of images say. I share your concern sir. One of the things is most troubling about this is that closed in funds ordinarily are held by Retail Investors and old mom and pop investors who bought the fund on the understanding that it wouldnt be attacked in this way and in this area sir, i helped to write a paper a few years ago to take over of fences which were called the congressional of the sec of couple of times and heard her investors and hurt the value of these funds. Im continued to working on this and ill hopefully will work on my colleagues to make sure that this bombing pop investors are protected. Thank you. Ill move to the next issue which was just last week, i say to mr. Clayton that Interest Rates in the market skyrocketed and causing the Federal Reserve to eject around 400 Million Dollars into the market. In 2010, the sec performed a short term rule which responded to exposure with the liabilities. The secs proposal says that a critical component of companies with Capital Resources is often its access to short term capital and further operations. If this rule had been finalized, investors of the public which have information about the market so chairman clayton, given the market of the past few weeks, do you believe that the sec as a federalizing on disclosure . Thank you for that question. I understand liquidity is lets put it this way, essential with oversight and understanding the needs of its participants and at the times since it was proposed there have been a number of developments and requirements by other federal regulators and at the sec and accounting rules. In fact, just the other day we put out which addresses some of these issues and whether they had sufficient insight with liquidity in the market and other regulators should be looking at it. What i can say is that any of these issues what could be addressed with a proposal are invested in other ways. Are they nervous about the economy and going over and averaging over so it could have an effect . We would never want to go back to what took place in 2007 and recently in an article that came out last week of a number of financial newspapers, etc, there are concerns about where we are. Liquidity is the lifeblood of modern economists and the based economies which we have and should always be mindful of whether theyre sufficient or not in our court markets including our oversight markets. Let me ask another question. The sec has involuntary diversity in assessment but there is a responsibility of about 5 and i have the access of such exposures and what can the sec due to releasing this Important Information to the public. I think it was decided in 2015 that i would call it a survey which would be done on a voluntary basis and met with our directors on so many occasions to try and facilitate the 5 Response Rate is now confirms with a number of employees covered and i dont have the exact number but pam and i are working. Thank you, mister look at marie has the floor for five minutes. Thank you chair. I want to follow up on something that sherman was discussing in regards to seasonal. Conversation has written a letter to you with regards to sec asking for a delay that is appropriate and your order in stated that the mission is on the macro level studies and the impact of the Financial Markets and its economy its best pursuit by the relevance of regulators and they all seem to think that nobody should be doing this and ill everyone is pointing in the direction and we get the irregular to step. At the moment, lets agree that the sec is thought under economic studies and are you not . Have you requested the Financial Research to do so . I have not. That is their job. Why havent you done it . Lets take a step back. I agree with you that if something is going to have an adverse impact if were going to accuse measure than people up to manage to that measure for a non credential reason that is going to have an adverse effect on our economy and should be rethinking that measure and i think in the area of cecil what weve seen is fast be say that for a number that we should take a step back and evaluate its initial implementation. I think that has been a wise step. If youre proposing this rule mr. Jackson, a minute ago talked about making a decision that came up with a supports and i assume you do the same thing, when you not . Genuinely we do Economic Analysis. If somebody brought to you a problem, im sure you asked them to show us the data on what you believe is the problem and would address it. We do not look for the data that supports us . In most cases yes. I am very interested about the data and this one is reporting how youre doing and reporting how youre managing and you and i have discussed this. I think you are a very valid point but were trying to provide insight to the losses and that standard but the question is, fighting that insight are, you changing behavior that should be lets analyze that for a moment. They say the reason are doing this is to have their experience imbalance in regards of the markets on the balance sheet. The problem with that as investors tell me is supposed to be with the investors. Investors are telling me, look as a uniform model across all of the institutions that preserve executive flee the same we have a different thing for every institution. So now its, more confused and more typical to look at that it was before the. This is going to confuse and make this difficult to assess the risk as it was to be helpful. The study will also show that i guess my question to you is as a member of this would you be able to go to the board and request a research to do a study of this sequence is something that needs to be done . Im not going to commit to that specific course of action. What i will commit to do is discuss this with my fellow members and raising the point that you raised. Mister chairman, ill give you an example of gave to some of the other regulars. We just celebrate the 50th anniversary of the man on the moon. How do you like to be on top of a rocket knowing that the previous rocket, mark to market didnt have any study or society towards a rocket was tested and blow up on a launch pad. Now youre sitting on a launch pad with another rocket and he sees so that hadnt been tested, i. E. They study or the briefing analysis. Would you like that . I would not like that. Thank you very much. Thats the answer i got when i get that example. I think its time that we stop im not asking to do a world through. Im just looking to see the impact of this and its ginormous of an impact on this economy and to not do our oversight. Job here which is to make sure that this is something thats going to be helpful i think we are dropping the ball. I will continue to engage on this and i think that the points you are making our once that we talk about. That you very much and i yield my time. The gentleman from missouri as reached up to the Housing Community and as recognized. Thank you madam chair and the witnesses for your participation today. Commissioner jackson, the use of the practice of stock buybacks after the president trumps tax cuts and jobs act and the tax bill which provides significant tax benefits such as the lower Corporate Tax rate and the incentive to repatriate and according to one study there are a 64 increase of staff repurchase when there are real wages. Indeed, analyst estimate that from 2018 they used nearly 60 of the Corporate Tax cut to repurchase stock, in other words at a time for average workers they have failed to keep up with this information and corporations abused corps protects into collectively pay what trillion dollars of directors and large shareholders. Seeing at the expense of investors instead firms could dedicate this capital to work on wages training of other investors and that is the innovation and growth. What is your view to stop buybacks and they should be code tailed in a way that contravenes congress policy . How to make two points and response to all that was said. First, i released research earlier the spring of last year to show that are rules right now allow executives to use the buyback as an opportunity to cash out their personal chips. If i were an ordinary buyer i would be confused that the Company Thinks the stock is cheap enough to buy. The ceo would like to sell it and for me that would raise a conflict of interest that would raise more attention by regulators. Secondly, i would like to say but these buybacks with skyrocket which is long over a decade. I think its time for us to dig into those rules and thats why have called for an open calling period for the buyback. New lay out a analogy thats really troubling, when you think . When you see confidence being there by those smaller investors. Commissioner clayton, many Pension Funds including some in the state of missouri invest in private equity. Can a taxpayer and retired worker in the state be assured that there is adequate oversight of private equity by the sec . inaudible so, i think what people should understand is that our oversight in the private markets could have private equity. Its not the same as our oversight and its one of the reasons why it bothers me that more Growth Capital is been to your specific question with who in respect and regulate that market albeit in a different way. I was talking to our head of inspection recently about this and it continues to be a focus and particularly in the area of disclosure and fees and yes, we do regulated and not the same extent of the Public Markets. Retirees and taxpayers be competent that those investments would be protected and there will be a dollar for dollar retirement form and people that will depend on that . What i will say here is, i think, if you look over a 20year period, Money Managers have had a mix of private equity and public activities and thats been a fairly standard and successful way to do it. If im looking out over the range of Investment Options as a professional investor and ive seen that a greater percentage of capital is being raised in our private markets. I would think ive got to allocate and at least think about allocating some money to that. We need to be cognizant of that in the regulation so im not going to substitute my judgment for a Money Management in part of the macro basis but if i were another position i would think of that as an class worth considering. I thank you both for your responses and i yield back. Thank you the, gentleman from kentucky has recognized for five minutes. Thank you chairman clayton. Companies are an important source and first of all they businesses in my state as invested 300 Million Dollars in kentucky and a sense of response on this but i do want to express my support for rationalizing how they are treated under the fees and the expenses role understand that the staff is considering this issue and interested in a favorable resolution because they have been so important to financing and kentucky businesses. When asked a question about leverage and the attention that weve seen recently at the alarm about raising corporate that. Private Credit Fund Manager and other Non Bank Lenders are invested as advisers with the sec. This result up substantial reporting requirement and the action of limitations. Some members of this committee have voiced the concerns of Financial Stability with the other non bank activity. These fail to take into account the sec plays and participants in this market. Clayton as a regulator can you discuss our agency oversees the fees and how they are sharing this information with regulators . So, ill do it on a little bit of a broader basis but we should recognize that our economy has grown since 2010. It is a credit peace economy and the amount of credit thats provided directly from the sector has gotten relatively smaller and thats a non Banking Sector much have gone larger and we recognize that. We are discussing that with our colleagues at the fed and the olc sea and others. That is the reality. More of the credit underpinning our economy is outside of the Banking Sector and the private sector in funds. Given your oversight over the investment, do you see a systemic issue at this point . If i saw a systemic issue, i will be doing something about it . The answer is no . The answer