Transcripts For CSPAN2 US Senate 20161115

[inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] [inaudible conversation] the meeting will come to order without objection. The chair is authorized to declare recess at any time. This hearing is entitled examining the sec agenda operations in fy 2018 budget request. I now recognize myself or three minutes to give an opening statement. I warn everybody i will take a lot longer because there is unanticipated news. First, before proceeding to the purpose of this hearing, i do want to know for all my colleagues that as we begin this hearing today, in 318, b3 18 of this very building, the rayburn building, our friend, our colleague, the Great American hero and patriot sam johnson is being honored by having that very room b3 18 named after him. I think we all know he is a decorated war hero who served his nation with great courage, great valor in korea and vietnam and spent seven years and experiencing torture there. We know him to be one of the kindest, most gentle souls in this institution and he has many distinguished a accomplishments for his district and his position on the ways in these committees. I personally look forward to visiting the sam johnson room soon and i hope all my colleagues look forward to that as well. [applause] this morning we welcomed securities and Exchange Commission Mary Jo White and i will take a little longer due to news that we received last evening that the chair intends to step down at the end of the obama administration. I do wish to acknowledge, on behalf of all, that chair white has now completed over two decades of distinguished Public Service as a u. S. Attorney, as chair of the securities and Exchange Commission. She has brought an incredible amount of professionalism to her position. She is known for her independent judgment which is greatly admired and respected. I also want to personally thank her for being one of the witnesses, one of the few witnesses from the administration that has never requested an artificial time limit on her time at a hearing. She has always made herself available to this committee and always made herself available to all subcommittees. She has indeed, epitomized what it means to be an accountable agency to article one of the constitution and she is to be commended for that. Also, she is always submitted her testimony on the timely basis. If there are cash and valuable prizes we could award you madam chair for such an accomplishment i am sure we would but im sure we would reach ethical considerations by doing so. She has always made her division in provisions available, and again, the accountability and transparency that she has brought to this office is greatly greatly admired. Just in case you have a false sense of security, madam chair, we still have some concerns and we still have some disagreements it has been almost a year since your last appearance here and there are many things we are eager to discuss. The ongoing failure to develop a formation agenda and minor rule changes to Capital Formation since the jobs act in 2012. The failure by the sec stems in part by the refusal to act on recommendations made by the Small Business capital for him. I encourage the sec to review these and act on those. That will Small Businesses to access the Capital Markets so they can improve, grow and provide Economic Opportunities for all american workers. Also languishing at the sec is a directive task by congress requiring the sec to simplify its disclosure regime. It became law nearly a year ago and requires the sec to eliminate or reduce burdensome, duplicative or burdensome disclosures. I also know you are under pressure from those intent on criticizing the regime but you have a navigation to follow the law and not appease extremists whose ideological objectives have nothing to do with the sec core mission. In addition, the failure to require the electronic delivery of mutual Fund Documents is disappointing. How can they force Public Companies to engage in social, environmental or sustainability exposures well simultaneously promoting wasteful use of paper, the cost of which is ultimately borne by investors. Its time for them to move in the 21st century and allow the e delivery of mutual Fund Documents. We need to also discuss the budget request. We are looking at the debt clock before me and to my side i see no need for the sec to receive a prefunded escrow account of more than 290 million for potential move of headquarters. They will have to increase the fees which is nothing last that a tax on Capital Formation. They claim that its underfunded or not supported as the budget has increased by a budget of 325 since the year 2000, an increase that the American People do not enjoy. Whatever the budget does not account for which is over 1 billion plus plus another 25 million that carryover from the fiscal year. Finally, chair white, this is most important, whenever there is a transfer of a transfer of power from one administration to another, there is a temp tatian for federal agencies to rush in rule makings and completion as a way of submitting the priorities of the outgoing administration. This type of midnight rule making neither conducive to policy or principles. There are currently two vacancies up commission giving your current reputation and legacy, i would strongly urge you to respect the results of last weeks election and resist the temptation to finalize any regulations including. Frank before taking office in january. I now yield five minutes to the Ranking Member. Thank you very much chairman and thank you chair right for being here today. Im disheartened to know that you will be stepping down, chair white considering there is so much at stake and so much to fight for. I am encouraged by because of all the kind words he had to say about you when he started his testimony today. That is the nicest i have heard him be to you and any of the others in our Oversight Agency since we have worked together here. With the gentle lady yelled. Yes i will yield. If anybody on your side of the aisle wishes to depart, i will say very kind words about them. [laughter] im sure since you have said such kind words about chair white youll be asking her to stay, please dont go. Also im appalled that the reaction on wall street to tuesdays reaction to bank stocks as they have rallies on a massive destabilizing lawless agenda. Its not the same as real hard earned Economic Growth the demise of regulations that wall street is cheering are the very regulations that have made our consumers and investors in economy safer and more resilient. In fact, just yesterday, wells fargos stock closed at the highest price this year on the expectation that a Trump Administration and Republican Congress will relate erase its culpability. We face uncertain time and at the insurgency is the president elect who does not have a coherent or consistent stance on anything. We dont know if hes building a wall or fence. We dont know if hes repealing obamacare or cherry picking some provisions he excepts. We dont know who he is, what he stands for our what kind of president he will be. We cannot rely on anything he says because it changes from one day to the next when mr. Trump talks about Financial Services reform and dismantling. Frank, what does he mean . Does he mean letting the wall street banks he is so indebted to write their own rules . Does it mean repealing the fair housing laws that the department of justice sued him over decades ago . Does it want to repeal protections and make it harder for the sec to collect from bad actors . Does he want to got the Consumer Protection bureau despite the agency being the strongest champion of everyday consumers . Or does he mean breaking up the bank by reinstating glass steagall. If so we can find common ground. Does he want to ensure that private equity funds and Hedge Fund Managers pay the same tactics is that Everyday Americans pay . Will he pay the same taxes that Everyday Americans pay . I am curious to see how republicans in congress react to his wide ranging, sometimes Progressive Agenda pretty is not is not holding to wall street and other special interest yet here he is with apartments of wall street insiders and their friends in congress to run his administration. Mr. Trump also said he wants urban renewal and to ensure that African Americans have access to loans to start Small Businesses. Yet, the leader of the White National movement is his chief strategist in the white house and he himself has made racist, misogynist and im agog,s. Chair white, even though you are about to leave, i hope you will share with this committee and the Income Administration the Important Role the sec place in our Financial System and i hope you will explain the importance of a wellfunded and strong Investor Protections for the sec has been the victim of woefully inadequate budgets as a result of republican obstructionism for years. Despite the crucial role that the sec place policing our everexpanding Financial Market spirit we are now at a crossroads and they look to profit off american seamers and invest it. If we enact the special wish list or if they weaken the rules at the expense of the greater good, our economy economy will go back to the darkest days of the financial crisis. I hope that common sense will prevail. With that, i yield back the balance of my time and chair white, i apologize for not spending more time on sec and a lot of time on mr. Trump. But thats what im going to be doing for a long time to come. I yield back the balance of my time. The chair yields two minutes to the chair of our Capital Markets subcommittee, the gentleman from new jersey, mr. Garrett. Thank you, mr. Chairman, and welcome once again for the last time, chair white, to our committee. Before i begin, let me just a quote engine echo many of the positive sentiments expressed by the chair regarding your tenure at the sec. Every sec chair receives criticism when they sit here from both the left and the right about certain policy positions that they take, but recently you have had to endure an unprecedented level of attacks from certain groups and from individuals as well who have called out your integrity and called out your professionalism and put them into question. Theyve even gone so far as to call to break the law or be fired for your refusal to follow their direction. Chair white, its clear from these many hearings that we have had that you and i disagree on certain policy issues. I can say this here, i have never ever questioned your professionalism, i have never ever question your integrity and your devotion to doing the good in your work. It is a difficult job that you have and you have handled it very well. You have done so for all the right reasons. I just want to take this moment to say thank you for your service and for your thoughtful approach for which you have tackled a number of issues, in particular the area that i spent a lot of time on, the equity markets which continues to be an important for this department had i have mentioned that we disagree with policy issues on certain times. Let me highlight a couple of those before we move on. Despite the sec having an Important Mission to facilitate Capital Formation, the sec is still not organically, within itself, develop the formation agenda and has relied on exclusively our committee in congress if you will, when it comes to trying to change some of that and modernize some of those areas of security laws for the benefit of the small and mediumsized enterprises. These are things that we have talked about. This, despite despite the fact that the chairman was just mentioning that the sec budget not only continues to grow but the agency has again requested a substantial increase without detailing how it will expand on these missions. Finally, i also remain concerned that the sec has not done an adequate job to habits jurisdiction when others try to trample on your turf. So, with that said, i hope to test many today, as you wrap things up that you will address both of these issues and others to ensure that congress is prepared to carry out its threefold mission before congress decides whether the agency deserves that increase in budget. With that, i yield back. The gentleman yields back. We welcome the testimony of the hon. Mary jo white, chair white has previously testified before this committee on many occasions so i believe she needs no further introduction and has received her deserved accolades. Without objection, your written statement will be made part of the record and you are now recognized for five minutes to give an oral presentation of your testimony. Thank you very much members of the committee, Ranking Members and thank you for your kind remarks. I appreciate it very much. It is my honor to serve and again, thank you for inviting me to testify today on the current work and initiatives of the sec as well as on our fiscal year 2018 preliminary authorization request. As this committee knows well, the sec is a critical, independent Agency Agency that is charged with protecting millions of investors and overseeing the strongest and safest markets in the world. Im very proud of the commissions hard work and many accomplishments as i became chair in april 2013. Weve achieved record numbers of examinations each year. Weve completed dozens of transformative rulemakings, including fundamental reforms to Money Market Funds, Credit Rating agencies, and the securitization markets. Weve built important new Regulatory Regimes for Capital Raising and critical Market Infrastructure and minutes of poll advisors. We put in place and during framework for work in areas that are central to our