And discussions agencies priorities including senator training and distinction over cryptocurrency. He testified before the House Financial Services committee. The committee will come to order. Without objection, the chairs authorized weight recess of the committee at any time. This hearing is entitled oversight of the security and Exchange Commission. I inaudible recognize myself for four minutes with an Opening Statement. Good morning. I want to welcome back chairman clayton and welcome jackson,s placement and lee to this important hearing of the secs role in risk Capital Markets. Its the First Time Since 2007, that all commissioners at this Exchange Commission have testified before the Financial Services committee. I believe it is important for the committee to hear testimony from each of the commissioners including as chairman, because he told the vote of important rally authority in these matters. They are unique reviews that the committee should be aware of. This is especially important steps that the sec is not fulfilling as wall street calls and key rules like the open rule and the rollback and our moves to implement employment reforms on issues like executive conversation, which congress upended back in 2020 as part of the wall street reform and conservative protection act and name and complete. Other regulations such as the sec isnt best interest which failed to protect the save years of an scrutiny financial advisers. This is also clear that the resistance Securities Law ive been working and there are loopholes that and corporate insiders are taking advantage of. For example, executives of buying securities that their companies during the trading gap which will support the gap on the corporate event for the companionship required of the investors of that event. Executives are also used of stock facts to provide pockets of giving them pay grazes are investigating and companies. In addition, a Court Decision versus sec limited the secs ability to recover wrongful gains and fosters like bernie made off and to harm investors. I believe that the sec need longer to protect investors and published bad actors. Members have addressed a number of pills to strengthen the commission, and our security clause, and a number of these bills passed the committee are the role of the house. Today, we will have the opportunity to hear directly from the commissioners on these important issues, in addition and there is concerned about the facebook, and digital currency. It appears that facebook is working to create a new Global Financial system that is intended to rival the u. S. Dollar. I, antidemocratic on the committee have called for facebook to halt their plans until regulators in congress have an opportunity to examine these issues and to take action today. I hope to hear what today explicitly has taken to ensure that libra is regulated. I look forward to the testimony, and i now recognize the Ranking Member of the committee, the gentleman from North Carolina for five minutes for an Opening Statement. Thank you for holding todays hearings, i appreciate german clayton and the gang here joining you today. Interesting that you have that the whole commission is here. The sec has a three part mission, maintain fair an orderly and efficient markets, and third, to facilitate Capital Formation. All three pillars of those, the sec does, but i think the two first, protecting investors, and maintain efficient markets, on captured in that. Without Capital Formation, the other two could not exist and that means that, if you have no market to regulate, then people will not have the opportunity to invest. Without market for Retail Investors to participate in, there would be no need for Investor Protection. So, we need to help investors by focusing on policies that make our markets stronger, more attractive and more competitive. Not at a regulatory costs and we condemn. We dont have to look any further than the impact of mandatory disclosure after mandatory disclosure on the companies cant compliance crossed. Real, cost theres a real cost borne by real investors, making it more expensive to pay Public Companies. Companies heavily burdened by costs will stay in private marcus, ultimately, Retail Investors of choices and opportunities in the Public Market. To that and, im glad that the chairman, under chairman claytons leadership is focused on long overdue reforms that focus on Capital Formation that benefit Mainstream Investors. The renewed investment to revitalizing our public and Capital Markets through increased Capital Formation could not come at a more appropriate time and more crucial time. When considering Public Companies in which to invest, american investors have roughly half the number of companies that they did, compared to 20 years ago. To quote chairman clayton, the steady decline in the number of Public Companies is, quote, not good. Thats an understatement. I share chairman clintons concerned that a decline of our Public Market is a troubling trend for our countrys competitiveness and for american investors. And for Retirement Savings as well. The solution to this crucial problem is to focus on policies that will make Companies Want to go public and preserve option for raising much needed capital, all of which will lead to increased competitiveness and more Investment Opportunities