Transcripts For CSPAN3 SEC Chair Testifies On Capital Market

[ gavel ] and i guess the the subcommittee will come to order. Without objection the chairs authorized to declare recess of the subcommittee at any time without objection. Members of the full committee not on the subcommittee authorized to participate in todays hearing. So long as they participate virtually and will be recognized after members of the subcommittee are recognized. Members who are participating via webex platform reminded to keep video function on at all times even if not recognized by the chair. Members participated by webex platform also reminded they are responsible for muting and unmuting themselves. And they should mute themselves both before and after the time that they are allotted. But in addition to that, consistent with regulations, the company and accompanies each res 965, staff will also be muting members when they are not recognized. Members are reminded that all house rules relating to order in decorum apply to this hybrid hearing. In addition, the chair informs members participating in person that in enforcing the order in decorum in this hearing room chair has duty to protect safety of members. Last week the attending physician provided the following guidance. U. S. House of representatives meetings in limited close spaces. This is one. Such as a Committee Hearing room. For greater than 15 minutes, Face Covering are required. Accordingly, the chair will treat Wearing Masks as a matter of order in decorum and all member shos wearing a masks at all times in this room. Member whose do not wish to wearing a masks may participate virtually through the webex platform. The hearing is entitled Capital Markets and emergency lending in the covid19 era. Mr. Chairman, point of inquiry on that. Yes. My understanding base and the rules that masks were required unless you were speaking. During your question period. My understanding of i want to make sure its clear. It is the strong preference of the chair we wear the masks even while speaking. But that rule will be less enforced than at other times. The reason for that is, if youre not wearing a mask before you speak, you may not be called on in order, but once i call on someone, well rely upon your dedication to the health of yourself, but more importantly everyone else in the room and urge you to continue to wear your mask. You are as weve seen from a number of instances, more likely to spread the disease when speaking than when not speaking. So i urge you to do so, but my tools for enforcing that are more limited. I just thank you, mr. Chairman. Appreciate that and i, to my members advise your Comfort Level and then as were dealing with this, much like the rules on the house floor, if you are speaking were free to, to add to the Comfort Level being able to deal with that. Thank you. I yield back. Okay. Accordingly, chair treats Wearing Masks as matter of order in decorum and all members should wearing a masks. Member whose do not wish to mask, i said before, may do so, may participate virtually. I will now recognize myself for four minutes. Mr. Clayton, im glad youre here. I hope youre here six months from now. It has been suggested that as part of the president s decision to fire the u. S. Attorney for the Southern District in new york, that you would be called upon to fill that position. I rarely quote senators, because they are rarely a source of wisdom. In this case Chuck Schumer stated jay clayton can allow himself to be used in this brazen trump barr scheme to interfere with investigations in the su Southern District of new york or stand up, withdraw and save his reputation. I dont always take advice from senators, but in this case, i would commend it to you especially in light of the fact that senator Lindsey Graham has pretty much indicated that youre with us for the duration. So keeping your name there simply weakens your gravitas with regard to the s. E. C. And doesnt allow you to reduce your commute. The covid19vt pandemic has resulted in unprecedented volatility in u. S. Markets. Yet the markets have remained open. They are functioning. I know that the chair will tell us all of his staff has done to achieve that result and that the s. E. C. Division of enforcement and office of compliance inspections and examination moved aggressively to stop covid19based investment scams and have already suspended trading of 30 companies. We are at a time of emergency. I would hope that the s. E. C. Would use its limited bandwidth to do two things. Do things that are necessary, because of the emergency, and do things that are bipartisan. Accordingly, i would hope that you would curtail the efforts on the proxy advisers rule and the rules narrowing disclosure related to mergers and acquisitions. Today as were going to deal with a number of bills, among these are ms. Velasquez bill requiring Public Companies to slow risks to the supply chain disruptions and impacts and what they, what impact they might have on their workforce. Ms. Deans legislation reversing fed and treasurys decision to open fed lending facilities only to corporations with Credit Ratings from certain agencies or having at least one of those certain Credit Rating agencies when in fact the s. E. C. Is determined a longer list of agencies has expertise. Ms. Wextons bill to require disclosure of products likely to be manufactured using forced labor from the uighur internment camps. And this is a group, of course, that the president was so anxious to set out. I dont think that should be our policy. Mr. Meeks legislation to temporarily suspend rulemaking by federal fiscal regulators unrelated to covid19 crisis. We also will discuss a number of issues that i have legislation on. Along with my partners and cosponsors, among these are the need for continued Public Disclosure of those unique risks that companies have, because of covid19. The ongoing barriers to the pcaob and its effort to audit auditors making sure investors are protected. Continued challenges with the flawed cecil accounting standard and overall push at the fasb needs to be controlled by the s. E. C. To move from historic accounting and reporting what has happened in transactions completed, to moving to having the accountants project whats likely to happen or determine what future values of certain assets will be. And the misguided decision by fed and treasury to exempt companies receiving taxpayer dollars from the rules we put in the c. A. R. E. S. Act regarding Dividend Payments and stock buybacks and executive compensation. Also well deal with the loan coveted issue that arises at this time. I look forward to hearing chairman clayton on these issues and i will yield four minutes to our Ranking Member mr. Huizenga. Thank you, mr. Chairman. Appreciate you holding todays hearing. Capital markets and emergency lending in the covid19 era, i note its not on the Southern District of new york and that box has been checked. Hope we can move along to the work of chairman clayton. Last several months upended livelihood and wellbeing for millions of families throughout the United States. With almost every state under stayathome odders, everyone factored by the pandemic and affecting our daily lives and our Capital Markets as well. Undoubtedly these have been uncertainly times for american investors and Market Participants. During first wharf 2020 pandemic caused severe economic and Capital Market shocks. This turmoil evidenced by sharp price declines, spikes and volumes in equity markets closed First Quarter worst performance since the financial crisis. Additionally, ultimate symbol of unprecedented march 23rd closing of the floor at the new york stock exchange, first time the floor closed while trading continued. Although we saw significant market volatility early in the crisis i believe Capital Markets have been generally resilient. Capital markets undergone toughest pandemic stress, test to date. Pleased to report they seem to pass with flying colors. We are beginning to emerge from the depths of this Health Crisis we have a unique opportunity to careful lly assess actions taki to address the pandemic and impacts. Take stock of Lessons Learned and how to move forward. Need to find more ways to jumpstart our economy, help grow our Small Businesses reduce unnecessary regulatory costs and burdens on our Public Companies. Also improve and expand access to capital marx for businesses and investors to better put their money to . cwork. Theres no doubt that many of covid19s impacts will be longlasting and necessarily influence how america conducts business in the foreseeable future. Chairman clayton, i look forward to hearing on ways to reignite the economy, help business get back up and running and get americans back to work. Not to mention what you often talking about, protecting main Street Investors. We need those folks to increases savings in retirement returns for these main street americans. Looking forward to hearing from you as we have chatted in the past. Lots is happening. Hoping we are able to capture some of the temporary reforms and streamlining as economists talk, reducing that friction between transactions in a way that certainly keeps6ux investo safe, facilitates the markets and increases the value and importance here in the United States and with that, mr. Chairman, i yield back. Thank you. At this point i would yield to the chair of the full committee, if i saw her on the screen or staff indicated she was available. Instead i go to the Ranking Member of the full committee and the chair of the full committee recognized either after the Ranking Member or after the witness. Now i recognize mr. Mchenry for one minute. Sure. Happy to take her time but not a perspective. Thank you. Thank you, chair clayton, forebeing here. I know theres exciting news about you. And with the Securities Exchange commission is doing. Glad we can talk about those things here today. I commend your leadership and commissions diligence during these tough times. The constant focused work you all have been about is commendable. This gives assurance to markets and to the American People that our government can actually function even in a time where we have to be socially distant. So we need to ensure regulators like the s. E. C. , focused on policies to make our markets stronger, more attractive and competitive to see our way through this economic challenge born out of this Health Crisis. I know the commissions made a lot of progress on proposals to stimulate the economy and Economic Growth and prioritize targeted reforms that address current needs related to the virus. Thank you for your leadership and thank you for being here and thank you for your good work. Thank you. Again, ill reserve the one minute for the chair of the full committee, and today we welcome the testimony of our distinguished witness jay clayton, chairman of securities and exchange commission. Chair clayton served as chair of the s. E. C. Since 2017 and during that time also has served as a member of the president S Working Group on Financial Markets. The Financial Stability oversight council, and the Financial Stability board. Clearly a package of responsibilities that exceeds and interests anything else hes considering doing. Chair clayton has testified before this committee before, and will not provide future, more of an introduction. Witness is reminded your minutes without objection your written statement made part of the record. Youre now recognized. Thank you, chairman sherman and Ranking Member and members[ of the subcommittee. I appreciate the opportunity to testify today. Before i begin discussing the work of the commission id like to address briefly recent news regarding my potential nomination to be u. S. Attorney for the Southern District of new york. I have a long held deep respect for the work of the Southern District, which is recognized throughout our nation and internationally for enforcing the law and pursuing Justice Without fear or favor. My deep personal respect, largely a result of many years working with the Southern District and its distinguished alumni including senior personnel at the s. E. C. I recognize that the nomination process is multifaceted and uncertain. It is clear the process does not require my current attention. In short, i am fully committed to and focused and my role at the s. E. C. I could not be more proud of the work of my colleagues over the past three years on behalf of main Street Investors and our markets. There is much more to accomplish, an environment that emphasizes a commitment to respect Diversity Inclusion and opportunity for all. I look forward to continuing to lead the commission. Today my testimony will focus solely on the work of the s. E. C. And in particular the s. E. C. s important work responding to effects of covid19. Our efforts focused first and foremost on health and safety of our employees and all americans. Since early march the agency has remained fully operational in a mandatory telework posture thanks to the dedicated women and men of the agency who have risen to the occasion, demonstrated flexibility and resiliency and proven why their work is so important to main Street Investors and our markets. In these times of economic stress and market volatility, brought about by our collective Unprecedented Health and Safety