Captioning performed by vitac by those we regulate, and of course, by this committee and congress. Whether were making changes to the staffs longstanding review process for shareholder proposals, assessing the duties of Investment Advisers or considering how to strengthen company disclosures, we must be fair and transparent about the policy choices we make and the data and information on which we rely on making those choices. I thank the committee for its oversight of these important issues. And i stand ready to answer your questions and listen carefully to your thoughts and concerns. Thank you. Commissioner lee. Chairman clayton you are now recognized. And i want to echo the thoughts of my colleagues on the opportunity we have to testify today and note that their testimony demonstrates the wide range of issues that the Commission Deals with every day. I want to thank this committee for your support of the commission and in particular the dedicated women and men who are our most important asset. The funding that you provide to us for fiscal year 19 allowedtoallowed us to lift our hiring freeze, market oversight, cyber security, and Small BusinessCapital Formation. The fiscal 19 funding that you provided us also allowed us to continue to make significant investments to our i. T. Infrastructure. Weve made progress in these critical areas. However, our Information Technology needs and the related risks are ever changing and let there be no doubt, substantial work remains. Turning to our mission. For me, the interests of our longterm main Street Investors are front of mind. I believe our 4,300 colleagues share this perspective. I want to highlight just a few examples of the recent work starting with our division of enforcement. Our teachers and military which invest resources on behalf of teachers, and active duty personnel. Unfortunately these hardworking americans are too often targeted and fall victim to fraud, shady and shelf serving practices and other misconduct. My message is simple, if youre ripping off teachers, Service Members or veterans, we want to catch you, we want to punish you and we want to get them their money back. Returning funds to harmed investors continues to be a priority for me. I testified about challenges including legal impediments we face in obtaining funds from bad actors in cases with longrunning frauds such as ponzi schemes. I want to recognize this committee for its bipartisan work to address these challenges. Enhancing main Street Investors has been a priority. In june, the Commission Adopted a package of rules and interpretations to inquire candor and other responsibilities on Investment Advisers. As a result, for the first time, regardless of whether investor who investor choices, it will be in the interest of the investor. This strong rule making package was informed by the commissions expertise and decades of experience bringing Enforcement Actions in this space. It benefitted from unprecedented direct, shareholder engagement including seven town hall style round tables held across the country. We are already seeing the benefits of this work. We are also focused on the implications for main Street Investors of the substantial changes that have taken place in our markets over the past two decades. For example, 25 years ago, the Public Markets dominated the private markets in every measure. Today the private markets outpace the Public Markets. In our private markets, main Street Investors do not have the same access to investments as sophisticated investors and two where they have access, they typically do not have the same alignment of interest with sophisticated professionals as they do in our Public Markets. We continue to explore initiatives to increase the attractiveness of our Public Markets. At the same time we are also exploring whether we can increase the type and quality of opportunities for main street inve investors. In closing, i would you to refer you to our written testimony which details a number of the risks which we are monitoring along with our fellow u. S. Regulators and regulators around the world the globe. Thank you and i look forward to your questions. Thank you very much. Im going to deal with two issues here as i recognize myself for five minutes for questions. First, i want to deal with Insider Trading. Im going to you commissioner jackson. Current loopholes in the law allow corporate insiders to enrich themselves. Theres evidence that insiders are misusing sec rules to engage in legal Insider Trading by trading their plans. My bill would require the sec to study this misuse and amend its rules accordingly. This bill passed the house on a broad bipartisan basis. Can you discuss why its important for Retail Investors and market integrity for loopholes to be fixed. Do you agree that the standards for corporate insiders act is a common sense fix to the apparent loophole . Insider trading has been a problem historically. What do you think . I want to thank you and this committee for focusing on this issue. The rule was adopted some time ago and its always a Good Practice for us to dig back into our role and is see if theyre serving their intended purpose. That rule was intended to allow insiders to make decisions long in evidence and theres evidence to the degree that theyre taking advantage of the investors. Without commenting on any particular legislation, im glad this committee is focused on this issue. Thank you very much. And now, chairman clayton, im concerned about crypt t cryptocurrencies. Other