Displaying items by tag: SEC

President Biden announced he is going to nominate Michael Barr, former Assistant Secretary of the Treasury and current dean of the University of Michigan's Public Policy School, for the Feds Vice Chairman of Supervision. Previously nominated Sarah Bloom Raskin pulled her nomination with harsh criticism from Republicans because she argued the Fed should discourage lending to traditional energy companies. Barr will be stepping into a difficult role but has experience in Government. He helped create the Consumer Financial Protection Bureau. Critics have said that Barr had been easy on bank regulations during the Obama admin and others were suspicious as to his role with Lending Club and Ripple Labs.

Finsum: This is a relatively new position but it has critical regulatory power for the financial system.

The SEC has splashed headlines recently with crypto and ESG rule changes, and they are once again widening their scope. They have proposed a new rule which would force trading firms to register as dealers and fall under oversight. Algorithm and high frequency traders woud now fall under SEC guidelines and scrutiny. Gensler believes these traders provide an important liquidity function for the US financial system and should be overseen by the SEC. The rules would not apply to those that manage less than $50 million. These requirements would put high costs on many financial market participants and might not be justified according to experts.

Finsum: These measures are to prevent a 2020 Fed step in again, but it's difficult to see if this much oversight is warranted given how much it will cost.

Biden has hit a brick wall with his climate legislation, and now is going out of his way pleading that oil companies double down on drilling efforts to curb gas prices in response to Russia-Ukraine invasion. However, the SEC is expected to propose new regulation that will force companies to disclose data around their climate risks. This legislation will only come into effect as early as 2023, but it will put a major spotlight on the biggest polluters and carbon contributors. Many believe these changes will force companies to pay higher costs for their carbon use and maybe make it harder for companies to invest in green bonds and funds around these companies.

Finsum: This isn’t enough to end greenwashing; foriegn governments are well ahead of the US in terms of ESG regulation.

Legal experts are predicting there could be an expansion coming to the DOL fiduciary. Partners at Faegre Drinker are expecting a proposal in the next quarter or two which would label one-time advisors involved in retirement rollover or IRA assets to be labeled fiduciaries. One time advice-givers particularly those trying to establish a relationship would now be labeled as fiduciary advice. Reporters reached out to the Department of Labor but they did not respond to a request for a comment about the change. However, legal federations are expected to challenge the further expansion of the DOL fiduciary classification.

Finsum: This would be a major change to the DOL Fiduciary rule and could really impact advisors trying to gain clients.

While ESG has run white-hot the last three years the main gripe was greenwashing, that was until now as anti-trust is on the horizon. An attorney from Arizona Mark Brnovich is opening an investigation into ESG investing with regards to anti-trust. The idea is pretty simple, while a top-down approach comes from legal agreements like the Paris accord, companies are suddenly allowed to coordinate and self-regulate among each other as to what constitutes good practices. Additionally, they may use ESG as a mechanism to compel or influence the removal of financing for companies from different industries. This coordination takes place through groups like the Climate Action 100+ rather than through the hush tones of a golf course but the effect is a coordinated one targeting companies or industries.

Finsum: There is a compelling case that without legal parameters ESG will turn into anti-energy coordination and tech-centric greenwashing campaign.