mission. Asset management, Market Structure and disclosure effectiveness. Our latest results in enforcement examinations exemplify the agencys high level of performance during this time. In fiscal year 2016 alone, the commission brought over 850 enforcement actions, an unprecedented number and turned over 4 billion in orders directing the payment of penalties and disgorgement and a formed 2400 exams, a sevenyear high a sevenyear high that reflects a smarter more efficient program. The strength of our four step can also be seen in the kinds, complexity and importance of our cases that span the markets and the securities industry. As this past year also showed, the commission was only three members, they were able to continue to pursue a consequential set of policy measures designed to protect investors, strengthen the markets and open new avenues for Capital Raising. Since i last testified, testified, the agency has, for example, advance major rules addressing equity structure issues including the transparency of ats and order handling practices while moving forward with the comprehensive assessment of other fundamental structure questions. This afternoon, the commission is scheduled to consider in an open meeting, approving a final plan for the critical consolidated audit trail. Over the past year we have also continued implementation of a series of proposal to address the increasingly complex portfolios and operations of mutual funds and Exchange Traded funds. We adopted final rules to modernize the data reported by both funds and their advisors, completed rules for enhanced liquidity Management Funds and adopted a proposal for new controls on the use of derivatives. We also adopted new rules to better enable businesses to raise capital through local and regional offerings and enhance our review of our effectiveness of our disclosure regime through several detailed proposals. Along with several other roles, we finalize critical components of the regime for securitybased swaps and establish new standards for the clearing agencies to stand at the center of our Financial System. In addition to our many discretionary initiatives, the commission has also adopted rules for nearly 80 of the mandatory rulemaking provisions of the dodd frank act. Was also made significant progress under the fastback. Our rulemaking workers perhaps the most prominent example of our achievements. Our mission is also carried forward by our exceptional and the beast staff every day from reviewing thousands of filings each year to complex. [inaudible] as reported today, the commission has, for the for the second year in a row, received from gao, an an unmodified report with no material weaknesses or deficiencies on the sec Financial Statements. The commission today is, i believe, a stronger and more effective agency. I am honored to have let it during this time of progress. Significant challenges remain if we are to adequately address the growing size and complexity of the Securities Market and the ever more sophisticated Financial Services industry. It is critical that the sec has a resource needed to discharge its important responsibility, the new ones, and many others we have long held. I deeply appreciate that we must be prudent stewards of the funds we are appropriated and we strive, very hard to demonstrate how seriously we take that obligation by the work we do. At the same time, our resources are insufficient to fulfill our responsibilities to investors in our markets. Cuts to the sec budget would seriously impair the progress we have made and diminish our ability to fulfill our mission. While more remains to be get done, our accomplishments in the past through few years have both been impressive and inordinately important to investors, the markets and Capital Formation. For that, i want to think first and foremost the exceptional staff of the sec as well as my fellow commissioners, present and past, and i wanted to thank the chairman, the chairman, the Ranking Member, and this committee as a whole for your continued support which will allow us to fulfill this mission for the american economy. If i might, on a personal note, as the chairman has chairman has indicated, i did formally announce yesterday that i would complete my nearly four year tenure as chair of the sec at the end of this administration in january. It has been my high honor and privilege to serve. While i have not yet done my David Leavitt jet letterman top ten list of what i will miss the most, im sure my appearance before this committee will be on it. More seriously, as an independent had as an independent agency, it is to be expected that we have had areas of agreement and disagreement. I very much appreciate the professionalism and courtesy of the chairman, the Ranking Member and the committee, generally, as we have grappled with the challenges before the sec that are so important to the american public. Thank you and im happy to answer your questions. Thank you chair white in the chair yields himself five minutes for questions. Chair white, as as you know, significant tension has been devoted recently to a quiddity concerns in our u. S. And Global Fixed Income markets. When you testify last year, before us, for us, i asked you about the Regulatory Impact on Bond Market Liquidity and at the time, you testified that while no question there are concerns about the fixed income market, you could not identify a culprit. Since your testimony of a year ago, we have had some news and some evidence of the Regulatory Impacts on the quiddity. They have become starker. On september 27, former secretary hank paulson commented that the boca rules solve the problem that was not a problem. We have much less liquidity in the market and it has been harder for Financial Institutions to provide liquidity. On september 16, douglas, ceo of virtue, one of the largest electronic Market Makers announced that his firm would no longer invest in certain bond bond exchanged because of the underlying security had become too hard to trace. Thereby eliminating sources of liquidity that banks continue to reduce their roles and Market Makers. On october 7 the british pound plummeted in a matter of moments in trading asia, they recorded trade as low as a dollar 15 and the wall street journal attributed this to a lack of currency traders in the Foreign Exchange market. Since your last appearance, have you been able to determine whether regulations, such as the rule involves Capital Requirements are a contributing cause of the continuing decrease in liquidity in the fixed income market, particularly the Corporate Bond market . The short answer to that is no. We continue to study at very carefully. As you know, a, set the sec from our division of economic and risk analysis are charged by congress with actually studying and reporting to congress on the impact of regulation generally. I think that report is actually due in may of 2017, but nash. Is the recent data concern you question market has been a year and its disappointing they are are still not conclusion. The data does concern me. I think i said that my last testimony as well, and the issue, the overall issue also deeply confuses me. We go back to our staff to drill down on what we are reporting to congress. That essentially, although some decrease in dealer inventories come about by most measures, there has not been a deterioration. I think you are aware chair white that many economists believe that frankly, the next financial crisis very well could be triggered by this bond market phenomenon, so as you are soon to depart your stewardship and chairmanship of the sec, i would simply request that resources be focused on this. During your appearance before the committee on march of 2015, i asked you and other members of the Financial Stability Oversight Council to conduct an analysis to see what Systemic Risk could be posed by this. They conducted analysis of the Systemic Risk that could result from a lack of liquidity in the Corporate Bond market. We are studying at the sec paradigm mentioned our economists as well as others, our staff in terms of fstop, there have been working groups on the staff looking at that, but there is no definitive conclusion. I know some work is going on in different working groups. Again, i would commend to you, this is an area that is deserved of laserlike focus and i hope the appropriate resources will be devoted again. It has been at least over a year since these concerns have been brought to your attention and the attention. One last question, during the adopting phase, five regulatory agencies had the ability to interpret, examine and enforce compliance with it that has led to overlapping and conflicting guidelines. What extent are the five adopting regulatory agencies trying to coordinate efforts concerning the rule . We still have our working group we talked about before that meets quite frequently on interpretations and on coordinating enforcement. As you know, that is assigned to different agencies. We are trying to be as consistent as we can possibly be the chairman is exhausted her time and now we yield to the Ranking Member for five minutes. Thank you very much. I would like unanimous consent to enter in the record that when the Washington Post of october 2016. Without objection. The story recounts a disposition, a deposition from late 2007. Donald trump had sued a New York Times reporter for defamation alleging that he lied in his book about trumps not worth than his lack of success in business, something we know that trump is very sensitive about. Because trump sued the reporter and allowed lawyers to get access to his business documents, as opposed story document, through the defamation of trial, it became clear that it was trump that was the of the lying. In fact they caught him in lies 30 separate times. He lied about sales levels in his condo building and how much it cost to join his golf clubs and about his amount of debt and employees and how much he was paid to give a speech over dating the payment by one and a half times. He lied about needing to borrow money from his rich dad and he tried to blame the lies on a coauthor of a book. He lied about facts that were simple to disprove. Things easily verifiable by searching documents for Public Records. Now this lawsuit was thrown out by the judge and was denied an appeal. This man is now unfortunately our president elect. I expect him to continue with these distortions only now our nation is at stake. He is a thinskinned bully. I hope he doesnt lash out on the freedom of the press or peaceful protesters. We will be standing ready to protect our american freedom. I bring this up because you are the lawyer in the 2000 case that deposed mr. Trump and expose these lies. I mention as part of the record, is the Washington Post story true . Did they mistake this information and was this all smelly thrown out by the judge on the case . I dont think it would be appropriate. I dont think its accurate that i argued the case myself. I dont think would be appropriate to comment on statements of the litigation. Okay, so i just wanted to confirm in the record that this case did take place. Now i understand why the chair is stepping down. I yield back. The gentle lady yelled back. I recognize myself now for five minutes. You and i have both talk that we had correspondents go back and forth about the secs implementation about the fastback. As you know, there were a couple deadlines for the sec to meet under the fastback. The first was to propose outdated proposal which you have done in the second deadline which is due next month is the sec to issue a report to congress and modernize this. It can go to the testimony today on page 12 of your testimony you say, staff has also completed a study and report on how to further modernize and simplify as mandated under section, and so forth. Can you tell us what report you are referring to and what are you referencing. I say that because to the best of my knowledge i have not received in our staff is not received a report or study on that. I noticed the same reference in the testimony that was not cited. I believe that reference is to the report that is due November November 28 to congress. The staff has completed a draft of that report that is with our commission now for review. It is a staff report but as is customary under procedures for most staff reports, it provided to the Commission Reports provided to congress. Minus question is easy followup. November 28 as far as your concern that will be met . I certainly believe so. Before you leave here for Good Congress will have that report . I hope long before i leave. It should be to you on the 28th of november. The fcc, as you know, as the equity market Advisory Committee, that term for that committee which has been around for a while is slated to end in january 2017. Do you anticipate renewing that committee for another term or is that something you are leaving to your successor to handle to renew. I think it should be renewed. I think it will be useful Going Forward. In order to renew the charter, we need to deal with it now so i will he discussing that with my commissioner. For all intensive purposes, you said yes go forward with it. In my view it certainly should go forward. When its done, are there other industry representatives who are not there now who should be such as retail brokerage or anybody else . There has been a lot of discussion about the conversation, 17 members was approved by the full commission and actually five members and our goal was to get balance and representation but clearly there are reached out brokerages where i think there is one area where we have all identified as an actual member