is no. Ill move on to commissioner purse. As you know, the business round table released the purpose despite some leaders insistence that its a rare statement a practices and some of this committee would have predicted and interpreted this as a shift to bedrock principle and the officers of a corporation are again divided finisher of the primary job of a corporation is to not engage in social engineering and a political correct cause which is to maximize shareholder value as not to say that accompany social concerns and activities are to ensure the employees or customers which are very well carrying about those issues and will help drive probability. Can they serve their customers and suppliers and communities without the undivided focus on the maximizing shareholder value . The singular focus on those shareholder values with homes, managers and disciplines managers and focuses them in on fulfilling that mandate. They are going to think about the communities and theyre going to think about their employees and think about suppliers as well. The focus is really important. The eagles like the set forth in their be artist statement are those ancillary goals any secondary goals are predicated on the business in profit and maximizing shareholder value. This is how companies have run. They have serve their customers well so they will have to handlers shareholders well. We have the social governance metrics and investigating in her the last week with the conference you noted that he s angie together is different because theyre quite different and you would have described yesterday as letters that stand for enabling shareholder graph. Shouldnt the central focus of sec disclosure provide material from investing in public and chairman clayton, can you discuss what they are doing to ensure that materiality has been touched on in their markets . I very much believe that it should be the touch tone of our markets and as our markets change, what may be material will change which is to have a in poach to disclosure. Thank you, i yield back. The gentleman from georgia, we recognize you for five minutes. Thank you very much chairman. Chairman clayton, let me ask you this. I want to talk to you about he or transition. Its very critical from a Financial System and the banks who are submitting the report used to determine the rate would no longer be compelled to use that in 2021. This is very critical and is a benchmark that is undermined 400 trillion dollars and contracts globally and 200 trillion dollars in contracts right here in the United States. What is the impact this will be on our Financial System . Its good that you raise this. Its an issue that requires shifting from an alternative rate and one of the incident that has been theres going to be some friction and theres one thats a bank rate and a secure funding rate and we need to produce those frictions as much as possible. There are a number of ways to do it and the numbers that you cite are exactly right and were talking about 40 trillion its going to survive with scheduled to go away and even small frictions. You raised an initiative and one of the very Critical Issues were faced with now is the need for Financial Education. It is very critical. We have 50 or 60 million under banked folks and here is my point. I grew up in a grew up in a town called scars dale new york. In the sixth grade, are six great project at fox meadow which was for us kids to go out, earn money and do the research and as a class we would go down to the New York Stock Exchange and bought stock. That was so profound in my life and was pivotal and it led me on too behavior to buy stock every year and use that to stop my own business and go to the school of finance and be on the border directors. You know what, with john scholarly who is chairman and he was chairman of our committee. We would go across this country, and to African American communities Building Wealth and the number one tool we use was investing in the stock market. Now, do you know that there are less than 17 state School Boards associated who require teaching of education. That is just so critical. I want to ask you, nobody can come out and be as strong and be an advocate for Financial Education mandatory in our schools. It could start doing high school before the kids get there and they dont even know about the Checking Account and what are they left with . The people out there. So tell me, are you only serious about this issue as we are . We are on this committee and are making that i priority and they are as welcome as Maxine Waters and all of us who are dealing with this issue and to just passed the bill and the, the communities financial the Consumer Financial Protection Agency and we need to start moving in this. Can you help us . Can we start a National Movement to mandate the teaching of Financial Education in our schools . Id love for it to start at the sixth grade. Thank you what, are your thoughts on . I try very carefully to stay in my lane with the department of education and as he see. I cannot agree with you more about the importance of Financial Literacy and Financial Education are the country. Its not just for investing, its for opportunities. If you feel like you if you dont have the vocabulary or the tools to participate in our credit based economy, your opportunities are limited, and the story. Now, i want to ask you about financial finn Tech Organization and they are working on a bill for that and you gave a speech in singapore on that. Could you tell us what is the state right now of mandatory affairs with finn tax . For years give the courtesy of a short response. Thank you. We have to take into account that there is a lot of activity at having outside of the United States and are trying to bring more relatively clarity in the u. S. And i think that can happen here. Thank you very much. The gentlemen mr. From colorado is on the clock for five minutes. Thank you madam chair and taking the time to be here today and chairman clayton, i would associate myself with mr. Lieu meyer in being able to pick that ball up and talking about the folks in our district and it is an important issue and the intent was im sure to have the potential of actually impacting us with our economy and i think mr. Jackson noted that these studies is something that is incumbent on us to follow through on and we will make that comment and were pleased to see that they have established the Small Business capital information and will you expand a little bit with that officers doing . And what you would like for them to do Going Forward . Actually, thank you for the opportunity because i think this office is a very Important Office and also for our economy. Capital formation in the area is regulatory impediments and we cant lift without jeopardizing the protection as part of one of the things that were focused on. Thats the nuts and bolts of what we do another thing that we focus on is the developments and the environment that drives Small Business capital of information and entrepreneurship across the country with 1 28 and is going on and i dont want to leave anybody out. One of the elements that exists in those places is how can we replicate the different parts of the country. And it is relative of the middle of the country and want to do something about that. I appreciate that and im unlucky inside and send me segments what about myself along with my colleagues and seen this progress in terms of lending to businesses. Theres a huge gap in terms of the lack of participation in terms of the businesses or the opportunity to be able to expand and encourage that . I agree. I agree that thats a thing we should focus on. Commissioner purse, you made some comments that i think has in terms of some of the regulations that we have in place of being a burden or not there. Talking about the Opening Statement and you see the opportunity that we are able to have the guardrails in place that the economy is moving and that we know the rules that we can get to that point of inhibiting the ability to raise capital can. You expand on that just a little bit more . I think the chairman and the Corporate Finance bill up in taking a very close look to see where we can get rid of requirements and we can streamline existing requirements and the chairman mentioned to focus more on principles that they last had over time because they change with the reality that theyre facing. Things like that can seems bob but can make a huge difference that our companies that are engaged in the capital here in the u. S. Chairman clayton, which states like california coming up with extends the privacy laws as the sec considered developing rules and regulations within the commissions jurisdiction to make sure that the americans regardless of the say that they live in, will stand what can and cant be done in regards to that . I cant tell you that weve had specific focus on a data privacy. I think we are talking about is a data privacy disclosure for dealers registered and advisers dealing with their customers. We have not taken up that initiative specifically. I understand the issue that youre talking about and through a kind of disclosure but i think thats also in the consumers base. You make a good point. Thank you and i yield back madam chair. The gentleman from texas, mr. Grain its on the oversight commissions and recommended for five minutes. Thank you madam chair. Mister chairman, is it fair to say that we have two products that we deal with and libra current being one and his token being another. Again, i dont generally talk about specific products or assets but as i understand your question. It sounds like they are two different products. Thank you. It is a true that in your opinion, that the coin does not produce a return on investment that is not subject to security regulation and the sec regulation . Again, all talk about assets generally and Crypto Assets and a statement such as if it doesnt produce a return, it is not a security and i think that it is a bit of an overstatement i asked this, generally speaking, lets not have it be a cryptocurrency. If a product does not produce a return on investment. Is it something that you would regulate . Years if what youre saying by return on investment is it giving you rights in an enterprise . Or is it somehow packaged or is it designed to give you a return on your investment . Those are the types of things. I use that terminology because you used it earlier when youre given your statement. Let me just walk through something if i may. This is Something Worthy of consideration. As proposed, libra will be backed by the elaborate reserve. And the reserve will be managed by the libra solutions. The association will have members and the members of the association will invest some 10 Million Dollars into something called the liberal token. The token investors will receive dividends generated by the yield of the assets hailed in the reserve fund. Im sure youre familiar with this because of the position you hold. If all of this comes together and it seems like we have integrated a token into the coin in some way. Such as, to reduce a return which would then teammate to be a security. Not specific to libra and the token but generally speaking. With that transaction make it a security . I want to commend you on your understanding of the Securities Laws and the question youre asking because its a sophisticated question that i believe a lot of lawyers have spent a lot of time trying to find out what that line is under the sufficient amount of integration that could cause something with the how you could become a simple store of value to become its security. Im not going to make a judgment if it is secure not particularly because we cant see how it used. But you have articulated very well the kinds of issues that we were looking at in the assets of this type. Thank you, all write a letter giving you my opinions if i may please. Mister speaker let mr. Jackson, if i may pursuant to sec rule above june the 5th on 2018, are investment in visors true judiciaries . Thank you congressman. My concern as i mentioned is that i was under the option of that rule and the reason is is exactly why you suspected. The ordinary american investors