Response to covid19, the commission has focused significant resources on ensuring our markets continue to function as expected, facilit e facilitating timely disclosure and maintaining enforcement examination and Investor Protection efforts. Weve worked closely with fellow regulator over the past moss nt and this significantly mitigated potential economic consequences of covid19. I would be remiss if i did not mention the prompt Decisive Action of the Federal Reserve, the treasury and congress. From my Vantage Point these efforts were necessary and intended stabilizing and other effects. Here i note that despite the extraordinary volumes in volatility weve seen over the past few months the pipes and plumbing of our Securities Markets functioned largely as designed. Importantly, as Market Participants would expect. Continuing to monitor market crisis, capital flows, liquidity and aavailability of credit in our efforts to assess function amount and resilience of you are Capital Markets, closely engaged with fellow authorities and Market Participants in this regard and provided targeted relief and guidance where appropriate. Also been assisting issuers in fulfilling obligations to provide materially accurate and complete disclosures and urged both corporate and municipal issuers to provide investors with as much information as practical regarding their current and anticipated financial and operating status. In addition, weve maintained our strong enforcement and Investor Protection efforts especially in the area of cove edrelated fraud and misconduct. For example, the commission issued over 30 trading suspensions and brought a number of Enforcement Actions alleging fraud based on covidrelated claims. Finally, while the agency is engaging or numerous covid19 initiatives also weve continued traditional missionoriented Agency Functions including rulemaking, investor outreach and others. Thank you again for the opportunity to testify about the work of the women, men of the commission, and i look forward to your questions. Thank you. We do have a minute available to the chair of the full committee, but im told that, and this doesnt surprise me, she would prefer i not yield for a minute. Mr. Chairman point of inquiry. Yes . So my understanding is the second vote has just been called. What, can you lay out for the members and for the witness, intention how were going to it is our intention to keep this hearing going. That members will leave when their appropriate time is to vote. The chair will leave and i know that a number of my colleagues are here with names that are different parts of the alphabet, and so we will just keep going, but i realize that there will be a vote, maybe two, that thank you for the clarification. Thank you. Okay. Small business, mr. Chairman, is very important. We just adopted probably the most Popular Program were involved with in the ppp program that will cost the federal government half a trillion dollars. Well worth it. But it is important that we do Committee Hearing<\/a> room. For greater than 15 minutes, Face Covering<\/a> are required. Accordingly, the chair will treat Wearing Masks<\/a> as a matter of order in decorum and all member shos wearing a masks at all times in this room. Member whose do not wish to wearing a masks may participate virtually through the webex platform. The hearing is entitled Capital Markets<\/a> and emergency lending in the covid19 era. Mr. Chairman, point of inquiry on that. Yes. My understanding base and the rules that masks were required unless you were speaking. During your question period. My understanding of i want to make sure its clear. It is the strong preference of the chair we wear the masks even while speaking. But that rule will be less enforced than at other times. The reason for that is, if youre not wearing a mask before you speak, you may not be called on in order, but once i call on someone, well rely upon your dedication to the health of yourself, but more importantly everyone else in the room and urge you to continue to wear your mask. You are as weve seen from a number of instances, more likely to spread the disease when speaking than when not speaking. So i urge you to do so, but my tools for enforcing that are more limited. I just thank you, mr. Chairman. Appreciate that and i, to my members advise your Comfort Level<\/a> and then as were dealing with this, much like the rules on the house floor, if you are speaking were free to, to add to the Comfort Level<\/a> being able to deal with that. Thank you. I yield back. Okay. Accordingly, chair treats Wearing Masks<\/a> as matter of order in decorum and all members should wearing a masks. Member whose do not wish to mask, i said before, may do so, may participate virtually. I will now recognize myself for four minutes. Mr. Clayton, im glad youre here. I hope youre here six months from now. It has been suggested that as part of the president s decision to fire the u. S. Attorney for the Southern District<\/a> in new york, that you would be called upon to fill that position. I rarely quote senators, because they are rarely a source of wisdom. In this case Chuck Schumer<\/a> stated jay clayton can allow himself to be used in this brazen trump barr scheme to interfere with investigations in the su Southern District<\/a> of new york or stand up, withdraw and save his reputation. I dont always take advice from senators, but in this case, i would commend it to you especially in light of the fact that senator Lindsey Graham<\/a> has pretty much indicated that youre with us for the duration. So keeping your name there simply weakens your gravitas with regard to the s. E. C. And doesnt allow you to reduce your commute. The covid19vt pandemic has resulted in unprecedented volatility in u. S. Markets. Yet the markets have remained open. They are functioning. I know that the chair will tell us all of his staff has done to achieve that result and that the s. E. C. Division of enforcement and office of compliance inspections and examination moved aggressively to stop covid19based investment scams and have already suspended trading of 30 companies. We are at a time of emergency. I would hope that the s. E. C. Would use its limited bandwidth to do two things. Do things that are necessary, because of the emergency, and do things that are bipartisan. Accordingly, i would hope that you would curtail the efforts on the proxy advisers rule and the rules narrowing disclosure related to mergers and acquisitions. Today as were going to deal with a number of bills, among these are ms. Velasquez bill requiring Public Companies<\/a> to slow risks to the supply chain disruptions and impacts and what they, what impact they might have on their workforce. Ms. Deans legislation reversing fed and treasurys decision to open fed lending facilities only to corporations with Credit Ratings<\/a> from certain agencies or having at least one of those certain Credit Rating<\/a> agencies when in fact the s. E. C. Is determined a longer list of agencies has expertise. Ms. Wextons bill to require disclosure of products likely to be manufactured using forced labor from the uighur internment camps. And this is a group, of course, that the president was so anxious to set out. I dont think that should be our policy. Mr. Meeks legislation to temporarily suspend rulemaking by federal fiscal regulators unrelated to covid19 crisis. We also will discuss a number of issues that i have legislation on. Along with my partners and cosponsors, among these are the need for continued Public Disclosure<\/a> of those unique risks that companies have, because of covid19. The ongoing barriers to the pcaob and its effort to audit auditors making sure investors are protected. Continued challenges with the flawed cecil accounting standard and overall push at the fasb needs to be controlled by the s. E. C. To move from historic accounting and reporting what has happened in transactions completed, to moving to having the accountants project whats likely to happen or determine what future values of certain assets will be. And the misguided decision by fed and treasury to exempt companies receiving taxpayer dollars from the rules we put in the c. A. R. E. S. Act regarding Dividend Payments<\/a> and stock buybacks and executive compensation. Also well deal with the loan coveted issue that arises at this time. I look forward to hearing chairman clayton on these issues and i will yield four minutes to our Ranking Member<\/a> mr. Huizenga. Thank you, mr. Chairman. Appreciate you holding todays hearing. Capital markets and emergency lending in the covid19 era, i note its not on the Southern District<\/a> of new york and that box has been checked. Hope we can move along to the work of chairman clayton. Last several months upended livelihood and wellbeing for millions of families throughout the United States<\/a>. With almost every state under stayathome odders, everyone factored by the pandemic and affecting our daily lives and our Capital Markets<\/a> as well. Undoubtedly these have been uncertainly times for american investors and Market Participants<\/a>. During first wharf 2020 pandemic caused severe economic and Capital Market<\/a> shocks. This turmoil evidenced by sharp price declines, spikes and volumes in equity markets closed First Quarter<\/a> worst performance since the financial crisis. Additionally, ultimate symbol of unprecedented march 23rd closing of the floor at the new york stock exchange, first time the floor closed while trading continued. Although we saw significant market volatility early in the crisis i believe Capital Markets<\/a> have been generally resilient. Capital markets undergone toughest pandemic stress, test to date. Pleased to report they seem to pass with flying colors. We are beginning to emerge from the depths of this Health Crisis<\/a> we have a unique opportunity to careful lly assess actions taki to address the pandemic and impacts. Take stock of Lessons Learned<\/a> and how to move forward. Need to find more ways to jumpstart our economy, help grow our Small Businesses<\/a> reduce unnecessary regulatory costs and burdens on our Public Companies<\/a>. Also improve and expand access to capital marx for businesses and investors to better put their money to . cwork. Theres no doubt that many of covid19s impacts will be longlasting and necessarily influence how america conducts business in the foreseeable future. Chairman clayton, i look forward to hearing on ways to reignite the economy, help business get back up and running and get americans back to work. Not to mention what you often talking about, protecting main Street Investors<\/a>. We need those folks to increases savings in retirement returns for these main street americans. Looking forward to hearing from you as we have chatted in the past. Lots is happening. Hoping we are able to capture some of the temporary reforms and streamlining as economists talk, reducing that friction between transactions in a way that certainly keeps6ux investo safe, facilitates the markets and increases the value and importance here in the United States<\/a> and with that, mr. Chairman, i yield back. Thank you. At this point i would yield to the chair of the full committee, if i saw her on the screen or staff indicated she was available. Instead i go to the Ranking Member<\/a> of the full committee and the chair of the full committee recognized either after the Ranking Member<\/a> or after the witness. Now i recognize mr. Mchenry for one minute. Sure. Happy to take her time but not a perspective. Thank you. Thank you, chair clayton, forebeing here. I know theres exciting news about you. And with the Securities Exchange<\/a> commission is doing. Glad we can talk about those things here today. I commend your leadership and commissions diligence during these tough times. The constant focused work you all have been about is commendable. This gives assurance to markets and to the American People<\/a> that our government can actually function even in a time where we have to be socially distant. So we need to ensure regulators like the s. E. C. , focused on policies to make our markets stronger, more attractive and competitive to see our way through this economic challenge born out of this Health Crisis<\/a>. I know the commissions made a lot of progress on proposals to stimulate the economy and Economic Growth<\/a> and prioritize targeted reforms that address current needs related to the virus. Thank you for your leadership and thank you for being here and thank you for your good work. Thank you. Again, ill reserve the one minute for the chair of the full committee, and today we welcome the testimony of our distinguished witness jay clayton, chairman of securities and exchange commission. Chair clayton served as chair of the s. E. C. Since 2017 and during that time also has served as a member of the president S Working Group<\/a> on Financial Markets<\/a>. The Financial Stability<\/a> oversight council, and the Financial Stability<\/a> board. Clearly a package of responsibilities that exceeds and interests anything else hes considering doing. Chair clayton has testified before this committee before, and will not provide future, more of an introduction. Witness is reminded your minutes without objection your written statement made part of the record. Youre now recognized. Thank