of the committee. I think we had requests from very others folks to be members. Thats also up. Is that something youre gonna throw out before you leave. I think separate from that is the membership. Its possible we would proceed. Moving on, the fcc and other topic,. [inaudible] as such, do you believe the fcc sec should continue to review that rule as you indicated several years go back and 2004. I absolutely do and i believe we are. In what sense. As part of, i sort of talk about our equity Market Structure review with certain proposals where i think we should act now and then we have a comprehensive review of the issues. The committee is working on that. My time has expired. I have concerns about Capital Formation and not being done but again thank you for your service. Thank you very much. The gentle lady from new york is now recognized for five minutes. Thank you very much mr. Chairman and thank you for your Public Service. You have been a trailblazer and a role model to many young boys and girls and new yorkers are very proud of your service to new york in the country. We thank you so much and we thank you for your leadership and really groundbreaking stellar career and so many different areas. My question to you is about a statement you made last month when you gave a speech on the Regulatory Regime for the u. S. Treasury market. You noted that under the government securities act, firms that act as dealers and Treasury Security are required to register but you also noted that the regulators joint report on treasury market volatility had found that the most active dealers in the interdealer treasury market for High Frequency traders, principal trading firms, many of which are not registered as Government Security dealers. You stated, and i quote, there is significant concern that this activity indicates that certain principal trading firms are acting as dealers but without the appropriate registration that is designed to protect investors and the market. My basic question is why has this been allowed to go on for so long. You yourself admitted that some of the principal trading firms are clearly engaged in dealer activity without being registered as dealers. If thats true, why have they not brought any enforcement against those who are acting as registered dealer. I think i indicated that the data from which i observe observation of the events of october 2014 and raise question about whether some of those firms shouldnt be registered, i think i also mentioned mentioned in that speech, i know i have elsewhere that there needs to be public guidance issued where dealers and traders are to take account of that. Its interesting, i think its terrific because youve got great cooperation. We each have certain spheres of authority at the treasury market and i also indicated in that speech that i thought we should apply some of the sec up 40 to create Greater Transparency and other protective measures. My second question is about the statements youve made several times over the past several years. You suggested the sec should rethink its 2009 diversity the disclosure requirement to provide more useful information on the diversity of boards and their nominee. You directed your staff to review the disclosures. On my request, they reviewed these and found that the information provided by companies was unhelpful to investors. Because of repeated studies that indicate more diverse leadership avoid groupthink, many investors want access as they make Investment Decisions or exercise their voting right. In march 2015 they want to revise the diversity disclosure and suggested a simple matrix could make it simple for investors while providing them with actionable data. Where does the stand and where are you . I do want to say in the gao report, showed women were 16 and if they upped their activity significantly obi 24 before there would be any gender balance. The gaa o report also showed when there is gender diversity, the bottom line is better for investors, and my office has received requests from institutional investors, major investors on getting more Accurate Information on gender diversity. I even went so far to put in the bill that merely added another line that said just disclose how many women are on your board. It would not be in any way burdensome to industry. Its just another check or another number that would be added and this is information that investors, significant stakeholders and investors are asking for. Theyre asking for this information. I wonder about the activity. The gentle ladies time is expired. You can answer that. I will be very brief. As you know i am a strong proponent of diversity on boards , and i am aware of the studies you indicate which is quite telling. Where that stands, they are preparing a recommendation to give to the commission. Its pretty far along in that and trying to provide more meaningful disclosure along the lines you indicate. You think you will receive it before. I do not. Unfortunately, i do not. Will they receive it before . They may receive it but i dont think there will be a proposal before i leave. Your time has expired, thank you for the answer. The gentleman from texas is recognized. Thank you you mr. Chairman. Chair white, you and i are kind of in the same situation. This is probably my last hearing with you and i want to thank you for your service. Yesterday the sec held its first ever forum that included panels on recent innovation and Investment Advisory services, trading, settlements, clearance and Capital Formation. After this form, what is the next step in this syntax space . It was a very useful for him. We have been active in that space in terms of doing significant outreach. Some issues are on our plate right now and some are for the future p i formed, earlier this year, a syntactic working group that ive directed to make quite targeted recommendations to the commission on what the next step should be at the sec both in terms, to some degree of regulations that we have now that may apply to certain activity, how we can appropriate a properly foster innovation and protect investors in the space. Three topics we discussed and those we been most focused on, the settlement and clearing space, so the robo advisory, how [inaudible] also marketplace lending. Those are the three big areas that we are focused on. Folks in the division have also been reviewing and passing on companies that would offer digitized. We will receive those, i dont think eminently but what we need to do next in terms of rulemaking and giving more clarity to entrepreneurs. This working group that you formed, the recommendations that you heard, will it be your responsibility to respond to. Certainly what we heard at the forum will be part of the analysis, part of the input of the analysis that we are doing. It will come from the working group to the commission. Theyre doing much broader outreach than what weve heard at the form. There providing input on those recommendations that i expect to receive. One thing that is a common theme that concerns a lot of whats going on at the sec, you mentioned regulations two or three times. We are also looking for facilitation on how we make these markets better and how are we going to regulate these folks. What i would hope is that i think the forum was a positive step in what i would hope is that you will put together working groups. It might be to have people in the industry and spend some time focusing on how we facilitate this because as you know there are some exciting things going on in the space and some things going on that could revolutionize the way we do some of these functions. I said that yesterday and did some opening remarks that this jump to regulation, we did put out requests for comment and asked about, ask ask questions just like that. There are some exciting things going on out there that will improve things for investors. We dont want to be fording those but we need to make certain that investors are protected in that space. Are there investors that are providing that money through offerings that have been getting the authorization they have. I dont think we need the mindset of regulate, regulate, regulate prayer there may be some clarifying we need to do and some rules that we need to do but we want to encourage innovation. Since both of these are nondepository institutions, this should the sec be the point from a regulatory perspective for these companies . Mark. I certainly think they range in terms of the nature of the institution, but i think we should be taking a primary role, yes. Thank you, the gentlemans time has expired. The gentleman from massachusetts. Thank you thank you, mr. Chairman and Ranking Member. Much appreciated. Madam chair, congratulations. Im sorry to see you departing. Thank you for your service to your country. I think you did a remarkable job under the circumstances and i have a feeling that as far as her critics on the side of the aisle go, i think they will miss you. I think we can all expect that. I know youre wrapping up, but on Market Structure, i had proposed the reform act last year and i know there was a can beating proposal that had a little different wrinkle on it. It didnt go as far as what i proposed but it talks about lowering access fees which is a good thing. I dont really got at the issue of the routing or the conflict of interest in routing certain traits. Going forward, as you wrap up, is there anything percolating that might actually come to fruition in your closing months . I dont know if it will come to fruition quite in my closing months, although we are really in response to not just in response but including in response to that record that you reference, there will be a pretty comprehensive pilot. We also have an outstanding proposal on more transparency in routing which i think is a very important proposal out there. Itll be the staffs recommendation to the committee and we take a very seriously and i think its a good proposal that we have gotten from our equity Market Structure committee but obviously we will be studying that as to whether to do it. I think you have a lot of support for doing such a pilot in that space and what precisely the component should be. I cant tell you something will come out before i leave but we are still driving it. Okay, the question of resources, over the past while, at least over the past six or eight years we have had a d funding or a lack of resources for your agency. Can you speak to that a little bit about the Practical Impact of that defending and also as the cop on the beat for the Financial Markets, and also morale wise, in terms of trying to retain the best and brightest people at the sec. It is so important that we are able to retain the best people and protect investors and be that cop. Ive said this before, the biggest challenge ive had as chairman is just how significantly under resourced we are and i appreciate weve gotten budget increases, but look look at what our responsibilities are, how extensive they are and how much they been added to. Look at the volume in the equity market and for example, ten years ago, we had we had 17 examiner for every trillion dollars of assets by registered investment advisors. We have eight now. I talk moakley mostly in terms because its so stark of our investment in our responsibility to advise and i appreciate the support i have gotten when we get funding to really increase the number of examiners in that space. Ive done that. Ive actually increase the staffing in that area by 20 between transferring, but we are still in a position, were stored smarter and use Risk Analytics and examine 11 of those advisors every year, 35 of the assets under management on the broker side its about 50 . Its a a big big Investor Protection issue. Of course it affects morale, because you have some of the most brightest, dedicated staff dedicated staff in the world at the sec and they their mission is to protect investors. When you cant examine those advisors who are dealing with those investors, you have a duty to those investors to act in their best interest. To do the job that you are assigned to do by congress and what to do to fulfill our mission. Thank you. My time has expired and i want to thank you again for your service to your country. Thank you. Thank you. Thank you your time has expired. The gentleman from missouri. Thank you, mr. Chairman. we should facilitate broader competition and encourage those acting on behalf of u. S. Investors to do the same. Im senator scott and others have raised this issue with you and the secs own work is shown this lack of competition has the potential to harm investors. Its your job to protect investors and i hope youll give this issue all due consideration. Im going to be in touch with your successor and with sec staff on this issue as we go down the line. I realize its a general statement but it would like to comment i would offer that opportunity. Just briefly. Thats a very we continue to focus on. Weve done a number of reforms in the Credit Rating agency space is important that in terms of government transparency, conference of interest. We see some improvement in competition but its still a major issue. Its a very difficult one. To come upon an optimal solution for it i think in both a costeffectively but also in a way that actually deals with the issue youre trying to correct for. Its something our economists continue to study as well as our policy staff division. I know if you watch the movie the big short there was a lot, it was graphical now the problems were created, what was going on here call this a this is a point we need to shore up with regards to allowing investors to have confidence in our