concerns have been raised. Just this month, regulators from france and germany agreed to block libra from their countries. The two governments stated that, quote, no private company can claim monetary power which is inherent to the sovereignty of nations, unquote. Can you talk about the risks to investors that libra would pose . Thank you, chairwoman. Im not going to comment on any specific crypto asset. I do think that crypto assets, they have benefits, they can present a great deal of risk. Particularly in cases where in form, they are the same as securities or payment systems, but theyre not regulated in the same way. We have developed that what i would say is an ecosystem of Financial Regulation over the years, securities, commodities, currencies, the deals with a great deal of risk to investors and our markets, to the extent a crypto asset would be used, i have a real problem with it. What are you doing now to take a look at libra . Have you set up a committee, a commission . An Advisory Group . Are you looking at it so you can understand what those risks are . Yes. We have a group at the commission that is focused on Digital Assets, both the potential they have to add efficiency but also the risk they said. We saw this in the ico space, 4 billion, pick your number, raised. Most of it gone. Not complying with our rules. I think we had a great effort from our division of Corporation Finance as well as our Enforcement Division to say if youre selling securities, youve got to follow our rules and were going to do the same thing across all so you do have a committee of some sort thats taking a look at what is happening with the development of libra yes. All Digital Assets that come to our attention what about the entire block chain phenomenon . What do you know about that . What work has been done on that . Is there an opportunity to perhaps brief the legislators on the work that you may be doing both looking at libra and looking at all of the block chain . I would be very happy to do that. I would be very happy to do that with my colleagues at the commission. I cant speak for my other regulators, but jointly with them, happy to do it. Thank you very much. I now yield to the gentleman from north carolina, the Ranking Member, mr. Mchenry. Why dont we start there. Lets start with digital currencies. Chairwoman, i have similar thought process on raising the question. Based off your current analysis of the libra project, which is just an idea at this point, on white paper, do you believe that libra is a security . Im not prepared to make a decision like that here. We have to see how different assets function to decide whether they would be a security, a commodity, a currency or not. But if what youre doing is using a Digital Asset to raise capital for a project with the idea that youre going to get a return as a result of investing in that project, sounds like a security. Okay. Lets acknowledge there is theres a larger ecosystem to raise money globally outside the u. S. Jeurisdiction, but we need to have regulation, but too much drives off innovation for the United States. Is that correct. That is correct. Youve done a significant amount of work in this space. But for cryptocurrencies, we see the block stack had it approved. Walking through that process, do you believe we have a solid ecosystem for cryptocurrencies to exist in the United States and raise capital in a regulated environment . I think we still have work to do to make sure that people can develop Digital Assets in the u. S. , in compliance with our rules. I would like to see us be a little bit more forward thinking in ways we might accommodate unique assets. For example, Digital Assets that are utility tokens, i dont know that the Securities Law framework that we have right now is the appropriate framework for them. And so i would like to see us think about creating a safe harbor. The idea is to allow is there current law for that sec to write regs around them . I think we have an authority that would enable us to work on Something Like that. I think we have authority that could allow us to do that. How would you respond . We have a lot of discussions about this. I agree with the commissioner. To the extent this facilitates capital rising, i think its its been pretty good in the private space. I would like to have more access for individual investors if we can use it to have more access in a protected way, im good with it. And im good with exploring ways to do that. But what we saw in the ico space was something that, you know i dont think anybody thinks that was a success. Okay. Lets move to crowd funding. I raised this in my opening statement. 11 pages that we passed in a bipartisan way. We had fewer than 15 votes on the house floor. Investment crowd funding, regulation crowd funding, such as the limits on individual investment limits, the total amount raised and the overall goal of this. Is the sec willing to relook at the extensive onerous regulations . Yes. And i think we should. If you look at the market for Small Business capital, crowd funding shows you can get started. You can get up to and im going to talk to about large valuations. You can get up to a Million DollarCompany Going with the right crowd funding. Its really hard to grow a business from a 1 million business to a 50 million business because youre talking about individual investors and crowd founding, professional investors at 50. Theres a big gap there. Things we can do to facilitate that so our Small Businesses can