you, chairman sherman and Ranking Member<\/a> and members[ of the subcommittee. I appreciate the opportunity to testify today. Before i begin discussing the work of the commission id like to address briefly recent news regarding my potential nomination to be u. S. Attorney for the Southern District<\/a> of new york. I have a long held deep respect for the work of the Southern District<\/a>, which is recognized throughout our nation and internationally for enforcing the law and pursuing Justice Without<\/a> fear or favor. My deep personal respect, largely a result of many years working with the Southern District<\/a> and its distinguished alumni including senior personnel at the s. E. C. I recognize that the nomination process is multifaceted and uncertain. It is clear the process does not require my current attention. In short, i am fully committed to and focused and my role at the s. E. C. I could not be more proud of the work of my colleagues over the past three years on behalf of main Street Investors<\/a> and our markets. There is much more to accomplish, an environment that emphasizes a commitment to respect Diversity Inclusion<\/a> and opportunity for all. I look forward to continuing to lead the commission. Today my testimony will focus solely on the work of the s. E. C. And in particular the s. E. C. s important work responding to effects of covid19. Our efforts focused first and foremost on health and safety of our employees and all americans. Since early march the agency has remained fully operational in a mandatory telework posture thanks to the dedicated women and men of the agency who have risen to the occasion, demonstrated flexibility and resiliency and proven why their work is so important to main Street Investors<\/a> and our markets. In these times of economic stress and market volatility, brought about by our collective Unprecedented Health<\/a> and Safety Response<\/a> to covid19, the commission has focused significant resources on ensuring our markets continue to function as expected, facilit e facilitating timely disclosure and maintaining enforcement examination and Investor Protection<\/a> efforts. Weve worked closely with fellow regulator over the past moss nt and this significantly mitigated potential economic consequences of covid19. I would be remiss if i did not mention the prompt Decisive Action<\/a> of the Federal Reserve<\/a>, the treasury and congress. From my Vantage Point<\/a> these efforts were necessary and intended stabilizing and other effects. Here i note that despite the extraordinary volumes in volatility weve seen over the past few months the pipes and plumbing of our Securities Markets<\/a> functioned largely as designed. Importantly, as Market Participants<\/a> would expect. Continuing to monitor market crisis, capital flows, liquidity and aavailability of credit in our efforts to assess function amount and resilience of you are Capital Markets<\/a>, closely engaged with fellow authorities and Market Participants<\/a> in this regard and provided targeted relief and guidance where appropriate. Also been assisting issuers in fulfilling obligations to provide materially accurate and complete disclosures and urged both corporate and municipal issuers to provide investors with as much information as practical regarding their current and anticipated financial and operating status. In addition, weve maintained our strong enforcement and Investor Protection<\/a> efforts especially in the area of cove edrelated fraud and misconduct. For example, the commission issued over 30 trading suspensions and brought a number of Enforcement Actions<\/a> alleging fraud based on covidrelated claims. Finally, while the agency is engaging or numerous covid19 initiatives also weve continued traditional missionoriented Agency Functions<\/a> including rulemaking, investor outreach and others. Thank you again for the opportunity to testify about the work of the women, men of the commission, and i look forward to your questions. Thank you. We do have a minute available to the chair of the full committee, but im told that, and this doesnt surprise me, she would prefer i not yield for a minute. Mr. Chairman point of inquiry. Yes . So my understanding is the second vote has just been called. What, can you lay out for the members and for the witness, intention how were going to it is our intention to keep this hearing going. That members will leave when their appropriate time is to vote. The chair will leave and i know that a number of my colleagues are here with names that are different parts of the alphabet, and so we will just keep going, but i realize that there will be a vote, maybe two, that thank you for the clarification. Thank you. Okay. Small business, mr. Chairman, is very important. We just adopted probably the most Popular Program<\/a> were involved with in the ppp program that will cost the federal government half a trillion dollars. Well worth it. But it is important that we do Everything Possible<\/a> that Small Business<\/a> can get dmaecapital ins that dont cost the federal government money. I remain unattended affect of d. C. s acquired funds, and mr. Stivers and i introduced legislation to fix this but i know youre working to address this at well in the proposed fundtofunds rule. Are you confident that the s. E. C. Will solve this problem in a way that bbcs will inucolld colluded included in the indexes . I am confident women and men in our Investment Division<\/a> are aware of this issue. We have been looking at that treatment, and i think that in fee disclosure, let me just say this. Fee disclosure, comprehensive improvement is appropriate, and if you look at our regulatory flexibility agenda we have both fundtofunds and investor experience on that agenda. I intend to finish those rulemakings and proposals before the end of the fiscal year, and i expect affe modernization ill call it will be addressed therein. You cant mandate inclusion of indexes, but you can create a rule that you know will have a certain affect on inclusion and indexes. I think Small Businesses<\/a> are perhaps more important4ato our economy than reits. Id like to hear your next steps in evaluating electronic delivery of investors documents, is the s. E. C. Looking to expand electronic delivery beyond shareholders reports . If you mail it to me ill lose it. Email it to me, if some witness in this room is particularly boring, i can look at it on my ipad while im in this room. But much more likely because wl only have interesting witnesses here, i, when i have a spare minute somewhere i can find it. So by searching for emails from that company. Where are we on electronic delivery . Let me say this. My perspective on this has been shaped by the response weve needed to do as a result of the covid situation. It is can you speak into the microphone . So we have people participating remotely. My response, sorry, my view, has been further shaped by the work we have done in this covid environment. It is clear that we live in an electronic communication world. Let me say that i am of the view that anyone who wants paper should be able to get paper. But what this, this period has shown uspzzathe importance of electronic delivery and the effectivenesses of electronic delivery. Now i want to address the fact that Companies Based<\/a> in china and i think also belgium are being traded on our stock exchanging but invest es dont get protection auditing their audit. In the senate and myself and mr. Gonzalez here in the house put forward legislation. I hope that we derive legislation that achieves an important goal, and that is, if the audit is, you know, only 20 , 30 not subject to pcob that that is allowed, but when you start having an audit that is more than that, youre asking people to make investments, and i would, without that protection. If youre going to invest this is Investor Protection<\/a> committee. So i look forward to working with you to make sure those who invest in american stock exchanges are protected and hope in evaluating whether to impose the requirement in measuring what portion of the audit is unavailable to the pcaob, you would not look at audit hours, because i want to make sure that theres no reason to change the numerator, change the denominator having auditors do more or less. We want more auditing and auditors being audited. I look forward to working with you on that, and i will now yield five well i will now recognize the gentleman from michigan, mr. Huizenga. I was going to say that. For five minutes. Thank you, mr. Chairman. And seems we may have swapped notes and questions here. My first two questions were exactly about the digitization efforts and assessing the impacts on business kornt necon plans and investor preferences. I think you answered if you want paper you should be able to get paper. To expand a little bit on now where the chair was going on the pcaob, would you first of all, would it make sense to make clear thenegh s. E. C. Has full rulemaking sport under the bill to ensure multicorporations doing a small amount of business in an uninspectable are not caught up in the bill . The question what scope whereofin writing regulations to implement the bill . Yes. As we said, as the bill stands we believe we have authority to do it. oin of course, the more intent you express the better. But as it stands, we believe we could implement it, but if you have further nuances, further direction, we of course welcome it. I really want to find out whether you felt that you had proper tools to be able to move forward on that. Glad to hear that. As a small privately held business, as we see small privately held businesses struggle to stay afloat during these unprecedented times, some will look to sell their business or forced to close doors altogether. As you know i have a bill hr609, allowing Small Businesses<\/a> the opportunity to be sold to the next generation of entrepreneurs, also protecting good paying jobs. I hope you would join me in supporting this, and i believe we need to pass this bill to help the struggling Small Business<\/a> owners. Are there things we can do to make sure that that, the small privately held businesses arent caught up and treated like a publicly traded Large Company<\/a> . Yes. We have an Office Thanks<\/a> to congress, advocate for Small Business<\/a> policy, and im so happy with their work that theyve been doing, because theyve, their job is to affirmatively recognize that Small Businesses<\/a> are vastly different in theyre capital needs, in their operations from our Public Companies<\/a>. Just in response to covid, weve adjusted the crowd funding rules. Now, all with let me just say all without any degradation in Investors Protection<\/a>, but to serve smaller businesses, and to understand that the rules for them raising capital and access to capital should be different. Different from the Public Company<\/a> rules, and they shouldnt require hundreds of lawyer hours to get there. I believe theres been, that the sections within the bar have supported this in the past. We have seen a number of, a number of efforts. Ive passed this bill through the house unanimously and became partisan somehow, but nonetheless, hoping we can earn your support in helping to explore that. Also youve testified before this and other subcommittees several times members of both parties on both sides of the capitol raised the ponzi scheme, stanford and nearly all hearings. Indicated a willingness to be helpful to the victims. Over 21,000, my constituents waiting over 11 years. Update on the status of the commissions efforts to help them get their money back . So let me say this. The status, if you look at the status of the stamford victims, you cant reach any conclusion, other than there was a failure in the system. Everything that went oysm hered the veneer of legitimacy. Yet at the end of the day, they havent gotten much money back. And we have dedicated substantial resources to try to help them get more back. You know, theyre never going to be anywhere close to whole. In fact, never going to be anywhere close to anything close to whole. Anything satisfactory, but we are working on it. We are looking at the remaining claims they have, and consistent with our authority, and our independence as an agency trying to help them as much as possible. The last 45 seconds, talk about the trajectory of our overall economy. The health of our markets. Where were going, and your optimism on that or pessimism. So so, look. Heres where we are. We have been able to stabilize our Capital Markets<\/a> and the flow of credit in our economy. Thanks to the great work of the treasury, Federal Reserve<\/a> and in conjunction with this body. Were still in a period of uncertainty. Were going to go, from my perspective, into Second Quarter<\/a> earnings, find out a lot how companies are operating. Hopefully what were seeing is companies adjusting and continuing to increase their ability to operate. See that from Public Companies<\/a>. To the extent that filters down to private companies, thats terrific. But we do need to do what we can to keep, keep the economy going as we learn more about how to deal with the virus operationally and socially. Thats as quick an answer i can give you. You know, weve done well. Weve got work to do. Thank you. I yield back and mr. Chairman i have to excuse