Members question the fcc chair about Digital Currency, shareholder protection and climate related financial disclosures. This is an hour and a half. Today we will receive testimony from security and Exchange Commission chairman regarding the work and agenda of the fcc. I thank you for your willingness to appear before the committee today and mr. Clean your willingness to testify the borrower side of the fcc. You ca came before this committa year ago and am sure dusty would continue to take steps to ensure the Capital Markets remained the deepest and most liquid in the world. I commend you and the staff for your actions taken over the past year. Actions worth mentioning include the final rule package on regulation best interest which is great as the appropriate balance in increasing transparency and investors relationships while preserving access to the advice relationships and investment products. They also propose modifying the accelerated definition to reduce the number of registered subject to the requirement. I encourage the commission to move forward quickly to all smaller recording companies. This summer they issued a concept release seeking Public Comment on ways to harmonize the Securities Offering exemption regarding the concept release i encourage the fcc to revise the date to allow for the advertising sponsors such as the investor groups. The fcc should consider expanding the ability for Small Businesses to crowd the fund. The definition of an accredited expander should be modernized to account for qualifying expertise not simply the monetary threshold. And its important that the fcc update the definition of a Family Office to allow Family Offices and clients that meet certain threshold to be considered accredited investors. The committee has held a number of hearings during my chairmanship discussing the need for the scope and appropriateness of the proxy voting process. In other aspects of the corporate governance. I commend the commission for its actions relating to the process. In august, the fcc issued guidance to assist Investment Advisors in fulfilling their responsibilities when voting talks hes in the clarified the proxy voting is provided by the firms generally constituting a solicitation. In november after numerous roundtables the efforts led by the commissioner for the shareholder proposals i encourage you to continue moving forward with these efforts expeditiously following the Comment Period. Its going to be collected in this consolidated database. The plan participants wer wroteo the fcc to request the customer used ip instead of receiving and storing Social Security numbers. You previously expressed concerns of the information to be collected and stored and stated that you believe the regulatory objectives can be achieved without the most sensitive pieces of investor information. They made a modernization forward this year and i look forward to hearing about the hub for the financial technology. Welcome, chair clayton, nice to see you. Putting in place the Financial System and hardworking families around the economy at risk the fcc has flown under the radar but often the agenda has been seen taking their side over and over instead of the investors saving for retirement or college or down payment. Taken together. I appreciate the initiatives including those to protect teachers and military Service Members for the fraud and misconduct in financial advice. Youve done so much damage by adopting what you call regulation best interest under that rule and Brokerage Firms can disclose but dont have to eliminate the firm level conflicts. Iit should be simple they need o work for the people with whom they serve to follow the guidance to create a uniform fiduciary standard for the brokers and advisers which would be the best way to give them confidence that their interest comes first, but you didnt do that. That isnt the only part of dodd frank you were working to undermine. Look at the proposal to amend the Whistleblower Program one of the most successful programs created. We need to breathe workers to stand up to corruption and abuse when they see in their workplace Financial Companies scamming people were engaging in other activities. The only way they are ever able to stand up to powerful wall street firms is if we give them protection. Theyve increased in some years by more than 10 . But after the proposal in 2018 introduced the cab on the whistleblower awards, the number declined for the first time in 2019. The proposed cab they had to put out a statement to clarify. I know that whistleblower is a dirty word to sum in this town it always is to the serial wall breakers. I dont see how you can make changes in the progra a programs without understanding the decline as a result of your actions. Over the americans struggling to save and invest for the future both proposals get more difficult for the shareholders to hold Corporate Executives accountable. The proxy advisers make it harder for the traditional investorinvestors to have timels to independent research and analysis from the Advisory Firms they hire the rule would give corporations access to Investors Research be for the public Retirement Systems and Investment Fund managers and foundations that manage americans money. They say the changes necessary because of errors and accuracies but youve provided scant evidence of those errors and instead they would give companies the new tool to intimidate the proxy advisers and threatened their independence. The overhaul of the shareholder proposal would make it easy for the Corporate Management to avoid dealing with important issues critical to investors. They would stop proposals, could stop proposals