of the following understanding. When someone is a fiduciary to me, they have to put my interest first and my own view is that there will be a document thats not clear enough for that reason and i dissented from the package you just described. I understand that this is your position and then we ask the chairman if i may. Im not trying to put you at odds with each other and trying to get a better understanding. Visit your position that the true judiciaries . Heres the thing about the question like that. In terms of makes a lot of different things. They put my interest in front of theirs . And both the Investment Adviser space and the broker deal space, the professional cant put their interests ahead of the clients and for the first time weve made that clear. If youre investment professional and can put your interest out of these. Thank you madam chair, my time has expired. Mr. Hill from arkansas is recognized for five minutes. Thank you chair waters and thank you for having this hearing i want to thank the witnesses for being able to have the full commission before the committee and i want to thank all of you for the Public Service you are doing and continuing the 85 year tradition of the sec protecting investors and maintaining our remarkable information across all of our markets. Its been a very interesting discussion this morning. On a takedown and my friend from colorado said of interest and i want to associate myself with mr. Blaine luetkemeyer demonstrating leadership when the system about having been proposed and following its own rules under their pronouncements on how to break the rule forward so thank you for that discussion and i do have constituents who suffer ideally at the hands of sir island in the stanford policy scheme. That let me last week to support the clarification before our committee and im not sure im key on the 14 years and i think ten years is continuing with the tradition of frauds and definitely appreciate of defining forces discouraging and restitution which is online justices couldnt figure out so i appreciate that and i want to complement mr. Financial literacy on leaders and Financial Literacy and support that wholeheartedly and its the economics which is probably one of those 17 states that are encouraged economic curriculum throughout our kids. Commissioner peirce recommended the audit trail and we had concerns about that and was very concerned about the proposal to do the courts proportional four years ago and this is turning the card over and its a picture of a cat and its all the same issue which the governments need to micromanage and have the retreat and if you already have the authority to look for trades in the Market Regulation with the power of what you have now. Im not a fan as i was not a fan of cards. During this congress, weve had a lot of discussion about Capital Formation and corporate governments is gone in the past nine months and the proposal drives up the compliance and across preparing a ten q or ten quay for investors and i find that frustrating because the prior ten years this, committee on both sides talked about how to maintain transparency or to maintain the Important Information for investors but lawyer accounting cost and disclosure costs. How do we add director liability and corporate liability expenses and how do we lower the associated with going public on this point of view. Im concerned that were going in the wrong direction and i urge the commission to use your Economic Analysis with the power that you have and focus on lowering the costs of the enthused barriers and lets not blame for him the streamlining of the 1990s for what we have and fewer Public Companies lets raise more of the active jobs approach with. This law i wanted to point up because they discussed the last few days theres been a lot of conversation about this business round table part of this release that i can in august those on the left jumped on how they have coward the fortune 200 into doing things their way and are more socially sensitive boardroom. Those are the screening of bloody murder and oh my gosh, were going to end up in order returns. And they postulate it a new cynical theory from the bee rt release which is caused ceos to maximize their stock back and now we are going to go in the social goals and i put this up from 1992. This was publicly traded Company Little rock and had shareholders and bankers with all priorities of our company in the communities which served to do what . Dry Financial Performance. We were a top rated bank company and i dont think the brt changes that big a deal. Thank you, the gentlemen at who is also the chair of the committee of the National Security and the doctor it and the military policy will be on the chair for five minutes. Thank you for being here today. What is on the 27th of february, excuse me i sent a letter to a Financial Stability Oversight Council which which you are also members and Financial Research and to be the ceo of facebook, dave marcus and i received an interesting response and i would like to add it. Without objection, such as ordered. I like to share this because it is critically important. The chairman says that the u. S. Department of treasury requests a review by f sock and we agree with you and chairman waters that these projects would be subject to regulatory review. They said that they would agree to finish all information for any investigation or any review of death sock and a review if our gonna be interested. I thought that was significant and we agree with your view that have sock and or far qualified to assess the development that f. Scott can play a valued role in coordinating along to ensure regulatory concern or address and i came saluted by saying that it wont launch until we have addressed all u. S. Regulatory concerns. Now, chairman, i know you want to be involved in the product but i have a bloomberg article see where you address this issue of sorts. He said if it looks like an atf, it should be regulated like an atf. Can you provide some greater clarity . I like that statement. I do too. I like that statement because what the product this is like a atf on currencies and we regulate it. So, theyre saying theyre not going to launch until to address the regulatory concerns. Is there any concerns that had been expressed to facebook as it relates to whether or not they will implement this . As commissioner peirce noted, we are looking into these things and our doors are open and people should understand that as a general matter if they think digital or crypto asset he is looking like or a substitute for something that the security that they should come in and talk to us and find out our view of the world is the same. It can go both ways but i want to make it clear that our doors are open and we can talk about these things. Somebody is going to launch something about coming to seems first i think thats a bad idea. I do too. I yield back from my time. The gentleman from georgia, is recognized for five minutes. Thank you madam chair. Thank you all for taking the time to be here today. I want to talk about something that wass touchyfeely flight upon today with is upon you and i have a responsibility which is the greatest threat to the investors as well as average average americans which is security and it is the greatest Common Threat to our nation and individuals for any threat of identity and information and personally identifiable information and critical business and government and personal data and sometimes its a voice in the wilderness on this issue and it is significant which in this nation and we have to spend a lot of time and attention to it. I bring us up and different committees and we talk about this and the response i get is this is the investment that were bringing into the crypt olive g. And protecting what we have and we overlook the basic premise of the currency that spent my life in the sector and support my time when the air force and intelligence and we dealt with securing data. There was the principal that you dont have to secure what you dont have any. Meaning if, you dont absolutely need the information that dont get it, dont keep it. You see im getting to the consolidated audit trail. I have concern over the cohens consolidated audit trail. Youre talking about getting them to 60 billion records per day with a lot of pei there and information on an individual and the transactions. This in my opinion is making you a prime target for nations and active criminals in and in this environment, it is more than a fulltime job to stay ahead of bad actors. If you drop your guard for one second, a lot of people are harmed and ask equifax. Their proof of looking down for one second. I know that but this rules the sorrow has proposed the collection of Social Security numbers and moving forward with the consolidated trail and there are still discussions of including the earth and addresses which is still the concern of mine. Really mr. Clayton, does the sec support the sro proposal of eliminating at least that information . Backing up, i agree with you that we have to ask yourself, in this society, do we need information to do our job . Fast forward, i support it because i think that we need that information but name, not data birth but youre a birth to do our job. But i dont think we need much more than that. Im supportive of that outcome and i think that there was a lot more identified information that we drill down we realized that eliminating knows fields were not eliminating our surveil of the markets. The question is, do you need it . The other followup question on that from a security perspective this, is a data that you need store or the data that you could obtain when you needed without having to risk of storing the data . That is a question that we asked ourselves if we had some retrieve function and get the data. But you do need enough data to know that we can retreat something that a point you go from account number two name and year of birth and we got to reach out for a name in your birth and were trying to strike the right hours. But mr. Peirce, you expressed concerns and we thought we give you an opportunity to get in on my concerns. Youre raising the exact right questions. To we need the data, if we dont need it we shouldnt collected and we have a system now that allows us to get data where there is the blue sheet system and we can work on it and still need some work but its workable alternative. Why we need all this Retail Investor information i dont think we need it and we have to worry about it being extremely attractive target. Thank you both. Keep ill keep our eye on this because in a lot of instances, in our government, we just love collecting data. 90 of that data sets and never goes anywhere so thank you and i yield back my time. The committee will stand in recess for five minutes. The gentleman from connecticut, is recognized for five minutes. Thank you chair. I like to commend the commissioners were being reforested a. Mister chairman, i had the privilege of sharing three chairs and a whole bunch of commissions id like to thank you for your work. This is as transparent and engaged and helpful commission as i had the privilege of working with. So thank you for that. I want to focus on an issue that weve been working on for the last several years which is the issue of Insider Trading. As you all know, Insider Trading inroads faith in our market and a rewards insiders at the expense of often Retail Investors and is a real problem. What are witnesses no well is that the American People may not miss that there is no statutory prohibition Insider Trading. The sec can conduct Insider Trading through their outside fraud and manipulation authority. The flaw that shapes this Insider Trading law is a far of a Foundation Like radicaling the landscape as what is unlawful and almost overnight. Im a believer that if we are going to prosecute someone for a crime it could be a to statue northam working on in the past several years and the support and cooperation of the commission as well as the support of chairman waters and chairman maloney as a Ranking Member and as you know, we marked up the bill in the beginning of may and the spirit of bipartisan to continue to work