myself, because im about five minutes late for my vote section. So i will turn it over i understand. To the Ranking Member<\/a>. The ss will come up in the alphabet soon. I assure the witness iable getting notes from staff how to conduct the hearing but not using an ipad to review the investors disclosure materials from many of my portfolio companies. If we addressed ffe you would, though, right . I promise you, not while youre here. I now recognize the distinguished chairwoman, ms. Waters. Thank you very much. I appreciate the opportunity to be here with you today at this hearing. Chairman clayton, in the middle of the night last friday, geoffrey berman, United States<\/a> attorney for the Southern District<\/a> of new york was forced out of his position by President Trump<\/a> and attorney general barr. The attorney general subsequently announced that President Trump<\/a> intended to nominate you as mr. Bermans replacement. Their actions appear to be a continuation of President Trump<\/a>s efforts to squash any attempts to hold him and his enablers accountable. As you know, the Southern District<\/a> of new york has been instrumental in conducting independent investigations into President Trump<\/a>s associates and the Trump Organization<\/a> and is currently investigating Deutsche Bank<\/a>, and an insfutitution with long and financial ties to President Trump<\/a>. In light of these past actions, i am deeply concerned that while your nomination to this important post is pending, President Trump<\/a> and attorney general barr may try to interfere with your ability to independently and effectively oversee the securities and exchange commission. And serve as wall streets cop on the beat during a Global Health<\/a> pandemic that caused one of the worst financial crises of our lifetimes. Do you plan to continue serving as chair of the s. E. C. While you await your confirmation . Chairwoman waters, as i mentioned in my opening statement, i dont think that matter requires my attention at this time. Im sorry. Would you speak up . Im sorry. I dont think that matter requires my attention at this time and i expect to continue to devote my full attention to the commission. So you will continue to serve as chair of the s. E. C. While you await the confirmation . You will not step down . You will not step aside . They will not have someone to take your place in any shape, form or fashion that you know about . Right. Let me just say where i sit right now and this is this is not the where i sit right now, this is not the time to decide about the nomination. Im heres as chairman of the s. E. C. As i look at it, theres no theres no need for me to pay any attention to the nomination at this time. I am fully committed to being chairman of the s. E. C. And, of course, that would not be your decision, and im not asking you if you were making that decision. Im basically wanting to know, has anybody else said to you that you would not be serving as chair while you await confirmation . Has anyone said that to you . Did the president , did attorney barr say that to you . Anybody . No. And, look, i have checked this matter with our Ethics Office<\/a> and the like. I intend to continue to serve as chairman of the s. E. C. And devote my full attention to my duties at chairman of 9 s. E. C. Thank you. Will you commit today to recuse yourself from any and all matters before the s. E. C. That directly or indirectly involve President Trump<\/a> creating the appearance that your actions serve as a special favor to President Trump<\/a> in order to obtain a position that President Trump<\/a> and attorney general barr have highly politicized . Im going to continue to do what ive always done at the s. E. C. , pursue all matters with independents dense and consult with ethics on any issues that would give the appearance of not having independence, but i continue to appropriate as i have. Thank you. And so thats a yes . Let the record show that you have answered in the affirmative. Lets see. If we have time here for one more question. Chairman clayton, at the onset of the crisis, i called on you and other financial regulators to immediately halt the adoption of all i related to addressing the unprecedented help and financial crisis caused by covid19s pandemic. I made it clear 100 of the s. E. C. s resources should be dedicated to protecting investors and u. S. Capital markets during the pandemic. Also clear it would be unacceptable for the s. E. C. To use this crisis to justify regulatory rollbacks of important regulation, yet as i outlined in my letter to you this week i continue to see the s. E. C. Under your leadership engage in deregulatory rulemakings that expand private markets, that the state securities regulators testified are ripe with fraud. This proposal would limit the amount and reliability of information investors rely on at a time when markets are experiencing the highest levels of volatility, since the 2008 financial crisis. Another proposal would preventable small shareholders from seeking to reform and modernize the companies they own including by making it harder to propose increasing diversity pay workers a living wage taken seriously, Climate Change<\/a> or make changes to adapt the postpandemic world. So have you paid attention to what we are concerned about and the relationship to not using this as a time to do deregulation . Well what i can say is our regulatory agenda mr. Chairman we are continuing to pursue our regulatory agenda and doing so in a very open way. Continuing to take comments and engage with people, and on those areas where Investors Protection<\/a> my aim has time expired unfortunately. Okay. Thank you. Thank you. Well followup. Thank you. I now recognize the gentleman, Ranking Member<\/a> mr. Mchenry five minutes. Sure. Chairman clayton, written to you about harmonizing the the choppiness of regulations within the securities andgjl exchange commission, this is something needed quite a long turned of time, but i wrote to you specifically about regulation crowd funding. An issue ive worked on for a decade. Especially now. I think we need to help Small Businesses<\/a>. And we need to help Small Businesses<\/a> in a variety of ways. Not just with lending but the opportunity to raise other forms of debt, as well as, you know, due capital, new capital raises for equity as well. So i wrote to you about this specifically, about special purpose vehicles and increasing offering limits. So i just wanted to see if you would elaborate on the comments you received and when the when this looks like youll finalize the rulemaking . I dont have a specific time frame for that, but it son our agenda to finish. Sometime around the end of the fiscal year. I intend to stick to our agenda. What we are trying to do, if you dont mind me taking a few minutes is, if lets just say youre a small or Mediumsized Company<\/a> looking to raise capital, youve got to weave your way through a patchwork of six or seven different times of exemptions including regulation crowd funding and you need a ph. D. In Securities Law<\/a> to do it. What we want to do is basically streamline that process without in anyway degreeding Investor Protection<\/a>s. Right. In fact hopefully increasing consumer protection. Get rid of all the cost maintaining some in respects with regulation crowd funding, more capital rates for 50,000 than we do for 50 million . So that doesnt make sense in terms of a cost burden for the protection of the investor, the clarity of information for the invest investor. So rightsizing these things so there is a gradual change in regulatory costs and oversight based off the instead of having arbitrary break points to smooth those things out, is that the focus of your work . Yes. Thats a fair thats a fair summary. So what are the benefits . What do you think will get, as a benefit, if this is done, and it, done successfully . So a hopeful benefit is right now our most acute problem is, Companies Getting<\/a> started raising 200,000, 300,000, 400,000, 500,000. Generally thats achievable through people, friends and family. The like. Trying to take that company from that size up to a 25 million is extremely difficult. Once you get to 25 million, institutional investors, sophisticated, bring them in. It is in that gap. Pick your number. 500,000, 2 million, up to 50 million, a tremendous amount of choppiness and access to capital could be better. With Investor Protection<\/a>. You know, limit investment size. Do a bunch of things, but its too choppy where it is now. Okay. And i commend the work that you have focused on here. Its been due for decades at the s. E. C. And i think that was how some of the poor implementation of the jobs act that you can remedy and make clear the intention of congress here. So i want to highlight also on esg. We had a recent panel before this committee that the head of sustainability at black rock said there was an overabundance of esg data. The Strong Majority<\/a> is not connected to materiality. Which is a fundamental foundation of our disclosure framework. Given the vast amounts of date. Tara and questionable utility for some if not most companies is it appropriate for the commission to dictate a single esg scoring system for every Public Company<\/a> using that data . Look, ive been very thats coming out one way. Coming at it a different way, ive been very clear i think a single esg metric doesnt make a lot of sense. When you take qualitative metrics that have a degree of subjectivity and then personal preference. So just one of those has a fair amount of ambiguity in it and then you combine them together to come up with one score, i kind of you know, i love i love economist, he won the nobel prize showing them when you try to rank like that, it doesnt work out very well. Okay. So likewise, with the coronavirus. Do you think theres an appropriate onesizefitsall disclosure requirement for risks related to the coronavirus . What were seeing around corona i have to commend our staff. Weve gone out there and tried to give companies as much guidance as we can how to the effects of kore corona and our response. Its vastly different from company to company. So, no. Some companies have benefitted in ways. Some companies are completely shut down. Some companies have liquidity problems, others dont. Operational issues. Our principlesbased system has proven itself through the, this response. And you know, Second Quarter<\/a> earnings seizet s season will be way. Thanks for your statement and your work. Yield back. Recognize the gentle lady from new york. Mr. Maloni, five minutes. Thank you, and thank you for being here today, mr. Clayton. I want to address the issue that is on everyones mind. The scandal in the u. S. Attorneys office in the Southern District<\/a> of new york, which is in my home district. The office has several open investigations involving President Trump<\/a>, his company and his Close Associates<\/a> including rudy giuliani. There have been press reports that President Trump<\/a> was very unhappy about the Southern District<\/a>s decision to investigate his friends. And then on friday night, attorney general barr released a statement falsely claiming that the u. S. Attorney in the Southern District<\/a>, geoff berman, had stepped down, and announcing that the president intended to nominate you as his replacement. Of course, we now know that the attorney general replacement. Of course, we now know the attorney general was lying. He had not agreed to step down and when he refused, the president fired him. This episode was extremely troubling to many of us. And suggests that the president fired a u. S. Attorney for refusing to follow his directions on criminal prosecutions. That would be a blatant abuse of power and should be unacceptable to everyone. Now chairman clayton, you and i have a really productive relationship, even though we dont always agree, but i have to ask you some questions about this episode and your involvement. First, when did you first discuss the Southern District<\/a> job with the president or the Trump Administration<\/a> and who did you u disdiscuss it with . Attorney general barr . Im here at the chairman of the sec to discuss the work of the sec. What i can say is that as i said in my opening statement. That i want, i need to go back to new york. Were both from new york. Okay, but i was just asking for a timeline. When did you discuss it. Just the approximate date. This is something ive been talking about for a while, consulting whether it would make sense for me to continue in Public Service<\/a>. This was first raised last weekend. Something i wanted to do. They first became aware of it last weekend. Thank you, and did you know that mr. Burman did not want to leave his job in the Southern District<\/a> when you agreed to accept the nomination . In other words, did you know he was going to be fired to make room for you instead for the job . Im not going to get into that here. Okay. Okay, if you are eventually confirmed by the senate for this job, would you commit to recusing yourself from all of that offices current investigations into President Trump<\/a> and his associates . Heres what im going to say. Thats a process thats way down the road. Whatever, in my current position and in any position i take, i commit to doing it independently without