for the votes on issues such as a disclosur the f the corporate political spending, separating the roles of the chair and ceo and nondiscrimination policies. Im disappointed in the directions youve taken on the rules that have for decades through president s of both parties and as a teacher of both parties allowed investors to hold management accountable all while executives were further entrenching themselves and protecting the hardearned savings should begin with a simple concept of putting their rights first. I hope the fcc will remember that. But over the last week and this week weve had the financial regulators come before the committee. Weve had the fed and the fdic all defending the same policies and corporate interests all afflicted with a collective and misha about what happened in the last decade or so. The president promised to look after the ordinary hardworking people that theyve put in charge of the agencies they betrayed the workers over and over again. I would like to offer for the record a letter for the retirement system raising concerns about the fccs rulemaking. Without objection. You may make your presentation. Thank you, mr. Chairman. Senator brown and members of the committee i appreciate the opportunity to testify about the work of the securities Exchange Commission. I want to start by thanking you for your support for the commission and its people. People. The dedicated women and men are the most important asset. With the resources congress provided last year weve been able to lift the freeze until around 140 new positions with highquality individuals that i believe will serve investors while. The interests of the main Street Investors have been front of my mind and with that perspective, the staff has long held i would like to highlight a few aspects of the work over the past year. First, modernization has been the key avenue for advancing all aspects of the mission. In june the Commission Adopted a package of rules and interpretations designed to enhance the quality and transparency of the relationship the main Street Investors with their broker dealer or investment advisor. These measures brings legal duties and invaded disclosures in line with what the reasonable investor would expect while preserving access in terms of choice and cost to a variety of investment services. I am so grateful to the experienced and dedicated staff for bringing the long overdue rationality and clarity to this important area. We are also working to respond to the substantial changes that have taken place in the markets including the more capital that is produced in the private markets than the Public Markets and Many Companies are staying private until they are very large or not going public at all. Weve expanded key aspects of the jobs act increased the attractiveness of the Public Market for companies while maintaining or enhancing Investor Protections. Increasing the attractiveness of the public Capital Markets is just one side of the claim. We are also exploring whether through Fund Structures or other measures we can in race to type and quality of opportunities Mainstream Investors have in the private market. I believe we should strive to ensure the individual portfolio can look like a wellmanaged pension fund with robust protection that reflects the individual nature of the account. This is a challenge but we are making progress. In other areas modernization efforts are making a difference for the markets. These efforts not only include rulemaking is that the monitoring of the market function and market risk. I want to highlight the teachers and servicemembers initiatives where the focuwhere we focused l endorsements on educational resources. My message here is simple. If you are ripping off teachers and servicemembers are veteran, we want to catch you, punish you and give the money back. Returning funds continues to be a priority and this year weve e returned over 1. 2 billion. I previously testified about the legal impediments we face from the bad actors into situations wherin the situationswhere the l concealed. I very much appreciate the bipartisan work in congress to address the challenges and welcome the opportunity to continue working with you. Finally weve substantially increased efforts of entrepreneurs and an array of market participants. In particular we allocated Additional Resources that live between the coasts. I believe this is important. Thank you again for the opportunity to testify and i look forward to your questions. Thank you very much. As i highlighted in my remarks, theyve taken in a critical steps to modernize the guidance and rule. The process and shareholder proposals. Based on the staff expertise in your public remark he mentioned thayou mentionedthat you expectl address the universal proxy. When can we expect to see the actions to this process . Weve taken an approach to the agenda of which is if it is on the nearterm to be intended to get it done within a year and those items on the agenda. I would hope that we would be able to move them forward in the coming year. I appreciate the attention that you have given it. Can you speak to how the announcement has affected and how other regulators are working to be responsive to and innovate to work at developments and trends us . I appreciate the question, and it highlights what happened with that announcement. Im not going to speak at the particular product. Its not appropriate for me to do that. But the announcement was a focal point for the regulators of different types to recognize the digitization of the plumbing and other aspects of the Financial System including payment transfers. It is coming. I will say the natural