bonds and ratings of those. Appreciate your consideration. The chairman mentioned something about pending rules. I guess my question would be do you have any request from the administration or do you guys in the acc any ideas, any midnight rolls youre getting ready to propose we need to be watchful for or going to come in the backdoor that we need to be thinking about . Essentially our agenda for 2016 in february of 2016, the conference called sec speaks this where the chairman talks with the agenda. We would advanced a number of those players already. I said we would get as many of them as we could. Weve talked, basically set the agenda for the rest of the year and into january. I dont see any last minute russias. I do intend to carry out each and i outlined in february 2016 as much as i can. In the bloomberg report this morning there is a report that headlines use consumers are increasingly defaulting on loans made online. The story talks but delinquency and default reaching key levers called triggers. I guess my first question is are you aware of this with regard to the online lending loans that secure these bonds and having some problems . I am certainly aware of reports of those issues. Our space is the invested in this space, not the lenders but they become relevant in terms of what are those assets underlying the investment. I would say they become very relevant. I didnt mean to minimize it at all. The article talks about reaching these levels, cash flow some assets to paying off bonds instead of making new loans which often means it has to find new more expensive funding to scale back its business. Able for some of these bond folks to change their Business Model and to me thats very concerning. Are you considering any actions to prop us up or investigate further, or are you just watching from we continually, you know, studying the space to the extent it really impacts what we are doing and the offerings made, to raise the money to provide the funds to land. Disclosures what kind of notices or disclosures are required when these trigger . Have to send notices out to investors or yes, they do have to make, sometimes public offerings, sometimes private offerings but just make material disclosure to investors. I think i mentioned yesterday, very, very important that information talk about the underlying loans in a very accurate way. Im sure youre monitoring this if this were the case. Do you see this as a blip on the screen or is this a bubble getting ready to burst or do you see this as a trend . Without putting sort of an umbrella characterization on it, i think weve seen an increase in those concerns in the last year. That may be because more information is a veiled on it now but its something we were watching that very closely. Thank you. Thank you, mr. Chair. The gentlelady from new york discovered today for five minutes. Thank you, mr. Chairman. Chair white, i want to congratulate you for finalizing the data reporting rule. The rule will give the sec an important window into the Fund Industry while at the same time reserving the ability of the industry to manage portfolios in a manner that serves clients without constraints. Given the vast amount of new information that the commission will be receiving, what special resources is the sec committing to protect the data from cyber criminals who will want these proprietary investing information . Its been in her budget request for certainly the last, figures inside there because i have reorganized our Data Security obligations both respect to the new information we are going to be receiving their, existing information we have. Its also relevant in what were doing this afternoon with respect to the consolidated audit trail. We are devoting significant resources there. Our budget request for 2017, and when its finalized for 2018 you will see resource requests specifically for the purpose. Thank you. Yesterday the commissioner said the sec should take the lead on think tank regulation. Last year i sent you a letter expressing my concern about regulatory uncertainty in this area, and to better understand the needs of your agency now and in the future. I know youre stepping down soon. Do you have any final thoughts on this rapidly growing industry and the role you envisioned the sec playing in the next few years . I agree with the commission the sec in its space, the thing that touches, a lot of them, should surely take the lead and be proactive. I think we have been. If i remember your letter addressed a lease in part market lending platforms. We are uniquely among the regulars that are involved in those sets of issues focus on the investors as i just mentioned if, in fact, thats have the funds are raised to land where we dont act israel in terms of the lending expand its or the actual to me but i see the sec playing a major, major role Going Forward in all of the spaces that we have any jurisdiction over. Im glad to hear that. Thank you. You and your fellow regulators have spent years crafting a volcker rule to balance the needs of Market Makers, and on the right with a mandate to eliminate proprietary trading with federally insured funds. What happens if the volcker rule is eliminated and banking entities that have access to the safety net of once again allowed to make risky proprietary trades . Well, i think, i guess i would enter that more broadly that i think the reforms that are contained in the doddfrank act, enormous importance to strengthening our Financial System and for the protection of investors. A volcker rule is a significant component of thats i think were much stronger and more resilient than we were before the various reforms in the doddfrank act. I served would not want to see those recent or repealed. Thank you. I was happy to hear about the secs recently doctored rule regarding interstate security offerings. This has the potential to cause red tape and help many Small Businesses raise capital where they live and work. Outside of interstate offerings, are there any other areas the sec is our should be looking at two streamline Small Business Capital Formation . As you know we fairly recently, under the jobs act, reformed really expanded regulation a plus the crowdfunding regulation. We have a proposal that is outstanding of what the definition should be a baseball reporting company so that if it was an adoption of that you wouldve more Smaller Companies that were able to scale disclosure. Our disclosure effectiveness review tease out very spacious about scale disclosure for smaller businesses. We were very pleased to recently adopt the interstate amendments to our rules to make it easy for Small Businesses to do intrastate offerings include in the crowdfunding space, but its something we have our annual forum coming up this week actually, we will be talking about more avenues to try to associate raising capital for Small Businesses. Thank you and thank you for your service. Thank you, mr. Chairman. I appreciate that and i, too, want to echo the sentiments of my colleagues and thank you for your service and your efforts and your. I think hell try to come in and be as honest and forthright as he sometimes possibly can within the constants of what we are dealing with. I am concerned about something that has been brought up by the much cited commissioner concerning activism really overriding markets on this and a some cases commonsense about how we regulate and make sure that Good Business decision and that your discussions are behind the. With tons of examples that pay ratio and minerals, political spending disclosures he talked about that. How do you guard against that in these closing days issued against kind of my question . I mean, theres several things you group in there. A couple of them are congressional mandates. Ive talked about that before when a testified. I do regard much of as the judgment in part to carry out congressional mandates. There passed by congress but we carried out. Its obligation to quit targeted most costeffectively begin is consistent with our mission as we can but they really come from congress. Spin how about those things that dont come from congress . The various things we dont also because of the concerns you mentioned, i think as far as im concerned since ive been chair, we know what our mission is. I make a judgment as myself as to whats the right thing to do. We take input from all constituencies about the but ultimately make a decision based on our mission, protecting investors, the markets of Capital Formation specific i guess, there are two Commission Seats the partly open. Luetkemeyer, my colleague had started kind of going down this road i guess i would like to get as the definitive answer, i would like to get a definitive answer, stop, period, but that but theres reports that regulators are trying to quote rush to finalize the incentive Compensation Rule prior to present a like trump taking office. Would you commit to us here that you will stay in the Commission Vote on that rule until after the inauguration . This is a multispecies understand that its a multiagency, is the think the proposals issued by the agencies in may of this past year. The staffs are clearly working through the comments on the. Its not sort of a new issue. I cant commit as i said or what kinthe kind of that would be otr than to say i hear what youre saying. Regardless of the timing, and they are may not have it done to the reports are theyre rushing to try to get it done. What am asking for guess is a commitment from you that you within not vote on his or not allow a vote on this sunday fcc to implement that before theres a new president. I said two things. Let me very straight, as close i can on this. I dont think any will making benefit from it being rushed. Its hard to do it right. It started optimally and ive really tried in joint rule makings to make sure Economic Analysis comes into play after expertise comes into play and i will commit to do that. I think i cant judge in a vacuum the next two and half months. But thats come as i said or today thats the commitment i can go with. So if youre satisfied, we have another minute taking we can keep going back and forth me ask and you are avoiding it. So if, are you saying if youre satisfied that weve gone through improperly vetted this then you have no problem moving ahead with that, or again i dont know whats going to be. I want to be satisfied. I have to put it on the agenda to vote and, obviously, what is always at issue there is the content of the rule obviously in terms of to be sadness and with it, i think about to go to the commission. Is both content and context, correct . Let me set this way. I understand completely the sensitivity that you are raising entrance of the time period we are in. I will say this is something that has clearly been proceeding a paste all your love its not something all of a sudden proceeding apace. I mouthful the sensitive to what you are raising. Okay. So are you willing to commit to not vote on this speech i can get a commitment and a vacuum. That i cant do i think ive said all again. Upheld, well, i think ive said all i can say speak i would like to emphasize your view of rushing into these things is a bad path to do. I think rushing into anything is but certainly i take your point about. Without i give it a shot. Thanks, mr. Chairman. I yield back. I yield back. So well rushed over to the other side and. Mr. Scott is a recognized. Thank you very much, mr. Chairman. Chairman leahy joe whiteley, i want you to know that i think you have been one of the very best chairman of the security and Exchange Commission in the whole history of the sec. We all want to thank you for your service. You are smart, so tough come and many people dont know as a former prosecutor, you showed that toughness when you took on john gotti, the big mafia boss, brought him down. And you showed that toughness when he dealt with the world terrorists that attacked and bombed our World Trade Center in new york. And that same toughness you brought to the sec as you stood up and supported doddfrank as our main instrument to prevent any future taxpayer bailout of the financial sector. So i say congratulations on a job well done. Now, let me just ask you something. About six weeks ago this committee had a hearing about wells fargo. And the scandal. Its my understanding that almost three years ago the sec did an investigation regarding the aggressive crossselling of wells fargo. Is not true . I can, i cant comment on any investigation we did or what we might be doing, but i think what youre referring to, at least the reports that icing, and again i just commented on the reports that its in, the media reports ive seen, river Tour Division of Corporation Finance and their comment letters. Thats not our enforcement staff. Just want, for an out of change, a few years ago perhaps as many as three years ago somebody informs you that, about this crossselling. Now what the acc looks at, the actual crossselling practices is not in the secs jurisdiction. Its the banking regulation. Disclosures are within our jurisdiction under think thats where that is emanating from. Now we have a new report that the sec is again investigating wells fargos crossselling practices. Is that your . Again, now, i cant comment on whether and what we are investigating. I didnt you know what our jurisdiction is. What im trying to get is you are doing your job, and i certainly respect your comments on that. But i think its very important to show that the sec has been on the case and has been dealing with this in the best interest of the American People. So could you just may be callous, tell the Financial Services committee may be tell us of