fear or favor and in the pursuit of justice. Theres nothing excuse me, back. Thats not what i was asking. I was just asking for a commitment to recuse yourself should you be appointed from the investigation involving the president or any of his associates . As i have to say the circumstances of the firing was very suspicious and raises a will the of questions about whether the president is interfering in ongoing criminal investigations. So i personally think the American Public<\/a> deserves a clear answer on whether you will recuse yourself from these very sensitive investigations into the president and his associates. Im asking a very simple question. Will you commit right here to recusing yourself from these investigatio investigations . That position and that process is something that is separate and doesnt need my attention. What i will commit to do and what i commit to do in my current job is to approach the job with independence and to follow all ethical rules. Well i understand that a you dont want to talk about this right now. But i think its important that the American People<\/a> right now know these answers. Because if youre not going to be independent and the way to be independent is to recuse yourself, if youre not going to be independent, then we need to know so that someone else can be nominated. We need independence. Understood and i commit to independen independence. I recognize the gentle lady from missouri for five minutes. I thank the chair and thank you for joining us today in person, chairman clayton, to discus u. S. Capital markets during this pandemic. I have to say, for the record, i have worked closely with your in your office and found you to be a person of incredible integrity and character and highest of ethics, so i want to thank you challenges of the coronavirus, im, im please d to see that hard at work looking to improve our markets. Can you please describe recent proposed changes to your equity Market Structure<\/a> and where you think improvements will be most valuable for the investing public . Specifically main Street Investors<\/a> that i have fought for so passionately for the past eight years in congress. So, thank you u. O. Our equity Market Structure<\/a> has become incredibly complex. Just at levels, virtually all trading is electronic. Its done in nano second0 gps. And its complex. Our job at the sec is to make sure that what you pay for trading and ultimately filters down to our longterm investors, is fair and reasonable and were looking at infrastructure and governance. Data plans and the way data is distributed to those who trade in our markets, to try to make sure that that aspect drives fair and reasonable pricing. Thank you. Chairman clayton, im also, im worried about the risks of fraud. Fraud stemming from the coronavirus. We saw during the 2008 financial cris crisis a rise in investment s m scams that take advantage of the extreme kind of volatility in the stock market that weve seen and i am deeply concerned about the seniors in my district. Those that are saving for their retirement security. Im concern ed about these scam that are out there. Can you describe what the commission is seeing in terms of coronavirus related fraud and scams and what the commission is doing in its examination and enforcement efforts to reduce these kinds of frauds . Unfortunately, we are seeing corona related fraud. Were seeing people tap products they say they have, testing they say they have. And then trying to pump up the value of their stock or in private placements. Our enforcement staff is being extremely proactive in looking at these claims and if there are substantial fraud or misconduct, bringing trading suspensions and eventually actions. What i can say to investors is deal with professionals. Lets deal with professionals. Broker dealers, investment advisers. If youre at all doubtful about these. Known entities. Those that youve worked with before. G k in such because its on the uprise. We saw it in 2008 and its something of deep concern to me to the Retail Investor<\/a> and our most vulnerable seniors that could lose everything. Its of great concern to me. Im encouraged, like everyone, to see that the Commission Remains<\/a> committed to its regulatory agenda during the pandemic. The sec is under your leadership has made great progress on a number of proposals that will remove unnecessary regulatory burdens on businesses an streamline the flow of capital. That we need to stimulate economic recovery. Very pleased to see the volcker rule was finalized today. Another other brief update on things like the excement Securities Offering<\/a> framework and proposal to modernize framework for Fund Valuation<\/a> practices and such. I think that Comment Period<\/a> ends on july 21st. Any kind of a quick update would be great. Im optimistic that well be able to conclude if not all items, virtually all items on our regulatory agenda including what i want to say is the harmon sa ization and bringing transparency to a number of places where its needed. Im excited that the women and men of the sec, through telework posture, responding to all of these events. The fact theyve been able to continue with a defined agenda in an incredibly professional way, i cant say enough good things about them. Thank you very much. I yield back to the chair. Thank you for being here. I am sorry you are caught up in this series of events. Im particularly sorry this has had the effect of calling into question your integrity, your independence and your reputation. Weve known each other for some three decades and worked on a lot of things together. If i were a senator contemplating your confirmation, i would do my job and look at your qualifications, your history and your philosophies, but i would have no questions whatsoever about your reputation, your independence or your integrity. But im not a senator, for better or worse. ns] speaking of integrity, chairman, i was delighted to see your statement of june 22nd, 2020 and the division sidegned an histor mou. My suspicious is that this is signed because both entities had some areas of investigation in mind and i wonder if you might share with us areas that that new joint venture or cooperative enterprise might be looking at. Thank you very much for your comments and what i want to do is, investigation may be a loaded word. I dont want to imply were vest galting anybody together. What we have been doing, i greatly appreciate our friends at the antitrust division. We have been working together on a number of items. They have people with great expertise. We oversee complex markets. Theyre able to help us. Some of these issues. And were able to help them. We have deep expertise in how our markets operate and weve been sharing that with them. The mou formalizes that relationship. You know, no secret. I expect to be completed with this job at a the end of the term. And i think mr. Delaream is similar. Just because i have very limited time, to date, no particular areas of possible uncompetitive behavior have been contemplated . Well, we dont talk about pending investigations, but i dont want people to think this is somehow anything more than continuing the cooperation that weve had across our, across our respective agent a sies and divisions. I think you know what im going to say next because weve had this conversation a couple of times. Just for kicks, i printed out again the pricing for initial public offerings. This blue bar you see shows almost perfect clustering at 7 for gross spreads in the ipo market. I seek contempt to make this part of the record. Again, it is just a blue bar showing middle market ipos are 7 . Price of a flight from new york to l. A. Moves around a lot. The price of a a gal listen of gas. Im just blown away by the fact it never varies from 7 . Is that an area this new cooperation from the Justice Department<\/a> might take a look at . Thats the kind of thing our cooperati cooperation. I appreciate that and will probably not let that horse die. I want to ask you about one other thing. February 14th, 2020. Statement on adding more stock price to market data fees. You said the content and technologies used to collect, consolidate data have lagged meaningfully behind systems offered by the exchanges. General public watching this doesnt know what that means, i suspect. So correct me if im wrong, but what you meant there is that exchanges sell much more robust information about the nature of trading markets than is available to the public who does not purchase that information. Is that fair to say . Thats a fair way to say it. Zp okay. So apart from the fact that one is illegal and the other is legal, whats the difference between my paying a corporate insider for more robust cooperation and a trade entity paying in change for nonpublic for us to look at whats being done if its fair and reasonable. One of the questions we have is im going to use my hands to describe. If heres the publicly available data and youve started here with the robustness of privately available data, what we have is an increase like this. That gap we have to look at and decide whether its fair to trade under those circumstances and whethercomply. So theres some gap at which you would judge it to be unfair. Between that which you pay for and get publicly. Very good question. Yes. Thats a very good question. Yes. Thank you, mr. Chairman. Thank you, mr. Chairman. I appreciate you holding this hearing. Chairman mcclain, thanks for being here and good luck in your future stuff, but im excited hat youve been doi the Securities Exchange<\/a> commission and i want to say thank you for the work youve done to make rules that make sense and xwif investors more information. Thank you so much. I want to follow up on something the chairmanning braought up. Chairman sherman talked about the acquired fund fees and expenses rule. Affe. Obviously it was built for mutual funds. Not companies that have operating expenses, so those expenses for Business Development<\/a> Companies Make<\/a> it look like theyre eating things up with fees, but theyre really operating expenses. So when you list equities, you dont have them talk about their operating expenses. Its the expenses that deal with their investors and that the investor sees. Im hopeful and i know that mr. Sherman and i have a bill. And well pass it if we have to. I know that you can fix this. Youre already working on it. I hope you fix it and we dont have to pass our bill, but im not going to back down from passing our bill because i think its really important. This ultimately impacts middle market and Small Business<\/a> companies in my district and all around our country because they get less access to capital as a result of rule that was built for mutual funds and is now applied to a company that essentially has operating ee ii expenses and those have to be disclosed and make it look like theres too many fees. Please take care of it. But dont worry, we will. That was the first thing i wanted to bring out. The other thing i want ed to cht out wildfire the National Statistical<\/a> Organization Rating<\/a> nrsros. A number of our Committee Members<\/a> have expressed concern that the feds emergency facility arbitrarily chose winners and losers in our nrsros. Thats a real concern to me. I think we need to make sure that everybody has access to these new facilities that are coming up and so you, youre primary regulator. Has the sec been consulted by the Federal Reserve<\/a> on the subject of rating agencies and if not, have you offered any information thatxi0 can help t decide on a way to choose rating agencies that is not based on some arbitrary decision or some decision that doesnt actually look at the health and quality of those nrsros. The short answer is yes. We are in dialogue with the Federal Reserve<\/a> across the programs and the use of rating agencies and providing them the data we have to help them make the adjustments. Great. Thank you so much. Again, during your time as chairman, youve championed while giving them greater access to choice. My colleague and i from minnesota have a bill that would direct the sec to do more tailoring on your rules for registered index linked annuities. Those products give investors access to upside while giving them capital protection, but the forms they have to fill out have information that is not necessarily relevant and just hard for them to navigate. Again, this is something we dont have to pass a bill on. You can fix it yourself. I hope youll Pay Attention<\/a> and fix that yourself. Thank you. Thank you. I want to again thank you for your great work at the securi securities and change commission. Youve got unfinished business. We know youre focused on that and are going to stay focused on that through the end of the year. Good luck in whatever the future holds for you, but thank you for what youre doing for investors every day. I yield back. Thank you very much. This seems to be bipartisan support for that position. Well now recognize mr. Foster. Thank you, mr. Chair, and thank you, chair clayton, for being here. I really appreciate the work you and your staff have done in being proactive about looking out for scams and fraud related to covid. Its important. Its timely. Equally important and maybe more important in terms of market capitalization are the possibilities