with the commission and with my republican colleagues to refine the bill. I know you dont want to comment on these thoughts and ideas that we contemplate the bill which are exclusivity and chairman clayton let, me start with you on the topic of exclusivity and requiring weather inciting traces are only charged to the provision of law and envisioned in this bill. Instead of also being able to rely of anti fraud anti manipulation authority. With that hamper your prosecution of these cases . I commend you for grappling with the issue that are most simple sieve to Insider Trading which is when the information to give someone an advantage is acceptable for them to have that advantage. I count box colors and if theyre lying we short to stop and encourage people to seek information or information thats obtained in a bad way which is you are the ceo the company enough information and we dont want that. You are grappling with that and grappling with the issue of once i have im permissible inside information and when i pass it on how, liable other people that has a lot i think youre doing a terrific job on grappling both those issues in regards to grapple meant. A lot is been built up over time and i wouldnt want to lose an terms of what we think is a good way to obtain information and all we think is a bad way of obtaining information. That frames my answer to exclusivity. I dont want to lose the body of law that is built up over time. I understand the decision is what gave the people the conservation that has been greatly narrowed and my answer to your question is lets not give up over the course of the last 30 years enforcing this law and entering to improve it. Thank you chairman i appreciate that, the ageold issue which is preemption of state law and commissioner jaws let me talk to you on this one. We are discussing that issue which we always discuss in the question i guess is if the bill in fact preempted the authority of states to investigate and prosecute Insider Trading, is a your sense that that would be a good thing or would it compromise our overall deal with Insider Trading as a threat to the markets . Thank you for your work on this. I agree with the chairman. What we really want to do is be on longstanding law and the reason why thats true as we try to achieve all four people on the inside companies and for investors and want to let people know what the law is. If we make changes for example of people that already exist for many years and for less uncertainty. Ive only got 20 seconds left here so i want to thank you for those answers and those are important ways of moving forward and its always been our intention to communicate and the cooperation which is working with you. And hopefully never clear some of the legal ambiguity. Thank you. The gentleman from ohio, mr. Davids it is recognized for five minutes. I think the board as a midwesterner prisoner will thank you in your role those far particularly for Small Projects and raising caps for 75 billion to 250 million and i recognize want to idolize risks. Bill headman said that the sec refers to an approach to discuss Digital Assets that prove facts and circumstances rather than a test. This Company Approach prevents regulatory clarity and suffers from some of the charm inefficiencies of global power structures for. This reason, although innovators are still occurring in america, capital is fleeing. Not to avoid our regulations but to find a rate within clarity and are finding it elsewhere. There is a simple set of rules that apply equally to all, that is the premise of the bill and i know you dont talk about but the framework but the morgan needs and where is the capital going . Places like singapore and uk and switzerland have laid down the framework for assets. Meanwhile the United States and other companies weight but only two having been an issue thus far by the sec. I agree with you that the ico situation but the issue remains, america does not have a clear Regulatory Framework. Consumers and investors are alarmed by that status quo. In fact, we heard the explanation in the sec should not only be concerned about fraud but also about opportunity. Our failure among regulatory fails americans on every count. We have not been known of the worlds land of opportunity and the best destination for goods, services, capital, property and more by anarchy or by inaction which as the Digital Assets with means and not words. Director peirce, in your opening remarks you mentioned it is a poor way of this policy. Putting law passed by congress be an effective way to announce policy . With that better enable the sec or for that matter other regulators to focus on Investor Protection . Its always better to have a pure law that spells out that is not permissible then that enables people to make decisions around that law and we can enforce that as well you. The bank you. It assured the same sentiment of what the law is that provides a single for the market and thats why im having the token tax act which will provide a simple set of rules which will provide equally and clearly to all. Moving on to another concern, last Congress Introduced the market Data Protection act. Which passed the house but did not clear the hurdle in the senate. The bill required the sec and the consolidated trails to have internal risk control to safeguard market data before the consolidated except and he such data in this spring congressman who just spoke with you from the other side of the aisle made at the same assurances. I would submit further questions on his critical risk. And i am encouraged by the directions of the secs take on this and what was taking place i remember the first time here was one of my early earrings on the committee and you are just found out and just been used that ply are you taking office it had data breaches of that system. The eternal controls of the sec and just like the controls of highlighting our important it is to protect and diminish the amount of information that you have to safeguard it. I appreciate the attention you paid to separating the information from that data. When you think the two concerns im talking about i, hope that block chain can play a role in the Data Security that the country has. I believe that if we provide the clarity at the market is clambering for, that we will see flourishing and block chain much like we have seen with the internet. Americas interest is more highly advanced by are providing the clearance but it will happen elsewhere and will already accelerate that transition. With that i yield. Thank you. The gentleman from illinois is illinois is recognized. Thank you madam chair. Thank you for preparing today. You have been a lot of talk about mrs. Hearing the house as pasty fair act and sponsoring the investment choice act which would prohibit the companies from requiring a tradition and shareholder disputes. Did you say from your perspective why allowing individual enforcement security laws in our courts is good for the public . Thank you congressman and thank you for your leadership in this area. Its extremely important. He for me this is what it comes down to sir. We were trying to do in this country is deter corporate insiders from committing fraud and gets nervous theres. Its good for the market, good for the company, good for investors. Theres many different tools that we have to cross our markets and we have the enforcement of the laws which are a tremendous and chairman claytons leadership. We have private enforcement which occurs in our courts. I guess what i would say to those who want to do less with private enforcement, you have to have three choices in this area. You can enforce those laws, private enforcement or fraud. I sir would prefer police taken in this country which is the private tools that detected. Is it true that individuals that are related to corporate fraud help return on a very large portion of the gains to investors . Yes. In fact, in the members of the data the private lawsuits its quite substantial and compensates american investors all the time. Currently there are Public Companies that actually require under governing documents so to a large extent this would be identify the long standing practice and understanding . Without commenting on any particular i think that it would be very important to send a message to companies about what the law is in this area. And to any legislation would be very supportive. Chairman clayton i would bring up the issue of the trailer and could you give us a very brief update which is been a thing of glory over the past decade. Its way behind. Where i was supposedly but weve made some ground recently and weve coalesced around a schedule with the sro what are the key milestones there . Hes there are a series of milestones and i cant remember them off the top of my head but it starts with basic order data and a more complex species is essentially a series of three to four milestones that we now have on what what we expect them to be completed we proposed and i want to thank everyone hair propose a rule that would align a financial incentives with keeping to those milestones. One of the issues here is the financial incidents and the obligations may not have been as aligned a viewed of one of them to be. Thank you. One of the key issues here is the beneficial trades and it is my understanding from your testimony that there have been some motion in terms of the personal identification of individuals there. Situations do you plan to have a unique identifier so you can identify that . What we want to have is enough individual information which we wouldnt be needing where the trade is coming from. I think what weve said on this unique identifier there will be a unique identifier but they should be able to operate the identifiers informational any. That seems like that is a key part and a tough nut to crack . Yes. That is a key part and a tough nut to crack. Whats the status of International Agreement and what youre plenty at their . Erasing another question i think which is if people outside of the u. S. And this bothers me. You can manipulate a price from london and unless the regulators concede that is the official person then it deregulation doesnt work. You must have a plan in the works to deal with that and i assume whats the status of it . We need to deal with that. Do i have a specific plan no, but its a pacific information thats important to me. The gentleman from North Carolina, is recognized for five minutes. Thank you madam chair and thank you to our witnesses here. Its good to see you i thanks to work at the sec. I was pleased to see you add oversight of proxy advisers which is much more needed for this industry and the august 21 guidance and the advisory confirms the unchecked power and the concern that shareholders or relying on the recommendations which is factually incorrect information. The reason sec guidelines was a first step to expand efforts and increase transparency and the firms that ensured that they operate in a transparent manner with active information to support these decisions. From your view, what can the sec do in this congress so that you can bolster these efforts . When we start by thanking the commissioner for taking the lead route when i think the round tables that we have last year will have a lot of input for participants. It really shows areas that need attention. To investors understand how he securities that theyre investing in are being used . They should understand that. Is our proxy plummeting . Where it should be . My answer to that is that its not. We should be able to know when theres an election, he votes that are being cast our representative of the number of shares in the ownership of those votes. We should be able to solve the problem. I think thats fairly straightforward. Overall hygiene from around the Engagement Process and having calibrated it correctly when we have it really looked at the calibration around the impeachment process without any great rigor in the last 20 years or so. A lot of changed with the internet and we have the information very quickly and we shouldnt have rules he. Thank you. Commissioner roy symone, i thank you for your leadership on this issue and the same question, does the guidance