investigation is proceeding, what can we expect, any conclusion . Is there any input you can give us. Im afraid, again, i really cannot because we dont comment on whether were investigating or what we might be looking at, if we are. I just get to that in any case. Okay. Let me go to this point. Im the Ranking Member on the Commodities Exchange and derivatives swaps subcommittee, and i have been constantly assessing the numerous rules surrounding derivatives, in terms of equivalency on the world stage. My committee handles that jurisdiction and the cftc. And, of course, you are involved in that as well. Now, a major concern operates on the equivalency issue, particularly with the european union. I want to know what the status of that is going from your knowledge, and also want to get an idea of how you feel this exit of the largest market within the european union, great britains exit from the european union, impacts this issue of equivalency. First, i think as you know the derivatives markets are uniquely global opposite thats what all the regulators internationally have been dealing with these issues. Sbcs own crossborder proposal on the security base swaps base is under the rubric of substituted compliance, wind can and cannot accept other jurisdictions rules to satisfy our rules. Our staffs involved in those discussions. The cftc has been as you know more involved earlier more extensively in some of those discussions, and in terms of the uk, that is still sorting itself out i think. The concern is that it needs time is also to be put back on track so those rules can actually Work Together and be affected. But i guess were in the stage for everybody is very focuse fon those priorities but the discussion still go on. Thank you very much and best wishes to you. Mr. Duffy. Thank you, mr. Chairman it. Chair white, welcome again for your last appearance with us as the chair. You said last, right . I want to join my colleagues. I have not been the biggest fan of the administration somehow theyve complied with congress a request for information, witnesses have come in a testified before this committee i think has been a construction area at the least. But that is not in the way you run the sec, and youve been frank and honest and cooperative. I figured come in and try to answer the question weve asked to the best of your ability and i think your standout in how you run the acc and how youve engaged with congress to i want to thank you for the. Under the spot to at risk making the next two months challenging. But i think its a job well done. To be clear we dont agree on everything, and thats understandable but i think again, youve done thanthank you very much. I do want to drill in, you can pick up our concern with whats going to happen in the next two months, and we always get concerned about the lameduck session of a presidency, and a rush of blood a whole bunch of new rules. I think that the practice would be to wait and let the new administration coming. Weve kind of done a little dance today as you got questions, but what rules do want to see finalized . Im talking to you personally. What do you want to see finalized in the next two months . I mentioned earlier, we are not rushing in my do anything. As far as thats concerned. Did set up the agenda earlier in the year and our agenda for the rest of this year and into early january has been set for sometime. I think other than this afternoon which has been sunshine and publicly noticed when well be considering approving the final consolidated audit trail plan, i dont think we are publicly noticed the others, we talked about internally in terms of scheduling. So that i have mentioned in terms of year into goals include the capital margin segregation rules under title vii, something by the way that all of my commissioners have firmly supported prioritizing. My Current Commissioners and my prior commissioners and myself. So thats one that ive mentioned publicly. I mentioned i think in my oral testimony that we do have an outstanding derivatives proposal and asset measured space at a and publicly before that that is a priority. We are also looking very carefully at what the chairman mentioned in terms of providing mutual fund reports electronically. Thats something that when we adopted the reporting rule, but for the isomer very focus on trying to have the staff it was a final liquidation as to what to do by year end that i think those are the ones i mentioned publicly. Okay. We have blown through most of the timelines set out in doddfrank. We are six years on. You are now you end up basically a statement you made at the start of the year that we dont six years and in the last six weeks i think would not be the best practice. I would like to see hold off as much as possible unless its an emergency for the next administration. But that is just my opinion. Ill have a minute and half left. Quickly i want to thank you for your work on the pilot program. We work on that and the house. You saw what happened here with an outstanding vote in this committee and on the floor and took it upon yourself to implement this pilot program. We are grateful for the. Want to get our Small Companies greater access to capital. It as you heard some participants worried that the data will expose their trading strategies. You who dat and ive heard that. Can you assure the committee that she will ensure that the data that is provided will be protected . Kenya to those who participate assure . Ive heard those concerns raised. The staff is all over those questions and have been raised. I think i said before in answer to another question the secret of the data that should be secured could be a higher priority in every space including the pilot. So the staff is refocused on it. Very quickly want to move over to the shareholder proposal. Shareholders only need to own to thousands of dollars for a year. Indicia shareholder proposal need only received 3 of of the vote cast the first time and six, 10 in subsequent years respectively to qualify for submission for the next year. This hasnt been updated for 50 years. Do you have any thoughts and whether we should be updating these proxy submission both . Again, i think i would knows the rulemaking agenda in the last four, five, six years. Thats obviously been discussed for several of those years. I think its very important for the staff to refresh what the recommendations are in that space. I will say that are very divergent views on that. For example, the 2000 threshold was originally put in deliberately small so you could allow the small shareholder to have that kind of franchise participation. But as you say that was at some time ago im also aware of the issue on how many times and what vote do you get on the proposal. I think youll see the sec returning to that, not that theyve left the study but i dont think anything will come out during my tenure. My time is expired i want to thank you again for your great work and cooperation with congress. I yield back. Mr. Green is recognized for five minutes. Thank you, mr. Chairman. Thank you, cheerleading, for your outstanding service. It has been an honor to work with you chair lady and my hope and my prayers are that you will be equally as successful in the next life as you have been in this one. Thank you. Madam chair, if a bank, without being specific, if a bank creates a circumstance such not it gives the appearance of being in a growth mode by engaging in some onerous tactics by giving the appearance that it has more customers than it actually has, you are in the business of protecting investors. You are the investor protector. The bank is giving this false sense of the growth. Is this the kind of thing that the sec concerns itself with . And again, talking in the abstract speed is very general terms. Theres no question that its a much in the disclosures to public investors, ill phrase it that way. The accuracy of them is very much in the secs space. We bring cases in our Enforcement Division on misleading material disclosures all the time. I mean, a lot of those cases. And so what you look at, and you mentioned kind of was their growth or not growth. You look at both quantitative materiality and you can look at qualitative materiality. So instead of a profit, thats a loss. You may have qualitative materiality issues even if its not a big amount. So you to apply those lenses of the sec to disclosures like that. And when these circumstances manifested themselves, does it take a complaint from many protectors, pardon me, investors, or do you do this on your own motion, on your own volition speakers we very, very often do it on our own volition. We are constantly surveilling the marketplace and the marketplace of public information. We have our own Data Analytics are often we do ourselves. Often we will get, we have a very vibrant Whistleblower Program so we get it from all sources, we dont have to wait on a complaint to act. We are very proactive. And when you do this on your own volition, is it published that you are engaging in this process, or is this something that happens and then we are a record the results as opposed to an indication that the process has been engage . If were talking and i think we are about an investigation that we be doing in our Enforcement Division, for example, and i think that goes back to my discussion with congressman scott. We do not disclose whether we are investigating something are what we are finding. And so you wouldnt see that until, if it did, resulted in an action. Sometimes we to open an investigation, the companies if give their Public Companies, we will disclose the fact that investigation is ongoing. Again, thats their call based on their read of whats required, which proved to be. But you will not hear from us if its an Ongoing Investigation until theres a result typically. Well, im going to come back to this, id like to go to another point and that kind enough to do it. Do you find that there is a conflict between what your agency has as its responsibilities with the cfpb and its responsibilities . Ive not found that during my time as chair. Obviously, we work cooperatively with all other civil and criminal Law Enforcement agencies. Couldve the overlap, conflict is a word, try to work in any conflict you have it in these spaces theres an awful lot of space to cover. Different agencies and you would not recommend the elimination of the cfpb i take at . Code its been a very active Enforcement Agency and theres a need for a lot of active enforcement agencies. Thank you. My final comment will be this. Wells fargo engaged in conduct unbecoming a bank. They took advantage of people at the entrylevel in their business, such that benefited the people at the top of the business. As bad as that is, it also caused people who are making what they thought were honest investments based upon quality information, they allowed the people to make those investments to their detriment. My hope is, without getting into what you will do, is that wells fargo will be treated fairly and justly, and also those investors will be fairly and justly. Thank you very much. Thank you. Mr. Fincher is recognized for five minutes. Thank you, mr. Chairman. Thank you, chair white, for being with us. I must say why we coded would have disagreements you have been very respectful, very straightforward. You have been professional in every manner. So i commend you for your work. Thank you very much. And i would like to say an anecdotal reference is made to while you are leaving. Did you make the decision to leave prior to the election . I did. I think in the last 50 years or so the chairman of the fcc has left when theres an election. Irrespective of which party is coming into power. I served for almost four years, so truly normal cours course de. Effect on my bitchen did somewhat later but i was coming into todays i thought clarity was a good thing for coming here today. There was some inference made the gillette because of some individual who is elected president. Chair white him as you may know, i led an effort earlier this year with 50 other members of congress relative to concerns of of the sale of the Chicago Stock Exchange to a Chinese Government affiliated firm. As well, just two weeks ago my staff met with fec commissioner piwowar and hed met some concerns regarding the corruption inside chinese firms as well as their complacency and lack of transparency within them. Given that China Remains the number one state sponsor of corporate espionage and intellectual property, theft and market manipulation, we urge the city is to conduct a rigorous review of this transaction and block it if it felt it was necessary. Would you kindly comment on this in your opinion relative to your concerns with whether a Chinese Government affiliated firm should by the Exchange Given that it does put a more minor role in the markets, albeit it would be a foothold into our markets . I think the issues youre referencing are not our beta but we dont the process that follows that it has begun yes, i would want to comment on that or prejudge that. I understand. Chair white, you present noted that in quote enhancing Market Structure, we must focus closely on the particular needs of Smaller Companies and their investors. What do you believe of the most significant issues that smaller public compass face in todays equity markets quick for example, reduce liquidity. You have commented on somebody like you to elaborate on that. One is the availability or not a second or liquidity. I think the pilot is designed to see whether widening the spreads may hope that. I also in the public spaces, i think we have to be very focused on our any of our regulations