of share price manipulation among pharmaceutical firms. As all of those ongoing Clinical Trials<\/a> report out, youve already sceeen situations where results have been released, massive swings in share prices and scientists questioning the timing of the release of that information. Are you doing in that way to look at possible share pricing. We dont talk about any investigations. We just dont do it. Do we look at patterns generally . It would create suspensi in anys mind. Yes, we have a group that does that. We use have you added extra capacity and moved your eyes directly towards covid related pharmaceuticals . Sorry, then we do that in the context of the current debt. And we are doing it in the context of the current just as were looking at covid related fraud, were look iing at anythg that would be marked moving. In the context of the kind of pharmaceuticals, other things youre looking at. Right now, let me be clear. Weve encouraged companies to get out there with information as quickly and transparently as possible because at certain times, nonpublic information becomes incredibly valuable and it is a place where there can be great misconduct. We Want Companies<\/a> to be as transparent as possible and when theyre not disclosing information to keep it as confidential as possible. That makes them a huge target for things like Cyber Espionage<\/a> and so on. I just really urge you to keep your eyes focused on that sector because there are going to be very important Clinical Trials<\/a> reporting over the next months and the eyes of the world are going to be on these and the e eyes of investors are going to be involved. I appreciate all of the efforts you have to, you made to continually be effective in your job at the sec as you were being considered to lead the Southern District<\/a> of new york office. I appreciate that and i also appreciate that your discussions that you must have had with attorney general barr, the president s, anyone on that command chain really should be remain confidential. But separate from that, did you have any discussions with anyone representing or speaking for the trump family organization, trumps private lawyers or anyone outside the command chain that goes through attorney general barr . Look, i dont want to go down the road of getting into all of these things, but i havent talked to anybody about pending matters. Were they confined to the appropriate xacommand line that goes through attorney general barr or was there, did you have communications outside of that of the command chain, which i think, you know, shouldnt be subject to the same sort of confident iality. I dont want to get into, im not going to talk about it, but i am completely comfortable that anybody i talked to about this was appropriate to talk to. Were you contacted by people that you turned away because you did not feel comfortable . Just going to leave it at that. Something, all right, consolidated material. This is one of the, you know that was on your to do list when you came into the job. How do you feel like the progress you made particularly in relating to what i think will ultimately be the toughest thing, Getting International<\/a> agreement to have personal identifiers for the participants for trades in International Venues<\/a> . How do you see that going . I think we made substantial progress. Let me say that we started from a bad spot. We started from a bad spot. In terms of security. And in terms of architecture and we have made substantial progress. I believe we will have a completed consolidated auditory that functions as intended. It will be late. Its already late. But i think were going to get there. But that will require International Agreements<\/a> to get access to the actual identities of the participants at foreign venues and this is always struck me, the toughest thing, probably not made easier because of an administration that isnt enthusiastic about International Agreements<\/a>. What sort of progress do you has been made there . We are making progress internationally an that type of, lei and the like. All right. Thank you, and ill be following up. Please. Yield back. Thank you, mr. Hill. I want to thank you for the commissions leadership and your staffs leadership through the pandemic crisis of march where you kept your head about you as your fellow commissioners did when all were losing theirs around you. I think theres a poem in there somewhere. But specifically, in keeping our markets open for the benefit of our constituents that they had access to knowing the value of their account and could consult with their investment professionals through that period and again, as i always do, i commend the work of the fed and the treasury for their quick work in liquidity. So thank you for being a part of a team that got our Capital Markets<\/a> functioning again for the benefit of companies who employ millions and millions of americans. 01n and thank you for your entrepreneurship and Capital Formation<\/a> and your putting strong attention on that as well as the need to assess things that are important to the fintech arena. We have a new securities commissioner in arkansas and we look forward you to meeti ing ec in his new capacity and look forward to introducing you personally to eric as he takes up his new responsibilities at the securities department. Wanted to take a minute today and talk about one of mr. Shermans bills that is not introduced yet, i dont think. Mr. Chairman, its a bill that you are u, you mentioned on our call the other day on potentially having the primary corporate facility of the fed be sure tho that its subject to section 4003 of the cares act. And in a bond puchlsed in a corporate facility is in compliance with the cares act so that is in if the gentlemen would yield, i have little doubt that everything thats being done is legal. I cant yield to you right now becauseo busy talking to our good sec chair, but ill be back in touch later. But thank you and if i can help on that. I wanted to talk to you about the municipal order you issued providing relief to advisers under the rubric that its good during the pandemic. You know my views on this. Ive expressed them to you in a listening letter dated february during the Comment Period<\/a> on it. I dont really believe that this should have been done by exemptive relief. I think if were going to make changes in the Municipal Market<\/a> for our state and local governments, we ought to do that through the apa with rule making. What led the commission to do a temporary order rather than following the administrative procedures . Let me say this. C x\u00f7 its very narrow. It was contemplated and its temporary and it would be my expectation that if this were done on anything like a permanent basis or in m in any y brodeyer scope, dlld be opportunity for comment. Thank you. I do recognize that you made significant narrowing of the scope since it was originally ux proposed and attempted to meet some of the questions that came in from the comments from the bond keele edealers and msrp it. I see your temporary relief was dated june 16th and when you look at the municipal securities market, its functioning quite well due to the work of the fed and treasury. I see no lack of access for state and local governments to reach the market through traditional means. In fact, all of the month of june has seen capital inflows into all the tax exempt bond funds, so i dont view it as a an emergency situation. I view this more as wolf in covid sheep clothing in terms of using the pandemic to justify its rationale. So if the end of the temporary order of municipal adviser must notify the sec of any direct placements, will they make any recommendations to those who make the placement sns. Were going to get that information. I dont want to commit here to making it public, but i will commit to considering whether it should be made public. I would expect that the activity during this period would be something that would be considered again through any kind of open notice of rule making. Its limited in size. Right. I appreciate it. Yield back, mr. Chair. The next question ill recognize is heads and shoulders above the average member of congress all the time, but today, hes 15 feet above us here in the hearing room on the screen and that is mr. Meeks. Youre recognized for five minutes. Thank you. I want to thank you for the hearing today. Most people actually wish this hearing was a little less important. The only issues here were our Securities Law<\/a>s and Capital Market<\/a> regulations and the protection bill before this committee. Undoubtedly, these things are crucial to our strength as a nation and our status as Financial Capital<\/a> of the world. These issues are built on the rule of law. Recently, millions of americans have taken to the streets shouting no justice, no peace. No person is above the law. Regardless of whether theyre wealthy, wear a blue ewuniform badge, even if they live at 1600 pennsylvania avenue and they want to make sure theres equity and that the Justice System<\/a> is fair to everyone. And i know mr. Chairman, by the standards of the administration, you clearly have had a solid run at the sec and your tenure has not been littered with corruption or scandals or anything of that nature. In fact, i am really, you really worked hard on issues like cr t crypto currency scams. So i show hope that things go awry in regards to what you are now being considered for. Ill stop here and go through some policy questions that i think are important for us, for me to ask you. Listening to some of your statements earlier in regards you got to be focused continually on your job as the chairman of the sec. It has been successful in covering fraud in our Financial Markets<\/a> and your predecessor called the program a game changer. And stated it has, it is past time to stop wringing our hands about whistle blowers. They provided invaluable Public Service<\/a> and should be supported. So my question is to you, sir, so why have you sought to prefom a program thats proven to be so effective. I believe let me make sure i have it correct here. Youre talking at our whist whistleblower pending amounts and let me say this about our whistleblower program. It has been extremely successful and i am extremely supportive of it. I think you can see from the recent awards that we have not slowed down. In fact, we have sped up the timing for processing awards and getting them out to whistle blowers. What im committed to doing is making] t transparent and efficient as possible and im hoping to move forward to finalize those amendments and what i will say is not decrease, but actually increasing the incentives for people to come forward as promptly as practical. Thank you. Well be watching because that is tremendous. Weve seen whistle blowers recently. Their reputations are ruined and trying to discourage folks not necessarily with the sec, but with other policies that have taken place. Particularly coming out of 1600. Let me ask you this question. Last few a Record Number<\/a> of day traders have become active in the markets. You know, jim cramer recently claimed that Warren Buffett<\/a> was washed up in his language and used a scrabble bag to recommend stocks to millions of followers. So my question is, how has the sec reacted to this phenomenon of day trade ers and are there y tools of congress to address this issue . I dont know that we need additional tools. No doubt about this. There has been increased shortterm, retail participation in our markets. And when i see that, it concerns me. It concerns me that people do not know the risks theyre taking. Particularly in leverage products, options and trading on margin and let me just take this opportunity to thank you for the question and to tell all of our Retail Investor<\/a>s, these are sophisticated products that have risks that may not be apparent and you should be quite cautious in trading with leverage, trading in options and trading, sorry, my times out. Thank you. Mr. Davidson from ohio. I think the chairman, thank you so much for coming and chairman clayton, after your appearance before the full Committee Last<\/a> time, i submitted questions for the record rega regarding bulk download of data from fin ras system. Thank you for your response to the questions and in your response, you highlighted the work the sec has taken to limit types of Data Collected<\/a> as well as the directive for the sec staff to provide recommendations that will help enhance the consolidated trial cyber Data Security<\/a> so thank you for that. As you know, this is the as proposed, would be the largest database to be created and overseen by a Regulatory Agency<\/a> and it contains extremely sensitive information. Every firm thats supplies this data would view it as very proprietary trade secrets. The keys to the kingdom. The concern is all the more highlighted by the sec itself suffering a breach of the edgar system in 2016. One of the questions you posed to staff in your directive was issue of bulk data downloads and as i understand it, the more than 20 sros and the sec would be able to download bulk data from cat. What particular concerns do you have in mind with this data being distributed across sros that led you to pose these questions to the sec staff and what do you think should be