for everyday investors to grow their savings. I would like to commend the commission for their efforts to improve Capital Formation for smaller companies. Particularly, by reexamining the executive offering Regulatory Frameworks. Many of these frameworks were created by the jobs acts of 2012, a landmark bipartisan act of legislation that is at a major impact on Capital Markets and Small Businesses. Now its time for the sec to revisit these private offering exemptions to improve the Regulatory Framework to better and grow Investment Opportunities. One exemption that warrants modernization is the crowd funding examined, included in the chops act, only a few pages long. 11 pages, in fact. I appreciate the sec and the hardworking staff creating 685 pitches worth of regulation around those 11 pages. The absurdity of this, i point out a number of times since then, so youve given at least the rhetorical value of talking about the burden of sec regulation, making an exemption and a public lot, completely meaningless because of the impact of the costs. So, i encourage the sec to continue its efforts to expand investment, investor access to companies and to maintain its focus on companies from going or staying in our Public Markets. Stronger markets translate to more growth and greater opportunity for the investors to grow their savings and reach their goals of homeownership, retirement, or simply a better way of life. In conclusion, we will hear a lot of doom and gloom today, it is not all doom and gloom, the markets now appear healthier over the last two years. Investment opportunities are better now than they have been in recent years. I think there is a lot that is praiseworthy of the secs approach and how the market is responding to that. I look forward to your testimony and the questions that you will ask. I recognize the chair of the subcommittee on Capital Markets, mrs. Maloney, one minutes. Thank you for holding this important hearing. The sec has been active on issues such as cryptocurrency, and corporate governance. But by far the, most important action the sec has taken was in june, when they finalize regulation. This rule was intended to raise the standard of conduct for brokers, and offer Investment Advice to Retail Investors. Unfortunately, i believe the role was far too weak, and did not raise the standard for brokers nearly enough. And to make it worse, the sec also weakened the fiduciary standard for Investment Advisers, which was completely unnecessary and goes against the secs mission of protecting investors. So, i will be interested to hear from the commission about why they chose this path and i yield back. Thank you. I want to welcome the panel from the security and Exchange Commissions. Commissioner robert, j jackson junior who served since 2018, commissioner jackson came to the commission from New York University school of law, the commissioner has stir who was also served on the commission since 2018. At george mason university. Commissioner, served on the commission since september 2018 and who prior to joining the commission served as chief counsel for the u. S. Senate Commission Committee on banking housing and urban affairs. Commissioner alison aaron lee, served since 2017. She served on various roles and the sec, and most recently has written, lectured and taught classes on Financial Regulation and corporate law, internationally. Finally, chairman jay clayton, who served in the commission since january 2017. Prior to joining the commission, they were a partner at sullivan and, crumble part of the management committee. Welcome to you all. Before recognizing you for your testimony, i understand clemency man has a brief administrative statement. So without hesitation, you are recognized. Thank you chairwoman waters, and members of the committee for my fellow commissioners, i each provide our Opening Statements. Id like to give our usual disclaimer, which is easy laws will provide our only views and remarks, and do not represent those at the sec or our fellow commissioners. A few other statements. Id like to say that although all five of us are before you this morning, this is not a meeting of the commission under the statute known as the sunshine act. And, as a result, we planned to be mindful to avoid deliberating on business before the agency. We are also sensitive to the potential appearance of prejudgment. Although we may offer our views, share our concerns about general issues, we will avoid making a determination about the course of action that the commission should or will take about any particular matter. As with our usual practice, we will keep an open mind, look forward to reviewing a fully developed record before making our determinations. Also, consistent Longstanding Commission practices, we will not expected to comment on pending nomination. Thank you chairman waters. For purposes of testimony, each of you will have one minute to summarize your testimony. A yellow light will appear, at that time, i will ask you to wrap up your testimony so we can be respectful of both the witnesses and the Committee Members time. Commissioner jackson you, are now recognized for five minutes to present your oral testimony. Thank you chairwoman waters. Ranking member in the cannery and members of the committee. Thank you for the opportunity to join. Its my