such about, again, they need to be there, they need to protect the markets and investors, but are they unnecessarily inhibiting smaller compass and when public . Thats something were focused on all the time. Sure, thank you. I would like to ask you, companies that obtain capital through borrowing, do you agree tightening of credit has made Equity Financing all the more important as a means of providing Small Companies that capital they need to grow and to expand, create jobs at . That seems to be what the data shows. Thank you. I yield back. Gentleman yields. Ready . Ready. Thank you so much, mr. Chairman. Thank you, chair white, for being here. We are more than six years out from the passage of the doddfrank act, and far too many rule makings have yet to be finalized, despite the ample time that has been afforded to our regulatory agencies. One such rulemaking relates to section 956 doddfrank. This section imposes upon large Financial Institutions the responsibility to institute clawback policies, or policies that would allow the Financial Institution to snatch incentivebased compensation away from executives that engage in wrongdoing. Democrats on the committee wrote to you last month asking you both to work quickly to finalize the rule and to strengthen it. I am now hearing that this rulemaking may not be finalized anytime soon. Indeed, as it relates to the sec there are reports indicating that the sole republican commissioner of the sec has refused to grant a quorum for a Commission Vote when it comes to anyone makings he objects to. Thats right, the commission reportedly will not even show up and vote no comments did choosing not to attend the sec meeting at all. Is it correct that the republican commissioner has threatened to deny a quorum and thereby prevent a Commission Vote on any particular rules, including the 956 clawback proposal . Every rule that i put on the agenda, weve had a quorum for, so you know, the republican and democratic, i am only three, but weve all showed up for those. In terms of 956, the reproposal there was that i think many of this year which is joint but it is thus, sec as well, we moved that by there was no attempt to block it or not to have a quorum spirit and so where is it now speak with i mentioned before and i think its been public are discussed by other regulators, all of the regulators, either five or six of us, its a joint regulation, are working through the comments and working on the reproposal. Thank you for that. Last month wouters reported the sec questioned wells fargos overaggressive by selling practices in late 2014 quoting correspondents from the commissions division of Corporate Finance. As you know the banks crossselling practices as the related to deposit and credit accounts as well as Online Banking were eventually found to be unfair, deceptive and abusive by the occ, cfpb, and the city of los angeles, to the tune of a combined 185 million fine. Can you tell the committee what prompted the sec inquiry into wells fargos crossselling practices two years ago . Again, in terms of the practices of themselves, thats obviously not in our jurisdiction at the sec. I think what youre referring to, i mention earlier report of the division of Corporation Finance as part of the annual review of Financial Filings of lots and lots of companies, Public Companies, raising certain questions about the disclosures. But thats not, thats not the sort of the content of the crossselling practices. Thats not in our jurisdiction. I think what that is is raising some questions about i cant go get whatever the Public Record about the comments i think thats what that refers to. So that was just routine inquiry on the part of the division of Corporate Finance . Again, i cant see anything more specific but it does appear to be part of the annual review process of disclosures with questions being raised, which is a routine part of what wed do, every important part of what we do. What was the outcome of the divisions in wired . Again, i think comments as i understand it, comments may been issued, questions, questions and comments. I cant tell you what the outcome was in that sense of the word. And earlier this month wells fargo announced via a vegas with filing a that the bank again was being scrutinized by the commission related to disclosures surrounding it so its sale practices but how does it differ from the 2014 in wired . Again, they made the disclosures they have. I cant comment on whether were investigating are what we are investigating. I did point out before that obviously Public Company disclosures, if they are something, we not only review the better and reduce, but if we have some questions about them, they come under investigation by cant really say anything more than that than the company itself has said so far. And really cant comment further. Thank you for your sponsors. My time is up. Thank you. The gentleman from california is recognized. Thank you, mr. Chairman. I thank you, chair white. I think you for your service. Thank you also for always having your staff and your self available. The focus of the sec originally was editing should continue to be the strength and resilience of our markets but and i think thats critical to Economic Growth into the jobs that are created thereby. But when it comes to Capital Markets lending, and ive got a question about, about the last few years there may be some reflection you would make because we got a lot of changes, Major Writers were changes such as risk retention, accounting changes, the prudential changes and new capital and liquidity rule and new disclosure regimes and automated trading platforms. At all of this is occurring at the same time. And european regulars have raised concerns about how these new regulations fit together. This is the crocs are the question here, because specifically on his way out the door, the new Financial Services chief Jonathan Hill concluded that were asked after 2008, the greatest threat to Financial Stability had been the financial crisis. Over time, the greater threat has become the lack of growth itself. In other words, too little risk itself, in his words, became a stability risk. And then he went on to say that the crisis may have made the scale and the pace of records or change inevitable, but the various layers of regulation could have been better aligns. That was his reflection, and i was just going to ask you yours in terms of whether you agree with that sentiment. If we step back and we reflect on punitive impact of all these regulations and carefully understand what this means for growth and lending before we move forward with major changes. What would your observations be on that . I think in terms of impact of, let me back up with russia. Capital markets are and innovation are built on taking couldnt risk with factors fully disclose. So thats obviously a very important driver of growth, the economy and Everything Else thats positive. Obviously, one has to worry about, and we do, Systemic Risk that can destabilize the system and costume and disarmed to investors or i think in terms of the impact that regulations, mention earlier that our economists at the sec are studying and will be reporting to Congress Actually next year on the impact of cumulative impact as well as Corporate Bond liquidity. Its something we study all the time. When we do our rules, by the way, out economists to Study Economic impact and did you look not just the particular four corners of one rule and what you are changing, but look, you have these other nine rules so we add this one, whats going to be the cumulative effect upon also to economic impacts. That may be a benefit for investors, that may not be but what is the cost of it. One of the cost may be across the growth so you want to be concerned about that. The Financial Services chief Jonathan Hill from the eu, just in retrospect, looking at this, but at a time whereas you know theres still more coming down the pipeline. We have discussions continue on basel for my. We have proposal on the fundamental review of the trading block. So i assume you share sort of the over arching goal what you think he speaks to there. That we need a balance the goals of market stability and safety and soundness with the needs of market liquidity, efficiency and endusers and overall Economic Growth. I think that, at least as i view it thats part of the costbenefit analysis that would be. I think you to think more broadly as i said before when you do that, and thats very much a part of it. Well, i appreciate your observations and begin your service. Thank you very much. Thank you very much. Thank you. Thank you, mr. Chairman. Thank you, madam chair. Thank you for all the hard work that you have done and i took a want to thank you and to ask a few questions later with regard to making sure that our boards become more diverse. And i want to get into a few questions about the first a want to ask you this question. I think i heard my colleague mr. Clay talk about and a few other members do with the sole wells fargo issue, et cetera. What concerned about it is, especially coming out of these elections, and by both democrats and republicans from urban america, rural america, they are losing faith in the honesty at times of some of our Financial Institutions. I know that our Financial Institutions are absolutely essential to our well being and our way of life. But the common everyday american is, the question mr. Royce asked if they dont get into that, that i think you have to and with the sec does. If you ask me on a consistent basis, for example, is how do we find out that someone is doing something wrong before and as the impact that it has had on, well, the employees are the consumers of wells fargo. So i would like to ask you as you are outgoing what kind of advice would you give members of congress or your successor on what we can do is even the wells fargo scenario, it was, i hear this often, it was of the sec that discovered it additionally. It was the l. A. Times. So then they put the question on where we go with reference to our regulatory agencies and confidence in them that theyre going to, in fact, be there to protect the American People and to make sure that banks on district what would you say speak with you are raising a lot of very dashed again i cant comment specifically on wells fargo other than to say a crossselling practices of themselves are not, and other regulations jurisdiction. Im not saying the broader issue your raising, which is really in part a Corporate Culture set of issues. Its in part how do we more strongly deter also this conduct in our Companies Come in our Financial Institutions. Thats a function of Law Enforcement. Ive spoken before. I will speak again in a few days about things i think we need to be considering. One of them is enhanced the authorities for the sec, more fundamentally i think a question we have to be focusing on is accountability at the Senior Executive level for things that may occur on their watch, even if not, even if theyre not involved in the misconduct, and how do sort of infuse this do the right thing culture throughout a big company. We have codes of conduct. We mandated those for years. Works better in some companies and others. Tone from the top in terms of whats said and whats been done, maybe go to. I read something recently that i thought rested with me. When you want your employees to behave in a certain way, youve got to focus on what you are inspecting, not just what youre saying. And what your rewarding and what youre punishing. So if you end up with incentives misaligned, dont be surprised when you get misconduct that is a critic in terms of audio detection, id agencies, we are working on that all the time. Want of the things im proud the things im proud of at the sec frankly is the use of Data Analytics and all the Data Available to make us smarter and smarter earlier about what may be problematic conduct. I think theres a whole set of issues that we have to kind of think outcome and congress i think, too, have to think outside the box to really raised the bar of culture and compliance. On that, one of the things, i get concerned that is why appreciate the Diversity Initiative that youve taken with the sec because i think when you have more diverse boards come get more diverse thinking, and more diverse watching at the level. So thats the best way. They will not allow these things going on what it of its of interest. But in this scenario, one scenario do you think that theres a conflict that companies can do we have an individual who is both the ceo and the chair of the board . Because then it seems to me sometimes as though that cheer and the board can check the ceo. Theres the balancing act. When you have both, it seems to me that could lend itself to something unseen thing speak clearly raise almost issues. The sec doesnt sort take a substantive policy position on the. Thats a matter for the shareholders and stat the state. I guess im speaking for myself though, a bit of a one size may not fit all situation. Clearly there are speed is something that should be considered you look at it, when you see the can raise a flag and lets asked him questions about to him questions about a tizzy of if a red flag presents itself that needs to be done further. The gentlemans time has expired. Chair white, thank you so much. I ago much of what my colleagues have said and appreciators with very much and wish you all the best. Earlier your attitude questions from congressman garrett by the work of ecuador Construction Advisory Committee as followup. Candy to the mechanism is a place to ensure the recommendations of the Advisory Committee are included in