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Waters Praises SEC’s Progress, Underscores Need for Sufficient Funding

At today’s full Committee hearing on “Oversight of the SEC's Agenda, Operations, and FY 2015 Budget Request” Congresswoman Maxine Waters, Ranking Member of the Financial Services Committee, praised Securities and Exchange Commission (SEC) Chair Mary Jo White for the Commission’s  progress implementing the Dodd Frank Wall Street Reform Act. She also underscored the need to accomplish a number of outstanding measures, such as the adoption of final versions of a number of swap rules under Dodd-Frank. Waters also emphasized the importance of SEC’s request for significant additional resources, necessary to accomplish the important task of increasing the SEC’s  examination coverage of registered investment advisers.

Her full remarks are below. 

As prepared for delivery:

“Thank you, Mr. Chairman, for holding this important hearing this morning.  And thank you to Chair White for appearing before the Committee and offering your overview of the agenda and operations of the SEC.

It has been nearly four years since the passage of the historic Dodd-Frank Wall Street Reform and Consumer Protection Act, and we’ve come a long way.  The Commission has completed critical work, and we now have in place the registration of hedge fund and other private fund advisers, the appointment of an Investor Advocate, and the finalization of the Volcker Rule, among other accomplishments.  Even in the face of near-constant attempts by my friends on the other side of the aisle to roll-back the Dodd-Frank reforms - not to mention the SEC’s inadequate funding - the Commission is moving forward on this essential work.

But much more remains to be completed.  Most notably, the SEC still has to adopt final versions of most of the substantive swap rules under Dodd-Frank.  Given the number of these rules still awaiting completion, as well as the legal challenges facing the CFTC, I remain very concerned that our swaps markets still remain a source of shadowy, unregulated risk.

As it relates to the JOBS Act, I would also urge the Commission to move expeditiously to finalize the amendments to Rule 506 offerings that they proposed in July of last year.  Given that private offerings with general solicitation and advertising are currently taking place, we must also move to put in place reasonable investor protections that will guard against fraud.

I’m also eager to hear from the Chair on her view of the SEC’s fiscal year 2015 budget, and how the Commission would use the additional resources they have requested.  In particular, I agree with the Chair, who notes that there is ‘an immediate and pressing need for significant additional resources to permit the SEC to increase its examination coverage of registered investment advisers.’  I hope that the Chair can further elaborate on this need, and also weigh-in on the Investor Advisory Committee’s recommendation that Congress authorize the Commission to impose ‘user fees’ on SEC-registered investment advisers in order to fund an enhanced examination program. This recommendation is consistent with my bill, H.R. 1627.

Finally, I remain very interested in how the Enforcement Division at the Commission selects which cases to pursue, and how the Commission is responding to criticisms that it relies too heavily on deferred prosecution agreements and ‘neither admit nor deny settlements.’  The Chair came into this position at the SEC with a reputation as a tough litigator, and I’d like to hear more about the Commission’s enforcement program during her tenure.

Obviously, the Commission has a lot on its plate, and I commend the Chair for taking on this important work and for being with us today.  I yield back the balance of my time.”


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