honor to join my colleagues to testify, protecting ordinary american investors. I will begin by expressing my gratitude for the special privilege of working with the tremendous sec staff we work with every day. I learned a great deal from them and everything we do and will discuss it is possible only because of the tremendous Public Service. German waters, before i joined the sec, network in government as a teacher, as a researcher, focus on the gaps and our Securities Laws. That allowed corporate insiders to spend shareholder money to advance their own interests, rather than those of investors. Because this committee is considering legislation that could address some of those gaps, i will identify three areas where, in my view, doing so will be especially critical foreign very investors. First, our Disclosure Rules are not kept up in the piece of these markets. Specifically, sec rules give Public Companies four days before they must notify the market about market moving Business Development on what is known as our form economy. A steady average before joining the commission filed evident a corporate insiders off in trade during this gap between key Corporate Events and when our rules require that identity real. Im grateful that this committee has taken a Bipartisan Legislation to close the gap and give investors the level Playing Field they deeply deserve. Second, hour rules and sent by corporate insiders to pursue stop that maxime lies executive pay but make no sense to investor. I provided evidence that investors engaged in sales of their company stocks, and i expanded upon that work in a letter to senator van hollen this spring, showing that when insiders sell stock, their companies performs worse in the weeks after the fire back occurs. The sec rules should not intensify the high ends and allow insiders to buy out they do not make sense for ordinary investors. Finally, we should consider giving investors much more transparency into how Public Companies spend their policies. It is not disclosed under the law we have today, since Public Companies can and do give investors money to him intermediaries that do not disclose their donors. Indeed, a study published in 2013 showed that just enter media spend more than 1. 5 billion dollars of investor money on politics over just a short period. Under the law we have now, ordinary american investors have no way to know whether the companies they own where a source of that money. That would be less worrying if executives interest and political spending were aligned with shareholders. When it comes to politics, insiders interests may diverge from those investors. Political spending has consequences that goes beyond, like investing insiders preferred political views. They may be influenced by those preferences. The standard securitys law solution to conflicts like this is a disclosure. That is why sec rules mandate clear disclosure of executive pay. Thats why our rules also require companies to give investors detailed information about transactions between insiders in the company. And that is why the case for requiring disclosure on spending on politics is so strong. Before joining the commission, i led a group of scholars to develop rules requiring disclosure of foreign political spending. Since then, more than 1. 2 million americans have written to that commission to adopt the roles, and a partisan group, including two former chairman have called our proposal i slammed on. But, because congress has used the appropriations process to block the commission from developing roles in this area, too Many American investors today remain in the dark about how Public Companies spend our money on politics. I believe that the critical part of the sec mission to our grand eyes a level Playing Field in the days markets. Gaps in our Securities Laws that allow insiders to trade for key information, stop by back that maximized executive pay but not executive performance and rules that allow insiders to spend investors mind on politics and around the trust that ordinary americans in our political system. On all these matters, i remain open to the use of my exceptional use on this commission and my privilege to be part of that work. Thank you for allowing me to appear before you today. Thank you. Commissioner peirce, you are now invited to present your testimony. Thank you members of the committee, its an honor to be here and and its a pleasure to be here with my colleagues. We all share a common passion for the Capital Markets because we believe they have the power to unleash talent all across the country, and that is good for all of us. Under chairman claimants leadership and with the help of our hardworking staff we are applying the shared passion for the potential of the Capital Markets to change peoples lives to to collaborate and think through a wide range of issues related to protecting investors, facilitating Capital Formation and protecting the integrity of the market. I like to talk to about three principles that i applied when i do my job. The first is that Investor Protection means more than just protecting investors from fraud. It also means protecting their opportunities. The second is that, while enforcement is an important part of our mission, regulation is the key part of what we do. Its our first step, not our last step. And, th