policymaking in the commission for how in the commission for how can we be certain the report on the left on the shelf to collect dust in so many are . As youre probably aware the doddfrank act requires the commission to respond to recommendations made by the investor Advisory Committee. Yes. First, behind the formation of the equity Market Structure committee, and i think we forget nearly 2015 to murder bring in a lot of expertise points of view to have to what also at least reinvigorate i think which is a conference a few of the equity Market Structure. And so did been enormously helpful i think in keeping the focus, keeping, not their feet need to be kept to the far but we are all sort of end is in a very laser focused way, sort of get to concrete changes, if they need to be made. So in terms of their recommendations. At the end of the day, its the sec has to decide, not the committee. But essentially theyre doing with the issues were dealing with, the most serious ones that are out of there. And everybody at the commission really across the boards, i think theres a lot of unanimity about the wants to get to the bottom of what enhancements should be made to wouldve a strong and resilient markets in the world. Theres a lot of momentum to have these not sit on the show. Thats all purpose of that structure. To our some concerns here. Understand. Moving on to another question. Earlier we such a letter regarding the reimbursement of section 31 fees by the Commission Better than overpaid i am sro. And responsibility engendered 2011 sec issued a reimbursement when it was operating as a pacific exchange. Wonder if you want another exchange such as chicago or nasdaq is not entitled to the same treatment under the law courts the commission is maintained the statute requires clarification but its clear the commission has established a precedent. The earlier incident occurred before i was you. Status is we are still waiting on word really from omb and counsel as to what, if we can do this without a legislative fix in terms of what was done earlier. I really cant talk, i cant speak you, i cant speak to what the analysis was but the current analysis is we are not certain we have the authority to return those fees. We would like to have the authority to return those these. Certainly seems like president isnt there. Here there is bipartisan support of understood. Just a fairness issue it is significant. In the scheme of things speeded absolutely, absolutely. Would appreciate your help in getting that done. Moving on, march 25, the sec proposed amendments to rule 15 5 be that would require additional firms to register. During a speech on september 14 you stated the rulemaking would be finalized in the near future. I should commissions goal for proper oversight of the secrets market there are concerns that will making does not adequately contemplate the impact of the options markets, option market and its existing structure. What it could provide an update on the status of the rulemaking. Were short on time for the string but this is a dope we can continue to discuss. The status of that is the staff is among the comments very carefully studying the impacts in all areas of that. It is moving along in that analysis, but theres not going to be i dont think an imminent adoption. Okay. Earlier in this hearing you mentioned to congressman neubauer when he was having some questions and discussion with you that you formed a working group to make recommendations to the commission in regards to fintech issues. Can you please to win this working group will make recommendations to the commission . And similar questions youve attached and answering . I can give you a precise time. We are still doing, weve done extensive outreach. Our Fintech Forum was an important part of that but we are still doing really still extensive outreach encouraging comfortable participants yesterday to concede to engage with us. So timewise, its not, i wouldnt call it a minute. What i asked them to do is really across the fintech spaces that touch on this come sec function to make recommendations as to concrete recommendations, as to what the commission needs to do. Whether its rulemaking, and i start there but its kind of the primary focus because if thats the answer thats the edge. Do we need to clarify to entrepreneurs what they need to do . Having in mind the lens of this innovation could really help the markets and investors, so we want to be encouraging of that, balancing the Investment Protection to we have concept releases can interpretation. , staff guidance being issued, recommendations or rulemaking, conceivably just messaging workload to our to produce with the existing requirements are. We could end up saying we think our existing system of regulation is adequate, at least in part to these issues. So very exciting space, lots of potential and i think we are doing it the right way. Again thanks for your service. I would ago and i do think any future policy making would been a from Industry Input especially in the finra area. With that i yield back. The gentleman is california is now recognized. One request, we put up a 19. 8 trillion graphic. Weve had the vote plus 1 trillion for president elect trumps infrastructure program. Madam chair, my request, of you, i recognize her hard work. I can recognize you cross it off the days, extended and wellearned vacation. The tradition is for the sec chair as understand it to resign when the new president takes over. But that tradition was developed at a time when that a more efficient senate and be more Efficient Congress in general that could quickly confirm your successor. And that tradition was developed before the chair sat on fsoc come which did not have a empty seat. So you now have two very important seats. One of fsoc and one of the commission. Test me if you pass this rule you will save trees every year. On behalf of the trees, can you move the rule . I indicated earlier that is one of the areas where i indicated we would hope to get a recommendation by year end on the. Please inform me electronically of what you are able to do. I shall. Okay, as to Small Business investment companies, the House Appropriations committee they have asked you to reopen for comment your proposed rule in that area. Do you see reopening that comment. What area . Thats in the area of Small Business development companies. In terms of that, the staff is working on what should be done in that space to modernize, but i dont think, i dont know know if we are reopening a formal comment time. On that. I have to get back to on that. I have written about that issue. As i seek money for things that are important to my district i look forward to showing the Appropriations Committee that i brought up. Final issue, accounting and auditing consists of defining the terms and auditing the information. We do a great job of looking at numbers like revenue expense, assets, earningspershare. We have a whole system for those numbers. There are bunch of other important numbers, it might be the backlog of a manufacturing or aircraft manufacturing company, it might be samestore sales, and i wonder, in your closing days or perhaps on your to do list for your successor if we could have a project to do the same thing that we do for the numbers in the Financial Statements for the numbers in the supplement, what i hope would be a supplemental audited disclosure relevant to certain industries, because when i look at macys or nordstrom, my most important number might be earningspershare. Great job, clear definition. They cant change the definition yeartoyear within the company is comparable between the two companies. Then i look at samestore sales and its as looseygoosey as it gets. One hundred years ago we developed a financial statement, can we move forward to have industryspecific, perhaps voluntary or required supplemental, numerical disclosures with generally accepted, which means sec defining and have the Public Accounting companies that have spent a hundred years just auditing two or three pieces of paper, audited a few of these numbers. Or are we in this bizarre circumstance were some of the numbers are audited and defined and some are . To some degree that is correct. I usually done a lot of work on measures that are currently audited and we get a lot of guidance on that. Samestore sales would be audible. In terms of adding it to something that would be required in terms of the costbenefit of that, but i think there clearly is not consistency in that space. Its a metric that is not paid attention to so. Well raised. Thank you mr. Chairman, chair white, thank you for appearing before us and i also want to lend my voice to thank you for your service as you prepare for whatever comes next. We wish you the very best. With the Election Results there has been a lot of discussion and dratted sizing about the department of labor fiduciary role. I wanted to ask a question regarding that as we look forward to next year. Earlier this month they announced it would no longer allow customers with Commission Based ira to purchase mutual funds. Already choices are being taken away from customers. Are you at all concerned by the impact on the Retirement Services market that the sec oversees and regulates. Well, i think we are all concerned about anything that results in depriving consumers of reliable advice. Think weve expressed that before. Markets do adjust to rules. We are obviously talking to, where we overlap, various effects of the department of labor rulemaking and our job is to coordinate and provide relief if we have the authority to make sense to minimize impacts, but that is one of the impacts that the department of labor certainly asked a lot of questions about and weve talked about before. Merrill lynch certainly isnt the only company to announce major changes to their business operations, including selling off entire businesses. Are these impacts being considered by the staff as they develop a proposal to establish a uniform fiduciary standard . The answer is certainly the data will be considered. The status of the sec is that the staff has provided a detailed outline of how it will approach what is a very difficult thing to do. I dont expect, as i said before, i am one vote on this but it is definitely something that continues to be studied, all impacts impacts and impacts like that are being considered. To that point, has the sec undertaken specific analysis on the impact with advisors registered with the sec. The answer is, that is part of the analysis that is done continually. Its not a specific project toward that. Before we would move toward a proposal or a rule it would be definitively studied but its also being studied as it happens earlier this year, david graham, the based studied the analysis of the potential impact was ongoing and could draft recommended rulemaking and his point was that whether a rule is proposed and adopted depends on further analysis and action by the full commission. Can you provide the committee any update on the staff as i push towards this analysis on the proposals impact. I think analysis is ongoing all the time. I guess im not sure what the contest would be. Often when we do proposals, we do significant Economic Analysis and even more analysis on whether or not to move toward adoption. I dont know if thats what hes referencing or not but its a continuous process and you complete that process before you do a final rule. I know your ten years coming to a close,. This is something again ive tried to make clear. Its a really hard complex rulemaking. Im 11 vote and i think its important to do. It is something i dont expect there to be action while i am still the chair and i think in this Current Commission you wont see that advance. We are a commission of three. I understand that. Certainly, i also agree that the jurisdiction of the sec in this space is what is very preeminent and important. I also think its important as you come to the end of your tenure is to ask that the analysis be shared publicly or certainly with this committee before there would be any proposal of a uniform fiduciary standard. Thank you. It would certainly come out with the proposal if there was a proposal, but i hear what youre saying. Just the analysis as we move forward. I yield back. The gentleman from connecticut is recognized. Thank you. Mdm. Chair, let me join my colleagues in congratulating you and thank you for your service chairing this Securities Exchange commission at a challenging time. Two questions i wanted to ask you, as as you recall on july 15, 9 of us on this committee sent to you and the chairman a letter about the persistence of the more or less 7 spread, drawing on the work of Abramson Jenkinson and jones, and asking both the sec and finra to undertake a study of this pricing. We were all supporters of the jobs act and supporters because the jobs act was estimated to Save Companies one or 2 million a year in sarbanesoxley compliance cost and the average ipo of roughly 100 million, a remarkably consistent spread. We have not heard back from sec or finra and im wondering if we can get a sense of whether this is interest to either and how we might proceed. It is a point of significant interest. I think, frankly you should be getting a letter soon. I will say this much, i always study it with the staff and there is some complexity with the data with the cost which makes it hard to use as a straight line, 7 for reasons that arent necessarily apparent i dont want to get ahead of the letter, there may be difficulty studying it in a simple way or straightforward way. Youve also got interacting in all of the space in the jobs act that were made and some of the