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Jay Clayton: Too Many Regulatory Standards

March 28, 2018

by Howard Haykin


Speaking at last week's SIFMA Compliance & Legal Annual Conference, SEC Chair Jay Clayton addressed one of the 'Elephants in the Room' - the fact that the industry operates under too many different regulatory standards.


Take, for example, a typical 401k retirement account that holds annuity products and stocks. The client's relationship with her financial professional is overseen by at least 5 regulators – namely, FINRA; SEC; DOL; a state regulator; and a state insurance regulator. You can possibly add bank regulators and state attorneys general to that list.


With so many standards, financial institutions have a hard time demonstrating compliance, while investors have difficulty deciphering which rules and regulations apply to the financial institutions that service their accounts.


Going forward, Clayton wants to SEC to take the lead in setting appropriate standards for the financial services industry - and he expects the Commission to begin the process of change very soon. 


Among the issues that need to be addressed:


  • How should financial institutions demonstrate compliance?
  • How can regulators clearly articulate the standard for broker-dealers?
  • How can regulators bring clarity to investment advisor standards?
  • How can regulators boil down the various regulatory standards into a more unified standard?
  • How can regulators clearly articulate for investors what that standard means - and do so in a relatively short, plain-English document?


'Stay tuned,' Mr. Clayton told attendees at the C&L Conference.