from the sec adequately address this issue and what more can be done to increase transparency for the proxy in firms. Thank you for the question and they did a great job of summarizing and i think weve has an interest in this area for a long period of time and the congress as well and the factors a geo report so what i would say is that what they deny is an important first step and i think that we are looking at other things such as suggestions which would intended confirmation to ensure that when people fought that it is just a criminal to market and then, along the lines of potential other rules and engagement is on a regulatory flexibility agenda and to the way that we have putting that in our best decision. Thank you very much. Mr. Peirce, they published investment contract and a Digital Asset which is 60 plus factors and whether the sec can consider a Digital Asset in security. A Statement Released with bill headman and Valerie Scott panic with the framework and not intended to be exhausted overview but rather a tool to help Market Participants assess whether the Securities Laws of the resale of a particular asset. Based on your discussions of following the release of the framework. As a guidance help resolved the origins and would be more useful the framework of out there having the 60 factors . One of the things that they have told me the guidance was well intentioned but i think it is money the waters. Last question. When the Market Participants exhausted the overview that they had the regulatory way to innovate their jobs. As i said, as i said earlier im looking to create some safe harbor which would be the best way to provide clarity and im open to other suggestions and that could have tokens with some of the others Digital Assets that we could talk about. Thank you. I yield back. Thank you. The gentleman from illinois is recognized thank you madam chair and one of the things that we had in jay powell which we heard before that they and we eliminated all tomorrow we already have two things with the victim. And thats accelerating and how they are in receivership and 30 year mortgages and denver and the response which all paraphrase along the lines but i mention that because i have a real concern that we dont properly evaluate the companies for Climate Change and that is why i introduced the house of the exposure act and to quantify that risk. Commissioner jackson we know that he has gee requires the qualitative disclosure. Doubly that adding quantitative exposure is a good thing . Again, without a particular legislation the, answered your question is yes sir. Its clear that the best way to hold Companies Accountable with this in many other areas is to qualify their decisions and disclose that the shareholders. To be clear, im is concerned as investors and shaping as something that can be done. If im an investor in a company thats disproportionately exposures id, like to know that. If investors saw access to that information as a company that may not have seats that can grow and increase droughts that floods illinois. How does the lack of basic access to information potentially impact investors . What it does congressman if that it goes to understand the risks that they face and that is why the leadership in the area has been crucial that we have ordinary investors to understand what the sustainability implications are of corporate decisions. Im not the only one that things that. My overview that we should be asking investors to take care and this is the evidence that is crystal clear. You can see and many of the standards that have led to unusual returns and that shareholders care about this. They show their proposals and asked for more transparency and its very clear to me that these investors are about these two. Thank you. Assuming that we get this through the committee. We dont get to decide what extent were going to use. Will have the election for gaffe and weep in this point we still have the reporting standards which could come up with a consistent role so investors are trying to figure out what their exposure is and that they can qualify that and some of being existing fashion. Any other as you have any comments with the time i have here . Ill just say that i encourage these issues with companies. Thank you and i yield back. Thank you, the gentleman from ohio, mr. Gonzales is on the chair for five minutes. Thank you everybody for being here. And for a good hearing. I was very happy to hear your comments and your interest and seeing more companies go public and i share that with the investors participating in some of those succeeding businesses. When i talked to investors or investors in these companies and private companies which are exposing themselves i hear it into areas. Its a barrier of the market if youre in a small firm as well as research. The second one is just what i would call general pains associated with raising a public ground and going through the ipo process. My first question. What is the sec doing to increase the volume of infiltrating . And coverage from a research standpoint . You raise a point that ill take the time to explain it. Just what. laughs trading in our top 500,000 is really good and as you go further down the spectrum of Public Companies the trading is fairly thin and in fact, making a trait of any size thats meaningful would have an impact on the price. If you know that going in, they might be difficult to go out and you are less likely to go in and that is the issue on what we are looking at with ways to deal with what we prefer to as the trading stocks. One of the issues we have is our market texture will follow a lot of exchanges and will work really well for those top architecture and the most traded names. If i could put you if i can put you in the seat of a cfo and it will call it slack and i would argue that if youre cfo thinking about where do i want to raise my next hundred million many parts of the Public Markets and im shooting out of ten emails to my favorite investors and i means putting a slide deck of the process in a couple of months and do the same thing with the ipo and youll spend millions of dollars of putting this together and shopping it and going through the bit. In that world, using that analogy, what should we be thinking about to close this disparity . I would argue from what ive heard that the difference is one of the things that will keep a company private. You articulated it very well. Lets look at who is making those decisions, its the people that own those private companies and are running those private companies and i want to grow them and theyre saying where is the best place words Grove Capital to pursue my admissions and when we look at the public rules we need disclosure and we need fairness and good financial states and need all of those things but are we doing more that make that choice, im going to stay private cars are more than going to lose to pursue my vision. Like Street Investors can participate. The great thing about our Public Markets is that investors are sitting side by side. On my final piece. Well talk about crypto but mr. Davidson as well. Watching this here, its a technology thats been developed but folks are working to singapore, switzerland, the uk because of the clarity. My concern is, what i heard earlier is that until we see an operate we dont know if its secure not. When i talk to the companies, what they would say is were not going to operate until we know its a security or not. We have this chicken and egg peace in overseas and will build our businesses over here. Once the u. S. Figures about, will consider coming back. That i find concerning, i guess i would ask you, when can we expect more guidance and when can we expect something a little bit more from the sec or what are we doing to get there so that we can just provide some certainty there. One of the most difficult things about this though is that each project is a bit different. Their job is to get this right. Believe me, we have people who are focused on doing this and utility tokens that are truly for use and get rid of the frictions needed with moving around. I may have too Much Community power and have too little and shifted to the token in a great in fabulous way. But if youre trying to build a server farm with those tokens, to keep the return i know its hard, for my final second i would encourage you to need it. Mr. Vargas is recognized on the chair. Thank you madam chair. Anna thank the commissioner for being here i thank you very much its very important. As you stated in your testimony, the secs mission is the securities of 1930s which set the groundwork for the legislation requires companies to disclose all material facts on securities investors can make fully informed investment and voting decisions. Recently, its been made clear that investors a view environmental and social yes she matters as evaluating the Financial Performance and miss jackson both issued a joint statement of the secs change to direct as quay. They had a political topic however, we both raise concerns about the Company Executive discretion on what they can tell investors. And that the proposal does not seek to include the topic of climate risks. Can you please explain these issues and what they lead problematic for investors . Thank you. Thank you for your attention to that matter. Its very clear and weve heard from hundreds of millions and trillions of worth of investments with these parameters and what they need to make Investment Decisions based on the long term sustainability and values. And there were certainly and a lot of points raised and we appreciate the capital and it is extremely important for protesters and we found out whats important to at least have that if some comments because each inside the company will make their own decision about this material and makes it very difficult for investors to compare. You have to balance that and i think we have a concern about a shift and principles in regard of the issue and the proposal as a missed opportunity to highlight a hearing for investors for quite some time now that they have the climate risk. Would you like to add anything to that jackson . We should have the following question when, it comes to figuring out this material, who decides . I think that the law and the markets is very clear that investors do and investors decides whats important and that is why we issued a statement wondering why wouldnt go further given that is so clear that investors caramel this risk. Thank you. We dont have specific bills but i want to ask about the issue of diversity and its very important. We have seen that it is a valuable asset and what you like to comment on that issue . Yes i wholeheartedly agree that it is important for companies. I think that more disclosure on that both at the board level and with respect to the workforce would be valuable to investors, because i think its quite clear that it helped bring values inside companies that we strongly support. Doug jackson . Thank you congressman. I absolutely agree that before i joined the sec i was part of the 30 coalition that is 30 of the United States held by women. I think it is a scandal that we havent recycle yet. I agree with the diversity of the Tour Companies and we should do more to encourage more among Public Companies. In respect to yes g, we handle the issue of recommending the disclosure of political spending and i think that issue that they gave a speech at the beginning which is oftentimes spending a significant amount and the investor doesnt know where its going. In fact, its to the investors opinion. Can you comment on that . Im sorry did you hear commissioner jackson with 20 seconds left, once you help them you may not be for the question. Maybe you have in mind which is my description earlier a proposal to require companies to dispose their politics that you share. Where we stand today as material requires to disclose and a fair amount of shareholder engagement my time is expired but that is material . If it is it should be disclosed. Youre not saying that it is . Anna saying no. Mr. Rose had been recognized for five minutes. Thank you chair. I want to begin today by reiterating my call for mr. Luetkemeyer and the current credit