other changes that have been made. You have a lot of factors interacting. I think you raise a very important point and concern. We will getting back to you, certainly in my tenure. I appreciate that. At the end of the day we are asking for some scrutiny here. In an oddly priced. Understood. My other question, there were a number of legislative proposals to define in statute, in Insider Trading, im im partial to my own hr 1625, responding to this in the newman case which as you know, has led led to any number of convictions being overturned, some uncertainty for prosecutors, i have struggled to get either adjust us or any of the regulators or anybody to say that one simple way to remove some of this ambiguity, and i fully understand we have talked about this, it does seem to me that they clarify in the definition of Insider Trading and giving our Enforcement Mechanisms and the judiciary some clarity would make some sense, but i have have struggled to get an affirmative location from the department of justice on this and im wondering if you can give me perspective on that question. I can try. I know weve discussed this before. I think yours is a very thoughtful bill. One of the concerns is the kind of various permutations of what the courts, the sec and Insider Trading. Finding that is a challenge. I think we are in a little different position with respect to newman because we have a lower burden of proof on that issue. We are actually watching very closely what happens in the solomon case on personal benefit i think what ive indicated before is we have basically been arguing in our case, including in the newman spaces that that it impacts, but in narrowing newman to the facts its been pretty successful so far. The salmon decision will benefit part of newman if that work, hopefully, from the enforcer part of you, that comes out in a way that provides a reaffirmation of what is required and not required to provide prove that element that i think we revisit the question by regulation or by statute that we need a clear definition of it and what should that definition be. I think right now we have done well, i think again its a consequential decision in our space to which we worry about in terms of newman. We think this state of Insider Trading laws is such that we can vigorously enforce it. Thank you. The gentleman yields back. Thank you. I think that exchange i just had with my colleague is a testament to your professionalism that you have had before this committee and the Knowledge Base that you bring with you, that youve accumulated over your career and i just want you to commend you for that in your more than 20 years of Public Service. I want to do a little bit of retrospection, i know some of my colleagues are focused on the next couple of months and regulations coming down the pike but i want to look at what f stock has been doing. The f stock with the backing of the app sec has widely taken and activities based approach to evaluating Systemic Risk in the Asset Management industry. Many on the committee would like to see this in the Insurance Industry as well. F stock has the option to do either and i think whats been said is that they dont rule out coming back to the consideration of a designation of firms in that space. Clearly i think the pivot, as its referred to in the assetmanagement space make a good sense in that space. Theres a very thorough analysis in that space and i think they are confident with where it landed. I fully understand the question in the argument thats being made. The lens through which they looked at the Insurance Industry was under Clear Authority to look at it in that particular way and they were confident in their analysis there. I think that is a pretty accurate assessment. Also with respect to insurance, im a little curious about secs role as a member of the f stock and the fsb. There are concerns to which the extent the fsb risks designation process for nonbanks as separate and distinct from the process the abstract uses to to designate nonbanks. Chair yellen testified before this committee argued against fsb front running based on the assertion that gfi i for metlife was inconsistent with that narrative. Do you recall what it was, the fs b or the f stock who designated these as systemically important . It happened about as i arrived i think. I could get back to you, i think there was designation by fsb earlier but im not sure. I would have to get back to you. The process was separate. I was recused from some of the Insurance Company so im less familiar with them. The sec staff which does participate in these committees, if the subject matter of whats being considered at fsb doesnt relate to the Securities Market, we dont actually participate participate actively in those work streams and i can get to you with more information that we do have on it. We may want to follow up on that. In your role, have you felt any pressure to enact fsb policies are designation. None whatsoever. I yield back. The gentleman yields. The gentle lady from wisconsin is recognized. Thank you so much chairman, and thank you for your service as well. And thank you hon. Mary jo white for your service as well and i wish you wellin the future, but you are still the chair. I am. We want to make sure you use every single moment in your office to bring about the results that i think the American People would want. We have gone through some rough times in this country and one of those rough times was when our market funds sort of broke the bank and there were rules floated, they were promulgated to float the naff. Since then we have seen 64 billion in lost funds with regard to that. Im wondering if you sort of changed your mind about the efficacy, particularly with our state and local government not really having anywhere to put these funds that they need to keep liquid, that we are already centralizing money in these large banks. Im wondering if you have had any further thoughts. One answer, its a very important one, we at the sec continue to monitor the impact of all of our rules. One of the things that i have done as chair, as we come out of the gate, dont wait five years or ten years to look at them so we have been following that closely put i will say, thus far, the impacts that have occurred that were largely predicted in our Economic Analysis, for example the Money Market Fund spaces in terms of in total is about the same in terms of volume size, dollar size with a lot of movement to Government Funds which we predicted. Obviously theyre not impacted. A lot of it has to do with the low Interest Rate environment and not the Money Market Fund rules. Clearly the real Significant Movement has been in the prime institutional where it does apply. The answer i think, to date, date, we watch a very closely, is that the benefit of the reforms that we instituted, we believe was a Systemic Risk issue thats obviously a large one and of great concern p at think that is something we are confident we have, confident subject to further analysis that you needed to have the floating floating i think you will see some returns to the prime institutional space over time but we have to see if that happens. Well right now its not happening. The sec put out a report in 2012 on the Municipal Market that included a lot of recommendations, including providing the sec authority to directly regulate muni bond disclosures. Youve been supportive of this report in the past, but inlaid in light of the initiative for several issuers were fined for disclosure violation, do you think we need to do more in congress to move on these recommendations . I think its a broader issue than the mc d. C. Because that was continuing to slow obligation but we have less direct authority in that space that we do for Public Company sector. I think it was enormously effective and we tried to carefully calibrate that so we were mainly aimed for issuers that really changing the conduct and improving visit disclosures so we tried to be very measured there. The underwriters measured also, but obviously there was a different settlement paradigm for them. We have seen improvement in those disclosures, but i would not conclude that fat therefore removes the need for Greater Authority from the sec. The staff is, again its a continuous process, but we will be looking at and is looking at continuously. We may speak further on that in the future. Thank you again, and thank you again for your service, and i hope that you stay floating somewhere on the fringes so that we can have someone to call. Thank you very much, thank you you. I yield back. The gentleman is recognized for five minutes. Thank you for your service as well chair white, thank you for taking time to be here. I would like you to be able to expand a bit on the sam fox Regulatory Framework in regards to innovation and capital. Is it your sense that the sec should take the lead in developing regulations for the Technology Center and encouraging flexible regulatory to the experimentation or innovation within the syntax world . There are several questions in that. I think i am supportive of the sec asserting against jurisdiction and spaces that were in. I think its important to do that and were doing that and consultation, coordination and in the treasury market that well as well. I think we do a good job in those spaces. Anything i think we should be asserting our authority there. I also think that where we come out is yet to be seen on various issues which is as it should be. I mentioned earlier i set up a thin Tech Working Group some time ago to test them to come up with recommendations as to how the sec should proceed. Clearly having the lens of this innovation is exciting and can yield tremendous benefits we dont want to be stifling in what we do. We have to be concerned about protecting investors and everything that we do as well. I think we have the right group working on it i think we have the right mindset working on it. I was a little concerned when comptroller crede made a few comments that seem to indicate as a onesizefitsall so its hard to hear your comments a few moments ago saying that onesizefitsall is not the best path. Again, just to be clear we have to make sure investors are protected and whatever we do but its something we should look at with a fresh open mind. I understand you are gathering recommendations, but from those forms, what was the big challenge that Small Businesses are facing. There are a lot of challenges they are facing. I think all the regulators need to be very focused on. I think we have a lot of things we are looking at whether it is automated advice. I was watching one of the panels. One of the predictions is that we will have more consolidation of automated advice givers. You worry a little bit about the smaller highquality advice givers that may find it too difficult to penetrate the marketplace. We clearly are of the view that registered advisors, if there subject to fiduciary rules and will have to comply with those obligations but one of the things we are doing in the National Exam program, that is a priority, to see across the industry and what we try to do from this exam is share the learning. I think its a little too early to predict. You might not be able to fully speak to this, do you have a sense that having flexibility and the ability to streamline when we are talking one size fits all with the the cost association and redundancy, is that something they were able to encourage. I think the private sector encourages it, i think whichever sector im in, this makes sense, sometimes onesizefitsall at a certain range, but most often if you have the ability to do it you want to tailor regulations to a particular problem. And just as a final, i know you where couple of hats, but with the f stock that you sit on, do you support the feds attempt to usurp the jurisdiction as a Regulatory Agency over Capital Markets know i would not, but i do not think they are trying to do that, at least since ive been here. Okay, thank you so much and thank you for your service. I yield back. Thank you, the gentleman yelled back. Gentleman from maine. Its main, right . Yes it is maine. Im coming to maine. Everybody is going to maine after, lets restart the clock and give them an additional 30 seconds to talk about maine. I appreciate that very much but your retirement from your Great Service to our country and thank you very much. Also does mr. Chairman provide an opportunity and maine is known as vacationland and its also a great place to buy a second home and we would like you to invite you to be a taxpayer up there. Either way its just great. Now youre going a little too far. [laughter] i wanted to cover three issues with you today. We talked about a couple of these already. Your mission that you focused on aggressively and i appreciate it is to make sure that small investors have the information they need to make the conscious decision, the important important decisions to prepare for their retirement whether that is cost savings or what have you. You made a decision not to move forward with the rule and im appreciative of that. For two reasons, number one, we have a hiring district in maine and there are a lot of folks that are not connected to broadband. They rely on cell phone coverage in many parts of our district. There are 60 million americans that live in this area. There are about 46 millions who are 65 years and older who have a hard time navigating the internet. It is critically important that we ensure our senior savers and investors in rural districts have the information that is so critical to make the decisions they need. Now, i also, in full disclosure, know that we make that paper in maine