done to insure the sec and finra have proper controls to insure proper help in the cat as well as help by them once its downloaded, are you evaluating those controls . The short answer is yes, were evaluating those criminalcriminalontrols. The its the types of risk that caused me to ask those questions. If you allow me to speak generally and know this is a complicated problem, im looking at it this way. We have you know, x number of sros. We shouldnt start with the idea that everybody gets the data and then maybe we peel back a little bit. We should start with idea that the sec gets all the data because we need it. And then see what others need. To do their jobs. But starting with everybody gets all the data then sort of peeling back i dont think is the right perspective. I think starting with the idea that the sec with our cross market obligations have access to all the data, but others get data as they need to do their jobs. I dont want to keep them from doing their jobs, but lets scope the data consistent with the obligations they have. When you say all the data, i want to be sure that youre clarifying all the day a ta that is actually collected because youve highlighted the importance of first and foremost, not collecting data you dont need and frankly data that could. The other thing is segregating the day that would be personally identifiable to firm or individuals. So i think good controls and while i understand that perhaps not all of the sec staff recommendations may be made public, would you be willing to share with our office or with members of this body how we can collaborate in this effort . I think were doing a good job collaborating already and that say philosophy that i just described of what data do you need to do your job, not heres the data. Figure out how to do your job, is the right way to approach this. Okay, well i hope we can collaborate more closely, frank ly, but i want to mention crypto currencies or Digital Assets<\/a> as theyre more conflict known, because most of them dont aspire to be actual currencies. Many dont even want to handle payment systems. So i would just encourage you and the staff to locate a truly nonpartisan bill because it provides a bright line test applicable to Digital Assets<\/a> and its not a change of the howie test, as tn application to this field. Lastly, you know, i joined more than 100 colleagues to express our concerns in the commercial mortgagebacked securities market. You know, a lot of us are very concerned that the commercial space, it was disrupted because its so highly liquid and highly sensitive to no bide side for anything frankly to the point where the fed had to intervene through municipal bonds. So when you had this margin call for all sorts of things in march, the fed provided essential stability for most things, but not much for cmbs. And many firms have gone bankrupt in that space. This wasnt bankruptcy because of lack of collateral. It was due to bankruptcy due to complete lack of liquidity. Now were looking at a similar challenge where people arent facing challenges because they lack sufficient collateral. Theyre lacking a market struck chaur that can deal with it. Are you working on this . We are. Look forward to it. My times expired, unfortunately. Yield. Mr. Vargas. Mr. Chairman, thank you very much for holding this hearing. Chairman clayton, thank you for being here. I do apologize. I stepped out for a while to vote. I did want to ask you, have you ever be a prosecutor . Have you ever been a prosecutor . Ive never been a prosecutor. Just a simple question. Have you ever be a prosecutor . At the eck sec . I oversee 1300 enforcement attorneys. Theyve brought 2000 cases in time ive been there. Weve collected over 10 billion in fines. Returned 3 billion to harmed investors. Many of this people who work under my oversight at the sec are former prosecutors, so i hope that gives you comfort in your question. I havent known you like any colleagues had, but i do know your reputation for integrity. Thats all i know about you in the past. We may not agree on everything and theres Corporate Governance<\/a> issues. My understanding is that you have a reputation for great integrity. Thats my understanding. I would just refer you to some of the generals that came in with great reputations for integrity and effectiveness. Certainly has left their r reputation in tatters. I would just refer you to them. I do want to ask you, however, about the esg disclosures. Last month, Investors Advisory Committee<\/a> recommended that the commission promulgate disclosure standards and incorporate disclosures into the registered issuers. Similarly, the Asset Management<\/a> and Advisory Committee<\/a> echoed the calls for esg disclosure standardization. As you may or may not know in september of 2019, this committee passed my bill. This bill among others requires Public Companies<\/a> to disclose certain esg metrics and districts the sec to establish a rule dlenuating which metrics must be disclosed. What are the commissions next steps on esg disclosures . How does the Commission Plan<\/a> to bring clarity to esg disclosures and improve the current market based frame woworks . I think this terrible covid19 might be a terrible precursor for Climate Change<\/a>. I have been very transparent about my views on esg disclosure. On tuesday, i appeared for an hour on how to discuss this t top topic. I believe that there are e topics for a number of companies that are extremely important from a disclosure perspective. S topics and g topics. Lets put g to the side because we have a tremendous amount of g disclosure. If you talk to investors, its clear they can understand how a company is governed from the disclosure we have and compensation and the like. In terms, if you dont mind if i go to e disclosure, we are working both domestically and internationally on trying to get what i will say is more robust data on a sector by sector basis because its very different what e information is important to investors. So for property and casualty portfolio, modeling potentiaru losses and the like from different climate scenarios, thats important to investors. If you look at a manufacturing facility, Company Based<\/a> in se the midwest. It depends on where it is, of course. Of course. Its a completely different scenario and in some cases, companies can adjust. In other cases, theyre price takers in the space. I do believe through my work with iosco and in particular, my friends eric the dean in sweden, weve been working collaboratively. Were getting there, but were not just going to use blunt metri metrics. My times almost ended, but i was going to ask you about Corporate Governance<\/a>. I want to ask you about diver diversi diversity. Obviously, there needs to be more diversity, i believe both in Financial Service<\/a> industry at the highest level, but also at the sec. Could you just comment that in the few seconds we have left. This has been a focus of mine since arriving at the sec. Weve made progress. We need to make more. We have Diversity Inclusion<\/a> and opportunity. Not just as training program. The office of inclusion into our hiring processes. Our Asset Management<\/a> Advisory Committee<\/a> is hold iing a specia round table next month. So this is something that im committed to. Thank you for your service. I appreciate it. Thank you, sir. Thank you. Mr. Hollingsworth. Right over here. Mr. Chairman, i wanted to talk about a few things. I probably wont take my full time. First and foremost, i want to commend mr. Vargas on his work. This is important work and i appreciate what youve done also in developing a language that is clear that helps investors and doesnt muddy the waters with regard to what disclosure should be necessary for a company. So i appreciate that and appreciate mr. Vargas leadership on that. In addition to that, i wanted to thank you for some of the recent work youve done on extending the exception from 44b. This was a bill that i and cinema last congress introduced, mcadams across the aisle. Introduced it last year and i know youve done great work on this and i really preeappreciat that and for the Many Companies<\/a> that can benefit from that and can pour more dollars into research and development instead of unnecessary compliance. They appreciate it as well back home, so thank you for that. I had written you a letter and recognizing the definition of Venture Capital<\/a> fund. I want to followed with you. It continues to be ever more important given the dynamics. So we can move that ball forward. This is something im working with bipartisan to find a solution for. We can get back on that, that would be great. Saw the markets go down. Everyone assumed that somebody must be wrong. Can you clarify really briefly that markets going down in a single day is not dispositive conclusive that something is wrong or not functioning in the markets sm. What i can say is weve been monitoring the markets throughout. This is the greatest period of uncertainty in terms of economic performance. I have seen. In the real economy. We had a financial crisis. During that period, i am and look, i dont want to do any victory laps or anything like that, but the markets performed incredibly well. Now it require d action by the fed, by the treasury. By us. By private sector participants. But the fact that credit and capital continued to flow flout the system was exactly what you would want. Exactly. And just to crystallize that very point, as you well articulated, the its important for us to remember that circumstances also changed and there were reasons to believe that Companies Might<\/a> be valued less than they were in february on account of what theyre discounted cash flows might be in the future. That is signs of markets working, not necessarily markets not working. Secondarily, i wanted to also bring up materialalty because i know there are several pill bills being concesidered in thi committee right now that i believe may be redundant. That Companies Need<\/a> to disclose if there might be a terrible impact to their supply chain, to their workforce. As i understand it and again, i am not sec lawyer, those things that are material, this management believes are material to their business and may have a positive or negative impact on their business, need to be disclosed already. Is that true or untrue . That is a generally correct statement about disclosure. And we have put out guidance. Tried to act quickly and say look, we have a principle based disclosure system. Here are the things that you should consider when making your disclosure. Whats your position, your operations affected. The health and safety of your workers. Access to these things. Look, i dont want to grade people. But overall, the disclosure in First Quarter<\/a> earnings through that cycle was extremely strong. Right. I think it gave investors confidence that companies were telling them exactly where they stood. As we go into Second Quarter<\/a> earnings, let me take this opportunity to say i expect companies to be as forthcoming and as comprehensive as possible and doing so from the lens of how management and the board of directors are doing so. Id rather have bad news than no news. Thank you so much. I appreciate you being here. Yield back. Will the gentlemen yield . Gentleman will yield. I wish my friend was still here, and hes a genuine friend. I wanted to ask a rhetorical question. He was asking you if you had ever been a prosecutor. How many of this committee has been bankers or section 8 housing providers. Precious few, i might note. This is the type of place where a licensed realtor or time of the gentleman has expired. Your point has been made. The time of the gentleman has expired. And now also participating, mr. Sam nicholas. Thank you. Just answer to our prior colleagues question. I do have Banking Experience<\/a> so that are those of us in the committee who provide it and were more than happy to provide perspective to include theirs because when it comes to Financial Service<\/a>s, its important for us to have the mind that it impacts the entire country. Not just those who have this specialty or expertise. That being said, mr. Chairman, i wanted to first recognize my colleague, chairman meeks, who opened the door to what i wanted to talk about, which is the concern about potential investors under current market circumstances. Weve seen a lot of new Market Participants<\/a> engage in active trading activities to include day trading and swing trade, but of late, theres also been a muchoss larger increase in the access of Retail Investor<\/a>s to as you mentioned, chairman clayton, some exotic instruments, derivatives, options, naked c l calls, being able to purchase these kinds of assets and trading vehicles, these kind of hedge instruments, even on margin and so i wanted to, you were speaking about it earlier before time expired. Before i go into my question, i wanted to afford you a few moments to go ahead and make your statement on the risks that youre seeing with respect to Retail Investor<\/a> overexposure. Well, look, thank you for the opportunity. Because what i want to say to our Retail Investor<\/a>s is when we have times of volatility, you hear stories of people making a great deal of money as a result of buying low and selling high and perhaps even doing so on