The Securities and Exchange Commission and the Labor Department have both asserted the authority to regulate investment brokers. The two of us—a former SEC commissioner and a former labor solicitor—have a word of advice for Labor concerning its recent efforts to adopt new rules on broker conflicts of interest: It’s time to pass the baton.
April 26, 2018, Washington, D.C. – Former U.S. Senator Luther J. Strange, III has joined Patomak Global Partners, a strategy, risk-management, and enforcement consulting firm, as a Senior Advisor. Senator Strange draws on his experience as a U.S. Senator and Attorney General for the State of Alabama to provide strategic counsel to clients, including on corporate investigations, monitorships, compliance, and enforcement matters.
Former U.S. Senator Luther Strange, who lost a Republican primary race in Alabama last year despite the backing of President Donald Trump, is returning to Washington to advise financial firms.
Strange is joining Patomak Global Partners, a regulatory consulting firm with close ties to the Trump administration. The ex-prosecutor spent a year in the Senate after he was appointed to the seat vacated when Jeff Sessions became U.S. attorney general.
WSJ reporters Gabriel T. Rubin and Dave Michaels write:
WASHINGTON—Big Silicon Valley backers of cryptocurrencies have sought a broad exemption from federal oversight they say would slow digital coin growth, as the industry steps up lobbying to limit government oversight of the burgeoning world of cryptocurrencies...
...The cryptocurrency industry’s more established players last December scored a victory for their legitimacy when two of the biggest derivatives exchanges, CME Group Inc. and Cboe Global Markets , launched bitcoin futures. By allowing the contracts to come to market, the CFTC signaled that the bitcoin exchanges whose indexes were used to reference the contracts had proper safeguards against fraud and manipulation.
“It was good to help institutionalize bitcoin and have those on supervised platforms,” Mr. Atkins, the former SEC commissioner, said April 11 at a cryptocurrency conference.
"While acknowledging the opportunity for fraud, Paul Atkins, a former commissioner and co-chair of the industry-led Token Alliance, an education and policy initiative, says, 'We see lots of scams coming out of any new technology, but that doesn’t mean the whole thing is corrupt.'”
The Senate is expected to approve this week the most significant reversal of regulatory requirements for financial services firms since the financial crisis, including a significant retrenchment of the heightened scrutiny for banks with less than $250 billion in assets that was implemented by the Dodd-Frank Act of 2010...
Paul Atkins, chief executive of Patomak Global Partners, LLC...told an audience of international bankers at a conference in Washington on Monday that rather than what was being characterized by critics and in the press as a wholesale upheaval of Dodd-Frank regulation, the proposal was a 'refinement' of an 'absurdly low threshold' for bank regulatory scrutiny.
Just as Washington is becoming more investor-friendly, some politicians are going back to fighting in favor of well-connected special interests over Mr. and Mrs. 401(k). The latest example: A policy rider (let's call it what it is - an earmark) attached to an appropriations bill that would prevent a long-overdue effort to save retirees and investors more than $300 million a year by modernizing how mutual fund reports are delivered to shareholders.
Jerome Powell won’t run the Federal Reserve too differently than Janet Yellen would have. But, because he is not her and was not President Barack Obama’s nominee, he will start a four-year term as Fed chairman Monday while she begins as a think tanker at the Brookings Institution.
...The Powell era, however, will include another key Trump appointee, Randal Quarles, serving as the vice chairman for supervision, a position with oversight of regulatory affairs that was never filled under Obama.
Quarles, a former private equity investor and George W. Bush Treasury official, is likely to push for changes to several key features of the post-crisis rules, said Paul Atkins, chief executive of the financial services consultancy Patomak Global Partners, including new capital requirements for banks, internationally coordinated rules, and the Volcker Rule.
Investors in the age of mobile are tired of relying on Gutenberg-era fund communications, according to the SEC’s investment management unit head...
“We’re in the 21st century. It’s about time that mutual fund investors can access information in a way that is meaningful to them, rather than being married to the 1930s construct of paper delivery and disclosure,” says Paul Atkins, CEO of Patomak Global Partners, who served as an SEC commissioner between 2002 and 2008.
Many on Capitol Hill watch are expecting the action in 2018 to shift to regulators at the Department of Labor, the SEC and the Treasury Department, which oversees the Financial Stability Oversight Council.
"The real play is going to be on the new people coming into the agencies," including the SEC, which has its first full commission since 2015, said Paul Atkins, CEO of Patomak Global Partners, a Washington financial services consultancy. Mr. Atkins, a former SEC commissioner, is optimistic the agency will address market structure issues that should be less partisan. "What's good for investors should be good for markets," he said. On the enforcement side, he expects SEC officials to press for more personal accountability of officials whose companies are prosecuted for investor fraud.
Jason Bisnoff, a reporter for Compliance Reporter, writes:
Paul Atkins is the CEO of Patomak Global Partners, a financial services consultancy focusing on strategy, compliance, enforcement and litigation located in Washington D.C. He is also a former commissioner at the Securities and Exchange Commission, appointed by George W. Bush. Atkins spoke with Compliance Reporter about his expectations for potential deregulation during the Trump administration, and hot button issues, such as personal liability, that compliance teams should have top of mind.
