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US Regulatory Update


President Trump Signs Executive Order Regarding Retirement Plans

On 31 August, President Trump signed an Executive Order on “Strengthening Retirement Security in America,” directing federal agencies to make it easier for small businesses to group together to provide their workers with retirement plans.  The order directs the U.S. Department of Labor and the U.S. Department of the Treasury to issue regulations to help more businesses join together to offer “multiple employer plans,” which currently are available only to groups of businesses in the same industry. 

U.S. Congress


On 28 August, the U.S. Senate voted to confirm Richard Clarida to become the Federal Reserve (“Fed”) Vice Chairman and Dawn Stump and Dan Berkovitz to become Commissioners at the Commodity Futures Trading Commission (“CFTC”). 

SEC & Securities

SEC Chairman Clayton Delivers Speech Regarding Main Street Investors and Private Placements

On 29 August, U.S. Securities and Exchange Commission’s (“SEC”) Chairman Clayton delivered a speech on capital formation at the Nashville 36|86 Entrepreneurship Festival.  Regarding capital formation, Clayton said he believes “the SEC should be keenly focused on helping small businesses from coast to coast access capital to grow, create new jobs, and, in turn, provide investors, including our Main Street investors, expanded investment opportunities.”  Chairman Clayton stated that he would like to make it easier for Main Street investors to invest in private companies by expanding the current rules that limit who can invest in certain offerings to “focus on the sophistications of the investor, the amount of the investment, or other criteria rather than just the wealth of the investor.”  Clayton noted that the SEC staff is working on a “concept release” in the coming months to examine “how we can harmonize exempt offerings,” and he urged input from the investment community.  Clayton also pointed out that the SEC is continuing to study distributed ledger technology, digital assets, and initial coin offerings in an effort to “embrace new technologies that cut costs and provide new investment opportunities while continuing to require that our retail investors have access to the material information necessary to make an investment decision, including the key risks involved, as well as other fundamental protections.”  Finally, addressing the SEC’s efforts to promote capital formation and initial public offerings (“IPOs”), Clayton reminded the audience that “the SEC has taken meaningful steps to reduce regulatory burdens on pre-IPO and smaller public companies, while maintaining and, in some cases, enhancing, investor protections” and that disclosure modernization will help ease those regulatory burdens and “not adversely affect the availability of material information.”

SEC Delays Implementation of the CAT

On 27 August, Brett Redfearn, Director of the SEC’s Division of Trading and Markets, issued a public statement regarding the current status of the consolidated audit trail (“CAT”).  The CAT, a system that will allow regulators to track orders throughout their life cycles and identify the broker-dealers handling them, was supposed to begin on 15 November 2017 according to the plan developed by the self-regulatory organizations (“SROs”).  In the fall of 2017, the SROs requested relief from this deadline, but SEC Chairman Jay Clayton declined.  However, the SROs have since failed to report the required data to the CAT.  Mr. Redfearn stated, “To date, the SROs have not begun reporting required data to the CAT as required by the first phase of the SRO CAT Plan.  There continue to be delays in the SROs’ development and build of the CAT, and, recently, the SROs and [Thesys Technologies LLC, the tech company chosen to build the CAT] have missed new, self-imposed deadlines.”  As a result, the SEC requested, received, and is now reviewing the SROs’ “Master Plan”, which calls for the first phase, for SROs, to begin on 15 November 2018; the second phase, for large broker-dealers, to begin on 15 November 2019, compared to 15 November 2018 under the original plan; and all phases of small broker-dealer reporting to begin by 15 November 2022, compared to 15 November 2019 under the original plan. 

FINRA Elects Three Governors to its Board

On 28 August, the Financial Industry Regulatory Authority (“FINRA”) announced the election of three Governors to its Board of Governors.  The new Governors are: Timothy Scheve, President and Chief Executive of Janney Montgomery Scott LLC, elected as a Large Firm Governor; Brian Kovack, Co-Founder and President of Kovack Securities, Inc., re-elected as the Mid-Size Firm Governor; and Paige Pierce, Senior Vice President of Larimer Capital Corp., elected as one of the three Small Firm Governors.

CFTC & Derivatives

CFTC Issues No-Action Relief Regarding De Minimis Threshold

On 28 August, the CFTC’s Division of Swap Dealer and Intermediary Oversight (“DSIO”) announced it granted “conditional, time-limited” no-action relief to a non-disclosed “Main Street” bank.  The DSIO will not recommend that the CFTC take action against the bank for not counting towards its swap dealer de minimis threshold certain swaps entered into from the date of the no-action relief through 31 December 2018.  According to a statement from CFTC Commissioner Brian Quintenz, the relief “was necessary so that a Main Street bank could continue to serve the needs of its small and medium-sized commercial clients; in this case, by helping those clients change their interest rate hedging posture in response to recent market developments.” 


·        4 Sept: Senate Judiciary Committee will begin its hearing on the nomination of Judge Brett Kavanaugh to become a Supreme Court Justice.

·        4 Sept: Comments due on a CFTC proposed rule regarding financial surveillance examination requirements for self-regulatory organizations.

·       5 Sept: House Financial Services Subcommittee hearing entitled “The Future of Money: Coins and Banknotes.”

·       6 Sept: House Financial Services Committee hearing entitled “A Failure to Act: How a Decade without GSE Reform Has Once Again Put Taxpayers at Risk.”

·       6 Sept: Senate Banking Committee hearing entitled “Outside Perspectives on Russia Sanctions: Current Effectiveness and Next Steps.”

·        7 Sept: House Financial Services Subcommittee hearing entitled “Survey of Terrorist Groups and Their Means of Financing.”

·        13 Sept: SEC Investor Advisory Committee meeting to discuss: (i) proxy voting infrastructure, (ii) the proposed Transaction Fee Pilot, and (iii) the implications of passive investing.

Ianthe Zabel
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