become larger, i think thats an area we should focus on. To go much more broadly. We have fewer public listings than we did 20 years ago. Retail investors dont have the same potential they did 20 years ago for their long term savings. Is this a concern for you . Its a very big concern of mine. The great thing about Public Markets, mom and pop investors invest along side with professional investors. I like seeing Capital Raising in that environment. This group passed the jobs act. I think the jobs act helped encourage companies to go one of the things weve been doing is looking at the jobs act provisions and seeing if we could extend them. The gentlewoman from new york, mrs. Maloney, is recognized for five minutes. Ive long been an advocate for using structured data in Financial Reporting and i think it helps both investors and Public Companies and it actually makes it easier for companies to raise capital. Last year the sec adopted a rule requiring Public Companies to report certain financial and risk formation information in. Today im going to be introducing a bill with Ranking Member mchenry called the financial Transparency Act which would direct final regulators, including the sec, to require the Companies Make their filings in structured data format. I would like to ask you, chairman clayton, in light of the secs work in this area, do you think that this bill is a step in the right direction and compliment it is good efforts of the sec in this area . And the question of making data more usable, accessible, to various market participants, yes, and in particular, doing it in a way depending on whether youre very sophisticated or Retail Investor, you can have access to that data, very supportive of that. I will note that how data gets scraped and used has changed over time and i would just encourage everyone in this space to be forward looking and allow flexibility in achieving the objectives of making data more accessible. Commissioner jackson, i want to ask you about the commissions recent interpretation of the advisers act that was adopted along with regulation best interest. But i want to remind my colleagues why we passed so many regulations in the first place. We did it because 8 Million People lost their jobs, 6 Million People lost their home, and the financial crisis destroyed over 15 trillion in wealth for middle class americans, their pensions, their savings, devastating effect on our economy and country. So given all of this, the very last thing the sec should be doing is weakening rules that would perfect investors against these kinds of losses. But unfortunately thats exactly what the commissions interpretation of the advisers act would do. It would weaken the long standing standard for Investment Advisers and increase risk for Retail Investors. I know you voted against this, you opposed the final interpretation of the advisers act. Can you explain why you think the interpretation weakens existing law and poses more risk to investors and our economy . Thank you, congresswoman. Yes, i dissented and the reason is straightforward. The law in the United States should be clear that when theres an a conflict between an ordinary investor and the financial adviser, the investor comes first. The rules that we adopted including the interpretation you mentioned had a muddled standard. We should be clear that american investors come first. And my Office Released data showing that wall street has been staying in brochures for years that they would come first. My own view is not only it was a mistake for us not to make that clear in the interpretation, but also that we upset the prevailing expectations investors have when they entrust other people with their familys financial future. How do we correct this . Well, so a number of the things that i mentioned in my statement would address this problem. One of them would be to use the Authority Congress gave us in dodd frank. Theres authority that would allow us to set a uniform and strong standard with respect to Investment Advice in this country. I continue to think that thats an approach that we should give more consideration to. And i look forward to seeing how it plays out and we need to be much stronger in this area. Thank you very much and we possibly the sec should revisit this and come back with a the standard that president obama supported and worked so hard for. I yield back. Thank you. The gentleman from oklahoma, mr. Lucas is recognized for five minutes. Thank you. I would like to commend you and the commissioners for the tremendous progress the sec has made. And as a final step, sec will need to address the cross border application of these rules. My first question would be along the lines of, in a transaction that occurs between parties outside of the United States, a u. S. Employee will help to execute the transactions. Ive long been an advocate of harmization between the fec. I would like to urge the fec to harmonize with the other on how theyre treated. I hope the sec recognizes the need to safeguard against this. Could you speak to the issue of harmonization with a cross border rule . Either or. I would love to hear from you both. I want to thank the commissioner for taking the lead on these rules. Shes done a terrific job. And you raise one of the difficult issues. You have a transaction between two parties outside the United States. But lets say it is arranged in the u. S. Because, you know, thats where the expertise for this transaction is. And in fact it may involve what we would c