loss and to clayton on that issue as we were back home in the district of recent weeks and bankers and will have concern about the adaptation of cecil and again of the refrain that is rather ill equipped and will forecast and at the end result of the current policy would be to increase the cost of credit for the startup businesses and small bar owners. I encourage you to keep up the pressure about how it could be very smart that we study that question. I want to applaud the commissions efforts under your leadership to meet with the public outside washington d. C. Posting advance like the Historic Events in town hall in june 2018 and provide a unique form for our constituents to engage the commission. As a new member of congress i, can tell you that one thing i have learned is that nothing beats getting out of washington and meeting with my constituents of tennessee. Hopefully we will continue these efforts as we work to better serve the Mainstream Investors. Chairman clayton, id like to drill down a little bit on the advocate for Small Business Capital Formation or esg. In my district there, are three economic counties in the fiscal year of 2024 fiscal year of 2019. Small businesses are the engines of growth in areas like the district. What is this office doing today to help Small Businesses in these areas . I hope a number of things because it is a number of things that we need to do to foster Small Business capital. Navigating our regulations in systems but what is it that makes a business grow you . Need access to capital and access to human beings. You need the expertise for lawyers and accountants and others to facilitate that type of engagement and what we have seen his areas that have a Critical Mass of that in the entrepreneurship is much more quickly and one of the things that were doings his to facilitate that type of engagement and on a local basis. You look at the places that have all of these elements and professional capital and have the expertise and one thing is often missing is that if you have multiple Small Businesses in different areas than they feed off each other. Its a Virtuous Cycle to it and we try to foster those decisions. I was proud to join with several my colleagues today to pass a charge of 24 zero nine which is a mission of the office of the Capital Formation. Chairman clayton, is there anything more to empower the sec to be more proactive in these underserved areas . Heres what ill say. Were getting off the ground here and theyve done a terrific job leading the office. If we keep doing a good job, were always asking for money but give us some more money to do a better job. Mitch commissioner roisman, you mentioned in a speech this past april doctors last to invest in companies in the early stages of growth and more generally, a slow alert slower ipo with the Capital Formation which should address. In your view, what should the commission be doing to address this issue . Thank you for that question and touching on this important issue. We were always looking to see what are the current rules we have to foster in a Capital Formation and the department of the sec. We will have that to help address some of the concerns people have with these companies and uncertainty of what their requirements are going to be and what to be a Public Company. With these assertions are really helpful because of the secondary market so when youre a Small Company its harder to succeed in terms of having the secondary market and thats what we should look at you. Thank you and i yield back. Thank you. The woman from massachusetts is recognized. Thank you madam chair for your leadership on issues of accountability in oversight. Thank you for joining us here today. I want to go into an issue that has led to a great outcry and phone calls to my office from investment firms within my district that is the match it uses seventh. Are you familiar with the history of the shareholders resolution . Im sorry. The Shareholder Resolution and the file on the social issue . I need some help here . Episcopal church in 1971 presented to the general mortars a shared resolution filed by the church and requested by they stop doing business in south africa. Many members served the incumbent in our very own chair holder here on the front lines of this fight. There are a financial tool on the part of corporations and buy extensions and my colleagues on the other side of the aisle point to the role of the private sector in addressing the social economic issues. Climate change, human rights and standards are all parties issues. Issues that everyday investors are overcoming and right now, all is required is a Shareholder Resolution and the most recent one is to own 2000 dollars and stocks. Your Commission Wants to change that threshold. Some republican colleagues will require a at 1 threshold in other words, to file a resolution which has a market distinction of 347 billion dollars and investor would need to hold a billion dollars in stock. Chairman clayton, as you know you find it responsible to acquire investor to have over three billion dollars and shares just to file a simple resolution . Ill give you an answer you like but that number is way too high and it is a threshold as a responsible threshold for engagement. What will the new threshold b . Were working on it but in my ideal world but its a threshold that has access for a long term investors in the company and have a meaningful stake at a personal level but eliminates some of what i would say i dont like it at 25 or 30 of the proposals that we see are from a handful of people. I want people to have engagement and im just wondering who youve heard from. Im just wondering who i have heard from in my district and i have heard from the st. Josephs and ive heard from the ceo and the sisters of notre dame and the merciless nomination and the nominations of massachusetts and investment firms like will caught and boston trust and the asset management. All the proposes to the process where, did you hear from other than the chamber and the association of manufacturers. Where is this coming from . Where is the genesis . We heard from a number of companies and on whether of those entities were able to have proposals im only speaking for myself and my colleagues have your comments. Im not looking to keep those people from being able to make their proposals. We are looking at the recent threshold and im looking at the recent mission thresholds as the initial but what it means is that these resubmission were set a few months ago with how we communicate it. People are fairly aware acclaim my time because the clock is up. We are facing an unprecedented crisis and among them being Climate Change. Paul tools are available to us in this way and the fecs mission is to protect investors. So i urge you to reconsider any changes with the shareholder reggie illusion process. Thank you i yield. Thank you. The gentleman from wisconsin, is recognized for five minutes. Thank you madam chair. Congressman roisman i, appreciate your work and we talk about your firms and providing some of the publicly traded companies that they are reviewing and analyzing. I want to get a flare of the community if its a potential conflict as part of this process and commissioner lee. In the first place i will say that the two largest proxy advisers believe that they do make such exposures and i think its important that we have transparency around conflicts and that they are and have been for quite some time exposing these conflicts. Commissioner jackson . My answer is yes, these conflicts are serious and are from the marketplace more general. Chairman clayton . I would have disclosure of these conflicts across the board. Commissioner peirce i think we need to think about those conflicts. They all said it well. I appreciate commissioner roisman taking this topic on before you seeing the results and i think we can work on this. On a go back earlier there, was a brief discussion about stock buybacks that is really an efficiency of a location conversation. I think the question is, what is the role of the sec and putting in place rules in governing managements decision of the official capital across the board and is really the role of the sec and private management to make the official allegations. Can you comment on how you approach that process . I think you frame the question pretty well wthpretty e board of directors and thinking about whether you can invest in a particular item or with the company or pay dividends or return capital. Shareholders through a stock buyback. That is not within our preview and what they do decide to do with a buyback is within the review that they do so in a way that does not affect the market and as we say is within the manipulation and a rule is that it is a safe harbor. If you comply with this rule, absent the ten or other circumstances they are not going to be deemed to manipulate the prices. Thank you. And your testimony you wrote that youre motivated by the fact that millions of americans are invested in our Capital Markets and will have to make personal Investment Decisions. Its an important detail to keep in mind the number of americans that are invested individually through their 401 k or their pension plan and the United States in a publicly traded security and they were that theyre doing. Recently, we had a conversation of relates to the admission threshold. I want to open that back up to you chairman clayton. We think about this in the ability for management to stay focused on growth and not be distracted and we look at those thresholds. Do you take another second to walk through your analysis in the admission threshold and he in fact that would have when they are having repeat submissions . I mean, look, you have engagement, hopefully engagement with shareholders. It leads to more than just a proposal and do this and it leads to tell us about this particular issue of how you came through and having the conversation but sometimes the boxes are important. The question is, its been put to shareholders and has not passed. How many times and at what level do you have to have that to continue to put its shareholders. Like i said that, is not been examined since the fifties and one of the issues there was were using the shareholders our informed of whats in front of management. That information is disseminated very quickly today and through our firms you can get that kind of information and we need to reexamine that. I appreciate your work and its a real opportunity to reexamine the management and to stay focused on operating the Company Rather than some of these distractions and repay proposals. I appreciate your work i appreciate you being here and i yield back to bouts of my time. Thank you. The gentleman from new jersey, is recognized provides minutes. Thank you chairwoman and thank you to all two commissioners were being here today. German clayton, seniors across the country including my own mother who are having a financial scamp and being cheated by the right full retirements. Do you agree that we should be doing Everything Possible for our seniors being robbed of their life savings . Yes. Thank you. Chairman, are you familiar with the security act and have you read the bill . It is a pending bill . Its passed at the house of representatives. Couple of bills with similar. Its a bill that i introduced that would create a Investment Task force with the sec and trying to stop from scamming seniors out of their savings. It passed by 392 to 20 so that is the bill and were looking to pass the bill into law now when we signed we might not have time for the task force and which the bill which ive established and if thats true, they dont have time for a top report to you . I just wanted to check. You dont believe everything you hear. You be happy to have this Task Force Report you like other task force . Yeah, sure. Excellent. That would really help i think in getting this legislation passed. As you probably know our doors are open. Go ahead, sorry. I that engagement is important to our work cut. Thank you chairman. As you probably know according to reports in the special committee released this year, three billion dollars every year from financial scams and those who abuse