economic forces taking that out of the te system for the lack of a better term. We have to recognize that its happening. Recognize the mission, safety and soundness of the Investor Protection and ensure as it takes place we are being true to those principles tha but we shouldnt be fighting that decision because if we do, it will go around us. I assume when you say it is coming, it is here. As i have said many times again leaving aside the specific proposal. And frankly through other currencies than the u. S. Dollar so i encourage you and the other regulators to focus on this carefully. Who among those are regulated and how well they regulate as well as what will be the specifics of how we set the rules of the road so i encourage you to pay careful and close attention to this. On ways to harmonize the exemption is a positive step. There is a proposal of a round of the accredited definition and in your remarks, you highlighted one of the issues with the investor definition which is based on both. There are a number of people that have the sophisticated ability to assess investments who may not meet those thresholds and we should do a better job of identifying them. That said, the private markets have risks that are significant compared to the markets and we need to be called innocent of that. Thank you. Senator brown. For a dozen years wells fargo recommended shareholder proposals asking the company to celebrate the role of chairman and ceo and the ability like this would hav would have cutofs fargo investors after fours years of giving that. We know separating it is a sensible proposal because after they found itself mired in scandal and abusing its employees that decided to separate the positions and took a victory lap. How do you justify the proposal continuing to push for the sensible governance reforms . Whonce again the majority suppo, how long does it stay on the proxy . Right now you get more than 10 of the vote you can keep it on the proxy in definitely. The shareholder engagement were very different. Our proposal looks at increasing them. But still, if you were able to garner more than one in four in favor of the proposal, it would be able to stay on the proxy. Commissioner jacksons office studied that work for a decade now from 200422018 and they found the proposed rules would have excluded 35 for the independent board chair and the Board Diversity proposals that 40 of the political spending disclosure proposals. These are all areas that corporations need to do better. It wouldnt create a tap could you create that it would be consistent with the requirements in not create the cab . Any characterization is completely miss misguided and the mandate is for the commission to decide between the amount of how much they should be entitled to. I can tell you what the proposal was intended to do i believe in transparency and how those decisions are made and i believe they gave the discretion between them to make the decisions. And i want to say personally, im not speaking for the rest of the members of the commission, i think the program has been extremely beneficial to investors. Its had a Chilling Effect and we have seen the numbers change china last year. People mischaracterize things. Id have to step in and clarify. I guess you are arguing the Chilling Effect is gone because you clarified it. It was slightly down from last year but still people are identifying issues for us and we had another 17,000 of those and i think we investigate them and tried at least initially within the first week is that they are received. But we closed Comment Congress wasnt concerned about a reward being too big if anything it Shows Congress was unconcerned about the potential awards being stingy. I want to talk about the collapse of the work the company laid off 2400 workers, 20 of its workforce due almost entirely to the degree of crim crimes. Bloomberg reported in september that they were investigating the work for fraud and other security violations. We do not comment on whether we are or we are not investigating. I thought that might be your answers will banswer somebody pa different way to get it hypothetically speaking at a Real Estate Company was going public at the ceo matthew had been given positions, could that be something that the fccs decision to look into . Im going to take a step back and say transactions between the principles of companies, family members and other interests or something where transparency is essential. If the assault on the Compensation Committee to determine their salary would that be considered something that they might want to look into . Type of fisto take the fish e identifying should be transparent. If they trademarked a word like we and it was disclosed it that might be something of concern . s connec those are required to be disclosed. Is the ceo had credibly been accused of transporting Illegal Drugs and a private jet across International Boundaries and spending millions of the money on lavish parties with famous djs. Our Disclosure Requirements around the background and character and activities require disclosures. I want to commend you for your work. They found the perspective almost ninemonth spur the review before it went public and they claimed they could assume 100 occupancy rate of the buildings were some financial metric known as contribution margin or community adjusted, whatever that means. So its good. Its unfortunate that they caught it at the last minute. Its things hthe things he did f record and at least one of them across International Boundaries i hope is under investigation by the department of justice crime i hope the Enforcement Division is investigating adam newman becaus