Paul Atkins writes in an op/ed in Real Clear Markets:
The tax reform bills moving rapidly through Congress ... would leave more in the pockets of working Americans and reduce the role that taxes play in financial decision-making, allowing people to take their own paths without much help or hindrance from Washington.
But one provision in the Senate version of the bill would restrict Americans’ ability to make their own financial decisions. The measure would dictate how investors manage their portfolios of stocks, bonds and other securities.
The Senate bill would mandate a first-in, first-out (FIFO) scheme. When investors who hold multiple positions in the same security decide that it is time to sell, the government would force them to sell their oldest shares first. Requiring stock sales to be made on this FIFO basis will usually mean higher taxes for investors who sell their holdings accumulated over time. The FIFO provision’s tax implications will limit the ability of American households to fully realize gains from successful investments.
The Department of the Treasury recently released a 163-page report on regulation of the asset management and insurance industries (“Treasury Report” or “Report”) pursuant to President Trump’s February Executive Order regarding his “Core Principles” for financial regulation. The Report contains many recommendations that will help undo the damage to economic growth brought about by a deluge of costly financial regulations during the past eight years. Some of the policy reforms endorsed by Treasury, however, do not go far enough, are misguided, or send concerning signals regarding the direction of the forthcoming Treasury report on the Financial Stability Oversight Council (“FSOC”) – a multi-regulator council created by the Dodd-Frank Act (“Dodd-Frank”) – requested by President Trump in April.
Click through to read more of Paul Atkins's analysis.
This year alone, technology startups have raised a staggering $3.2 billion through Initial Coin Offerings, or ICOs, with the cumulative value of token sales skyrocketing by more than 1100 % in the past year alone, according to CoinDesk's ICO Tracker.
Also known as “Token Sales,” ICOs enable startups to raise money for their projects by selling crypto coins as a form of equity both to sophisticated investors and the average public. This democratization of fundraising through ICOs has generated a level of excitement, some say greed, comparable to the old days of gold prospecting in the Wild West.
“Anytime you have new concepts that are disruptive to old ways of doing things,” says Paul Atkins, CEO of Patomak Global Partners, “That gets a lot of people interested and focused.”
Manley Johnson and Paul Atkins write in a co-authored opinion piece in American Banker's BankThink:
"The Treasury Department recently released a new report endorsing numerous regulatory reforms for U.S. asset managers and insurance companies and is about to release another report next week assessing the Financial Stability Oversight Council, an unaccountable regulatory body created in 2010 by the Dodd-Frank Act.
During the past seven years, FSOC has threatened to use its sweeping powers to subject asset managers and insurers to cumbersome, inappropriate bank-style regulation by the Federal Reserve, whose leadership lobbied for and embraced these nonbank regulatory powers. Treasury’s recent report endorses some policies that will undo the damage of this regulatory framework, but it can do much more. Fortunately, the upcoming Treasury report on FSOC and the pending ascension of a new Fed chair provide perfect opportunities to abandon Dodd-Frank-inspired regulatory hubris and begin improving economic growth and financial access..."
As my students are back in lecture halls this fall, they are being reminded that it is more important to complete their assignments properly, rather than quickly. Mistakes at the beginning invariably lead to disappointing conclusions. That’s a lesson worth repeating to regulators in Washington too.
Take, for example, the Department of Labor’s fiduciary rule, which went into partial effect in June with the objective of improving the efficiencies in the market for retirement services upon which Americans rely. The rule’s regulatory impact analysis, produced in April 2016, found that imposing a fiduciary standard on brokers would save Americans billions.
However, as my new white paper shows, the Labor Department’s projections were based on incorrect interpretations of academic research.
Today, Patomak Global Partners CEO Paul Atkins released a review of the Department of Treasury’s recently-released report on capital markets regulation. After eight years of anemic economic growth, due largely to increased barriers to small business financing and accelerating regulatory complexity, Treasury’s report sets forth a pragmatic approach to improving capital formation, expanding investor choice, and simplifying regulations. The report was issued in response to a February Executive Order that requires Treasury to identify policies that could advance, or conflict with, the President’s “Core Principles” on financial regulation. These Principles include making regulation efficient, empowering American investors, ending taxpayer-funded bailouts, and improving the regulatory process.
Overall, the Report should give investors, consumers, workers, small businesses, and the financial industry alike reason for optimism. Its recommendations on expanding access to capital, securitization, and regulatory processes, Atkins writes, neatly align with the President’s objectives. The report’s recommendations on derivatives and equity market structure also largely go in the right direction.
Atkins notes, however, that the report’s section on so-called financial market utilities accepts failed regulatory approaches that are antithetical to the Core Principles. He also writes that some of the report’s recommendations related to derivatives and equity market structure are weak or misguided.
Moving forward, Atkins encourages Treasury to embrace needed reforms to financial market policies that conflict with the President’s Core Principles in its future reports on asset management, insurance, the Financial Stability Oversight Council, and OLA. Treasury should announce that it will drop its ongoing appeal of the strong March 2016 MetLife v. FSOC court ruling that limits one of FSOC’s sweeping powers to designate firms “systemically important” – an anti-competitive and costly “too-big-to-fail” label that brings about moral hazard and adds next to nothing to make the financial system more “stable.” Treasury should also endorse Congress’s effort to rein in FSOC’s full suite of designation powers and end taxpayer-funded OLA bailouts.