seniors and pray on them so its a real issue and affect so Many Americans. According to a survey the 7 million americans have been victims of exploitation. Not only that but in coal cases of exploitation is reported. It is obviously a very important issue. We hosted folks from the department of justice and others about a year ago on this issue and unfortunately some of us didnt play it well and is driven by things like opioid dependency where people are stealing from seniors. We are doing things but we need to recognize that this legislation will bury bipartisan and will go a long way in helping that effort. I dont know if commissioner jackson i agree with the chairman. I think your focus on this issue is enormously important and i have watched as the chairman is very enforced and directors to work for many of these cases. We see that you are right we, need to protect them and i think that we agree on that subject. Excellent. Im not going to stop until we get this bill signed to law and if we can Work Together to be sure that we get there and that we can help seniors to save their hard or in 24 to retirement. In the Fifth District of jersey to stay in their homes and have it for their grandkids were often scammed and unfortunately use lose their homes and have to decide if they want to pay for their medicine so the real issue. If the commissioners want to comment on this issue . I think we all committed to doing what we can to protect the problems associated with that and make it more intense as the years go by as people have the capacity issues and i think that a task force will think about this and could be helpful to us as we think about these issues as well. Excellent. Hopefully we can Work Together and encourage the senate to pass and to vote on the security act in the law and i think as members of the committee will be very grateful, thank you so much for a time and a year yield back chairwoman. Michigan, is recognized for five minutes. Thank you madam chair. My apologies as the committee that oversees you are not here at the beginning. Why are Opening Statements but my constituent whose name is soy or and last year he put together 25,000 care packages for members of the military and was asked that the two of the unknown soldiers was honored to be asked by her to join her so i love you all and i appreciate what youre doing but saw years work took some preeminences morning so forgive me for that. I want to quickly move to four items of possible. Yes gee standards, money market funds and possible advisers act. Its been well established that the current laws with shareholders can have their voice heard and the directors are followed through this system of bringing resolutions to boards wet which has had some discussions and debate and begs the questions that have moved this yes jeez to the top of their list as commissioner jackson has indicated and companies are adopting these standards formally because their shareholders are voted them down. I think that it is very important that you look at those russian issues of not just front runners and you have done a lot to work on this and im curious if the sec at wrath large had full expertise and the social goals such as that and. Should be developing mandatory disclosures based on that expertise. Real quickly. Mandatory standards do not work. Mary joe white appointed chair, made that same observation for guarding conflict and under this particular legislation theyve been looking at the sc metrics which is deemed de facto material and that seems problematic. Companies have been looking about a lot of the issues that fall under the umbrella and they think about thinking about it through a lens and is material to the so value of the things and i think thats how we should view all these issues that affect. I appreciate that and the best interest i understand that there is been a lot of criticism in youre july 8th speech and much of the criticism has focused on the extent of the interpret airy which is false, misleading and in some cases is policy preference this guide as legal critiques and what you like to assist address those insect the record straight on where you are right now . I prefer for a detailed discussion and i think id refer to my speech and wages use about the eye when my colleagues earlier said that we watered down the duty as you put this forward, is a true . No its, on true. Ive got a moment. The best interest in the broker out there retail have the put their interest on in front of the clients and made a disclosure of how to make your money and have a care obligation of knowing your client and a recommendation to your clients needs and where they maybe in their life cycle and they have an occupational to find a policy and procedure that words are good and unless you have an ability to test them it is very difficult and if that packages developed with our division of division of inspection and to give realities to this. Back in 2017 the chair of that subcommittee and congressman maloney as a Ranking Member had regulations that had for money market and you had written your response and the am am f was not until october 2016 and making major changes would be disruptive and short term funding markets and i agree with you that is federal chairman testified before this committee as identified some of the same issues. Do you think would be disruptive and if theres anything else youd like to add . I dont know that i want to say needlessly disruptive but which i think that we should look at the short term funding in the space that we moved out of which is private to government. As indeed bid impaired that what we should do about that. I appreciate the opportunity and i yield back. Thank you, the gentleman from michigan mrs. Tlaib is recognized for five minutes. Thank you madam chair. Detroits housing crisis i talk about in this committee i spent a tremendous a top amount of time on it because as many of you may or may not know, the crisis is very real in my district 13 Congressional District according to 2018 report from the urban institute, black homeownership rates and michigan degrees from 51 in 2000 to 40 in 2016. Currently the, waitlist for Affordable Housing is six months to a year. Chairman, you statement that the opportunity of these own program as a potential for the Economic Development in areas across the country that our need of capital. I would consider my district one of those that are in need of Economic Developments so i would like to talk about that a little bit. I dont know if commissioner jackson, can help him with this. According to sec, such qualified opportunity zones of funds must comply with all regulations of the sec in the security states where they do business. Can you elaborate on what that really means . You can use a little bit more congresswoman. It says on the sec that they have to be regulated under as easy and the security regulators of state and doing business. What does that really mean for opportunity themselves . Sorry you are quoted. That was something that we saw opportunity that were raising money for them and wanted to remind them that you have to follow the Investment Protection rules and that the states have so we put this out to say that we raised capital and are mindful of those rules. Chairman, this sec have defining and clarify the opportunity that have expanded in the 2017 tax law . Where you dont have direct authority over those types of things. We do have authority over is how we raise their money for those projects. We go to investors and say it, will raise money for this project and its an opportunity are they doing it in a compliant way . This is yes or no to any commissioners. Do you acknowledge the developers that qualify for opportunities that are required to produce a significant number of jobs . Do you know of any . Are they required to are they required to provide the number of jobs that will provide opportunities . Im not familiar. Not to my knowledge. Im not aware of that. I dont know how that works its so, hard developers a benefited to the opportunity zones required from Poverty Reduction and a tax break . Again, congresswoman not to my knowledge. I have an issue with opportunities owns and oddly familiar. In the 19 eighties are zones reached the g8 oh and had committed no Significant Growth or operation and wealthy Real Estate Developers made money from it in those zones and communities did not actually prosper because of it. On that note, i want to say for the record that the New York Times article that donald trump and his family advisers would benefit tremendously from the opportunity zone. Without objection. I was taken aback by the statement of supporting opportunity zones and see it and went on to say a lot of things. Wayne countys experience of rapid gentrification of our district which are low Income Opportunities are out with wealthy developers to build chinese stadiums or condominiums or they can afford. The sec announced two weeks ago where am i . Im sorry my question is, why would you say the statement that you said in regards to opportunity zones that are opportunity for Economic Development . It is a tax break right . One of the reasons i put the statement out was to comply with the law and make Capital Formation is good but if you look that our regulations make it hard for people who live in those jurisdictions to actually invest alongside the people who are investing in these opportunities zones. To me thats an issue and we want to help people make that opportunity available to the people who live in the zones in which there investing there are ways to do that. If youre going to talk about in the future we can make it much more clear because you are just supporting it without accountability and you follow the law but in many ways that we are promoting it as some way to deal with those other issues. But i recognize the issue and ill say lets find a way to impact our community and participate. Thank you, thank you madam chair. The gentleman from texas is recognized for five minutes. Thank you madam chair. As you all know, the individual investor does not have shares and stocks for big firms and big investors who have the bulk of those shares. They rely a lot on this proxy and a few questions ago you promoted transparency of these firms. Do you support further efforts to increase transparency among how they are produce and how they come to the conclusions and how they come to a recent vote in the past three to two and worked on some of that. Are there any plans in the near future to increase transparency among these proxy adviser firms . Its a good question. I would like to speak to the plans Going Forward. I would like to acknowledge the leadership in this area. Its been effective and as engaged across all five of us really to help get this right. There are some transparencies when youre describing it but anytime a Business Model as a conflict, we need to get information out to the marketplace about that conflict. I support that here as i do it other context. I appreciate the question and i appreciate the comments from my fellow contributors. What i say, is that weve done an important first step and part of it was reaffirming whats the interpretation of the law is in respect to the use of the Advisory Firms by asset managers. It what it comes back to is ensuring that if you are responsible for overtaking the investors you have to do whats in the clients best interests enough to vote. Part of that is understanding what those conflicts are and if those conflicts can be overcome or addressed. What are the concerns that i represented the dallas area and companies base there and i heard from leaders about companies that these firms just put out their analysis and often dont get any input. Some of the things that i heard would be helpful is that they should perhaps get a phone call and say that this is what we are about to put out. Do agree with this . Maybe theyre not going to change but perhaps or missing something. Another thing that might be helpful in your rulemaking process is to give accompany an opportunity to respond to what is being put out about them and have it attached to whatever this analysis is without getting to the point where these Advisory Firms have