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Waters Highlights Need for Protections for Investors and Retirement Savers at Hearing with SEC Chairman

Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Committee on Financial Services, gave the following statement at a full Committee hearing entitled, “Oversight of the U.S. Securities and Exchange Commission (SEC)” with SEC Chairman Jay Clayton.

Thank you very much, Mr. Chairman, and welcome back, Chairman Clayton.

Mr. Chairman, given recent developments regarding the Volcker rule, I’d like to offer a reminder that Congress put the Volcker rule into effect in order to stop banks from essentially gambling with taxpayer dollars. But earlier this year, the Office of the Comptroller of Currency (OCC), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC) issued a proposal that appears to give banks a pass and allow them to continue what Congress clearly wanted to stop.

Now, the SEC’s analysis of the proposed rule said, “[W]e recognize that the proposed amendment could increase moral hazard risks related to proprietary trading by allowing dealers to take positions that are economically equivalent to positions they could have taken in the absence of the 2013 final rule.”

So I’m wondering why the SEC would be supporting changes to the Volcker rule that will increase moral hazard risks.

I am also concerned about the SEC’s Regulation Best Interest. In Dodd-Frank, Congress specifically gave the SEC the authority to impose a harmonized fiduciary standard for both brokers and investment advisors. But the SEC’s proposal does not do that. So I am going to urge Chairman Clayton to ensure that the SEC’s final rules protect investors and retirement savers from unscrupulous actors.

Mr. Chairman, it has been reported that you have a plan to advance a package of capital markets bills to the House floor. You and I have not talked about this - I have not been consulted on what might be included in such a package, but based on some of the bills the Committee has marked up to date, I remain concerned that this package may contain bills that could weaken investor protections. Given that any such legislation could make the SEC’s job that much harder, I am looking forward to Chairman Clayton’s ability to express his concerns to this Committee about any measures that he views as potentially harmful to investors and I look forward to hearing from him throughout this process.

Thank you and I yield back the balance of my time.


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