become such a big part of daily business and ive talked to ceos who feel like we answer to these firms. One of them is called the iss and not jokingly we call it isis and thats a common term that these Companies Used to refer to this particular company because they feel like. Is there an echo in the room . They feel like they are beholden to these Advisory Firms and also a goes hand in hand with the Shareholder Resolution process. We have some of these radical shareholder proposals that takes these firms in such great influence and i want to encourage you to work on the rule making procedures and three billion is obviously too large and i agree with that. Companies that are spending so much time and dollars fighting resolutions which dont help the company or dont help investors or dont help the employees. I saw in fact here that 56 of all shareholders proposals and 2017, were related to social issues with little connection to performance. So much of this with the proxy advisers are encouraging one way the other thats important where theyre coming from in these conflicts of interest and disclose and ill pass it that you will work on this please. I yield back. Thank you. They congresswoman, is recognized for five good minutes. Chairman clayton, you mentioned the closure of the markets and during the december, you said quote, disclosures of the heart and countries and the secs approach of Capital Formation and he quit itty. Disclosure is at the heart of the as he sees approach and you made that statement to speak about yes g or environmental social governance disclosure. Do you generally believe that the esg are useful tool to provide information for investors who consider are about to consider information investing . I believe that there are disclosures in each of those categories and depending on the circumstances can be quite meaningful to investors. Thank you. Commissioner peirce, if compared these closures to scarlet letters and which a pregnant woman name haster red letter a four adulterous at said it i quote. As with the starlet, the letters over supple via complicated facts. Do you remember making that compare is it between the east she could closures . I do. You said it is colorful. We ought to be wary of a crowd of self appointed, self righteous authorities. Even when all up they are cried for is a label. In your opinion, those who support esg closures and that ive given information for instance their Environmental Impact or adversity, those people are self appointed and self righteous. Commissioner peirce would you consider commissioner pointed to be shrill . Would you consider jackson to be self righteous . No. Would you consider them to be self appointed . Not at all. Commissioner clinton, do you consider self to be shrill or self righteous . I try not to be. Would you call investors a request to esg be shrill or self righteous . So, i dont like to put a blanket on investors of a group. But i believe that people do engage on this they are not here they care. We want the information because they believe that it may be useful for them. Commissioner clinton, they believe that the letters of esg should actually stand for enabling shareholder graph as commissioner purse said in a speech . Being the advantage one gets from corruption. No. Thank you. Commissioner peirce he spoke about regulatory humidity. The sec should be subsequent for what it could do for other sources. You mention Advisory Committee as information. Does your regulatory immunity stand for the general public . Of common investors . I welcome comments from the general public i, think theyre very valuable as we regulate. So, they 1. 2 million comments received in support of disclosure of political spending incorporations, you have enough regulatory humidity to stay with the public who requested those . Or do you think youre smarter than those million plus people . Corporate political spending is not an on our agenda. I believe that there is a legislation on considering that topic. Moving to mr. Jackson. Corporations are choir to disclose compensation . Yes. Why . Because theres a conflict between the interest of the investors in the insiders when it comes to how much they are paid. So, why is are not the same conflict between investors and executives when it comes to political spending . Congresswoman, i believe there is. Insiders benefit between spending. How . They get the ability to use someone else is money to support political causes that they prefer as opposed to investors. For example, over taxes with americans that might not benefit the Main Investors who are much lower income levels. Thats certainly a possible example. Were disclosing executive pay because were worried that executives may over bay them selves and that same misalignment of interest applies to Court Spending . Thats my view, congresswoman yes. I yield back. Thank you. Mr. Mcadams, is recognized for five minutes. Madam chair, i have an inquiry. I was informed that there was a 1 30 hard stop and what is the status of that . We had a five minute break until were going to make up with mr. Mcadams and then we will excuse our witnesses for today. Thank you very much. Thank you chair clayton and for being here today. The work of the sec is to ensure our Capital Markets remain healthy and job growth and opportunity. I used to teach as a professor of regulations ten to 15 years ago. I would teach my students that Capital Markets only work to the extent that investors had faith and bad actors cannot profit off of wrongdoing. Thats what i want start to day. Chair clayton, do you know two years ago that the Supreme Court ruled in the sec that the secs discordant authority there was a penalty and that subject is to five year statute of limitations . The court further hinted at the sec not have the authority at all. Thats a result the sec can only bring Enforcement Actions involving disclosure without five into the violation. Even if the sec has loyola he securities violation. The market results of this case multitask out was able to bring keeper 30 Million Dollars in illegal gains but i want to go better than just the individual case at hand. You talk briefly about the effects of the caucus ruling on both investors and the sec . Adverse from both. Adverse Foreign Investors who would you find it an advantage for the markets generally. You shouldnt be able to have someone to conceive to find a way to get to keep the money to really good i concealing the front does not make sense. Officially consequences, invested a less protected, discourage funds around able to be recovered. More staff time and resources to fighting all sorts of bad actors chairman as you know i along with my republic in colleague bill his anger is here today, i introduced a bipartisan Investor Protection in the capital my kids fairness act and last year week this Committee Approved demolition on a rock by basis. The bill would authorize dccc to see each encouragement and junction against bad actors and give the sec up to 14 years to pursue these actions. Do you support this legislation and do you believe that it would effectively address the negative effects of the coal catch this that weve discussed . I mentioned in my opening my colleagues and i, think you forget attention to this and we wants to see our fixed the coquihalla shoe move over here and listen to this the bit about the contest but lets get this fixed. Generally speaking we very much appreciate my staff, appreciate the sec to try and bring this fix, and bring forward legislation i can got about president s to justice and understand that any person legislation there is a path moving forward i will ultimately have to reach an agreement by kamala fashion as well generally speaking do you see that legislation is a positive step forward to granting pecan within the authority that needs to enforce . I do. How important sinew level of priority high point it is to you that congress address the coach decision to ensure our capitals market our investors. Its a focus of all the virus that one does wrongdoing not only to react quickly. The reactor sizes but we kept people their money back. These types of frauds privacy games theyre basically taking money went out of the pocket of ordinary investors. Talk about stanford earlier those types of things. Its important to the integrity and its just important tristan essence that we can get their money back. Thank you and we appreciate your willingness to work with us on that and to move forward legislation. Are there particular types of cases Innovation Investors are vulnerable without a fix to this court ruling . We had some discussion of stanford earlier it is those well hidden schemes particularly in our private markets. I have the secret sauce dont tell anybody type of situation or were our friends here type of situation that theyre particularly vulnerable to the issue i was raised by the Supreme Court thank you and chairman some of our key to get the legislation saying that five years is more than sufficient for the sec and that is given more time the sec will just pursue claims so with your response to that claim . I think in the air that i just described the stand for the public europe there are multiple private schemes where snow like a Public Company market. Public financial statements, you have a lot of, you have reviewed you have all these types of things. Different environments in private market. And like pat used to reward somebody for concealing or fought for a long time. Thank you chair, thank you without objection a leather from bell markets will be an around to the record. Id like to thank my distinguished prime ministers for the testimony here today that which action all members will have five or just native days submitted positional return question for the witnesses to the chair which will be forwarded to the witnesses for the response i ask all of our witnesses to respond thats probably after able without exceptional members will have five days which to submit extremist materials and i thank you and this hearing is adjourned. This week in American History tv saturday 2 pm eastern, historians talk about the Lessons Learned from the reconstruction period after the civil war. The concept of whiteness before the civil war was a barrier of exclusion when state said only white man can vote. Whiteness was there for a used to exclude others but in the civil rights activists whiteness becomes a baseline. If white people enjoy certain legal rights everybody else has to enjoy those rights also. Our electors in history, to the english realization of the United States in the 1970s and 80s. And sunday at 2 pm eastern the psychological impact of flying on a world war i pilots. And that seven women in the Apollo Program have the challenges they faced. There were cameras all over the place but there was, if cameron with just i had no idea how long it it on me i did not say anything about it but we didnt even know the term Sexual Harassment or theres two different ways to think about that. One is a little voyeuristic on a part of the dos watching un is sort of harassing an uncomfortable but the other way to think of it is so what im liking let him all know that everybody who is not in this dam room know there is a woman here i am here to get used to it. Xp history tv every weekend on seaspan three. Sundown to an end. Peter the vote on the history of tariffs and managing the u. S. Economy. The Supreme Court eventually ruled that a tomato has been vegetable a lot of effort because of a town. To an old story any little you tornadoes are food but in fact the 1883 tough but a tough on vegetables and not fruits and so on imported or of and vegetables next new york pointed out that the tomatoes he was bringing in from the caribbean were fruits and he didnt have to pay a tariff the battle went on for quite some time and eventually the Supreme Court ruled that that tonight is actually vegetables thats an interesting ruling that had repercussions beyond just tomatoes themselves. Sunday night at eight eastern on seaspan accumulate. Next a hearing on u. S. Road and strategies to deal with Traffic Congestion and revenue needs held by house street rotation and infrastructure subcommittee this is two hours and 45 minutes