a leverage bases or through options. You know what, that, our kind of investor is the longterm Retail Investor<\/a>. There are significant risks in taking those shortterm leveraged margin positions unless you understand those risks and are able to bear those risk, you should not be doing it. Thank you for that, mr. Chairman. And while individual investors and traders have their own responsibilities in the decisions they make and capital they put at risk and the leverage they expose themselves to, the platforms that make those trades available to the investors and traders, they also have a responsible ility. To ensure the suitability of the individual making those trades. So i wanted to ask whether the sec given the increase in retail activity, has the sec enhanced its review of Trading Platform<\/a> Due Diligence<\/a> in insuring that the investor has a suitability test for access to day trading, Derivatives Trading<\/a> and margin access. We are looking at this issue. Let me try and break it down. There are sleelfdirected accous where youre not dealing with someone who has our new obligation which goes in at the end of the month and which i believe will and im making this clear to brokers right now, should, through the care obligation, make sure investors understand those risks and are able to bear those as appropriate. We are looking at the selfdirected aspects of our market ecosystem and whether the access to those is being is being granted as appropriate. Thaupg, mthank you, mr. Chairman, and i guess to close, i think important ft. Sec to really circle back on this and make sure that even the selfdirected accounts have the proper disclosures, but more importantly, that its being done in a way where the investor fully understands the risks theyre getting themselves involved with because not only are we talking about potential overexposure of an individual investor, but theres going to come a time if were not careful that were going to be having counterparty risks and were going to be having those kind of situations where a whole group of individual investors potentially making a lot of leverage derivative bad decisions are going to begin impacting the ability for the markets to function orderly. And while it may not present itself, thats the same kind of mentality we hadce5 prior to i t ask you keep a very close eye on this in order to not only protect our Retail Investor<\/a>s, but to ensure our regulatory markets. I yield back. We have about eight to ten additional speakers so youll be out of here in less than an hour. We dont intend to have a second round and i recognize the gentleman from ohio, mr. Gonzalez. Thank you, mr. Sherman, for holding this hearing today. And of course, i want to thank you, chairman clayton, for being with us today andal your work at the sec. I want to acknowledge and thank your team for working on reforms to the volcker rule. That are in additional need for start up capital so i thank you for that. Additionally, want the thank you for your recent e response to a letter i wrote with my friend, miss wagner, in support of additional access for retailers to private markets. You and i have spoken about this privately. Was it clear . Always fun with the technology. But as youre aware, the number of publicly listed companies has gone down significantly while some of our fastest growing, accumulate a significant amount of growth in the private markets before going public. Always been my belief that we must do more to safely provide every day americans access to those opportunities to the extent we can. My first question on that front in your response to my letter, you stated that closed Funds Investment<\/a> options for main Street Investors<\/a>, can you discuss more why you think this and also provide a good, and also what are the current roadbloc roadblocks . Sure. Look, i want our, my objective is for our Retail Investor<\/a>s to have access to Investment Opportunities<\/a> aligned with professionals. One of the great things about our public Capital Markets<\/a> is retail sits right beside institutional and they get the benefit of that professional alignment of interest. When you move into the private markets, you want to make sure that you maintain that alignment of interest. I believe that closed in funds are one option for being able to do that. But you have to have that alignment of interest. And you have to have what i would say is low cost. Reasonable cost of access. Otherwise were exploring ways to do that, and im were making progress. Thank you. Im excited about the progress that you have made on that. As a followup, what are you currently doing to promote closed end funds as a way to Access Private<\/a> markets . Is there any consideration of rescinding the staff guidance that prohibits closed in funds from investing more than 15 of their assets in private funds unless the sale is limited to accredited investors . So that specific question, let me as part of our overall looking at it, we are. But it gets to liquidity, and weve got to make sure we have the appropriate amount of liquidity including in closed end funds. Great. Shifting to china for a second. First, i want to reiterate support for mr. Sherman and senator kennedys legislation which i have joined to what i would call have china play by the same rules as the rest of the companies in our stock exchanges. Building off the need to further protect u. S. Investors from china, just yesterday the Financial Times<\/a> published an article that linked to a pentagon listing of 20 Chinese Companies<\/a> that have ties to the chinese military. Are listed on the new york stock exchange. Going forward, how do we make sure that investors have this information, especially since these companies are at greater risk of being targeted by United States<\/a> sanctions potentially . We have a disclosurebased regime. And it works it has worked really well because if you dont put it this way, if you dont disclose appropriately, if you make material misstatements, remissions, or commit fraud, we can come after you. R,am retail ]c investors should understand our ability to enforce that perspective is not uniform across the world. Right. And we need to take that into account. Investment advisers need to take that into account. Professionals need to take that into account. These are the kind of challenges you face in a job like this. How much can disclosure do in circumstances like that. Quickly, do you believe that that information, being on a list of 20 companies, is material for u. S. Investors . Im not going to make a blanket statement. But if youre considering what is material about your company or not material about your company, the fact that you may be subject to significance sanctions is something that you would you would want to ask that question and see if the company companys operations and the like or its reputation or whatever may be i would argue it is. And with my last question, do you believe that chinas ill submit it in writing, thank you, mr. Chairman. Ms. Porter . Thank you very much, mr. Clayton, for being here with us today and for your patience as we navigate this hearing. Youve recently been named as the likely replacement for Southern District<\/a> of u. S. Attorney berman. The u. S. Attorneys office, as you know, has been a political for over00 years. Do you agree that its important for the investigations undertaken by the u. S. Attorneys office to be conducted in a nonpartisan manner . So look, im here as the chairman of the sec. What i want to say about my work as chairman of the sec and our work in the Enforcement Division<\/a>, akin to any u. S. Attorneys office, we undertake our work in independent and nonpartisan manner. Terrific. As the chairman of the sec, you spearheaded numerous rule changes. One example being the socalled regulation best interest reg bi. Was that a nonbipartisan proposal . Yes or no . From my perspective, what weve done with im not sure what you mean by nonpartisan. Let me try this. Did the reg b. I. Recall change pass the securities and exchange commission, the sec, with bipartisan support . The i think youre struggling toward no. No, im not struggling. Im just making sure. The vote commissioner jackson it have complete support rigby lets try this one more time. Did reg b. I. Pass the commission with bipartisan support . Flow, it did not. Thank you. What about the shareholder voting proposal . Did that get support . As a proposal going out, no, it did not. What will about your proxy adviser limits proposal . No, that did not. What about your proposal to expand private markets . Pardon me . Your proposal to expand private markets . Are you talking about we dont have a you mean harmonization . Frozen for harmonization . I dont remember. Ill assume youre right. It did not have bipartisan support. Mr. Clayton, calling yourself nonpartisan doesnt make it true. And your leadership at the sec is to be generous inconsistent with being nonpartisan. I think becoming a u. S. Attorney would require a big change in your approach from the sec. Do you agree that independence from the president is necessary to Agency Independence<\/a> . So wait a second. I want to go back to the bipartisan nonpartisan i believe if you look at my voting record across the sec which is pretty good there are many times when i have voted with democratic commissioners, maybe both democratic commissioners and not the republican commissioners. And viceversa. I vote the way i think i should, without regard to partisanship. Thats what i do. Thats what i would do in any job. Okay. Great. Do you think that independence from the president is necessary to Agency Independence<\/a> . I think agents independence is independence from look, i interact with you people. I interact with agencies. I interact with independence does not mean isolated. But independence means doing what you think is right based on your experience. Do you think independence from the president is possible if you and the president are golfing buddies . I absolutely do because i do it i do my job every day without fear or we do justice at the sec, and i think if you look at the record of the sec its absolutely clear. How many times have you and President Trump<\/a> golfed together . Im not going to get into this. This is you know is it a large number and you have trouble recalling it . No, no. No. Look, i have i have played golf with the president a okay. What did you talk about . Those are private conversations. Are you willing to affirm to this committee that you did not discuss any sec business . There are no conversations that ive had that make me in any way, in any way uncomfortable with my wonderful. Before you golf im glad to hear that. Before you golf with the president , did you ask the sec Ethics Council<\/a> to advise you on that decision . Yes. You did . Yes. And did they issue a written opinion . No. But i the answer is yes, i did. You did. Okay. All right. I want to turn to talking about your prior work at your law firm. In your team at sullivan and cromwell, did you ever serve as on the plaintiff side of any securities or other matters . Were you solely defense counsel defending Deutsche Bank<\/a> and Goldman Sachs<\/a> . Time. The let me say the time has expired. The witness will be allowed to answer briefly, then well go on. The witness shouldnt be compelled to answer at all. The time has expired. And im sorry, welcome to your your confirmation hearing. Ive allowed other people to go a few seconds over you cut me off two seconds early actually. Actually, that is absolutely correct. Mr. Chairman, may be recognized . Its actually my time. Not anymore. Your time expired. I would like to offer, to allow mr. Clayton to respond in writing if that would be acceptable to him. My question was just to state it again because there was knocking and interruptions while i was speaking was are there mr. Chairman, shes excuse me. The offer to get an answer in writing is fully consistent with committee rules. All the hearing record will be kept open. The usual number of days for people to submit quizzes in writing, and that can be a question in writing. We expect a relatively prompt response to the written questions that are presented after the hearing. That is what weve done in every hearing. Wyle go on to mr. Style and look forward to reading your answer. Thank you. Thank you, mr. Chairman. Thank you, mr. Clayton, for being here. Id like to remind all of my colleagues that this is not a confirmation hearing. Were not the senate. This is in the house. If a confirmation hearing is required, that would be the role of the senate. And if somebody would like to participate in that, they are more than welcome to run for the United States<\/a> senate and participate in a confirmation hearing. Id like to dive in as to the topic that we are here for today which is about monetary policy, the state of the economy, and how were keeping our Capital Markets<\/a> strong during some of these most challenging times that weve seen here in a long time. First off, mr. Chairman clayton, i want to start by thanking you for your work to improve oversight of proxy advisers. I also want to recognize commissioner royceman whos been a valuable voice on this topic. I dealt with proxy advisers in my private sector career, so i understand how important it is to get this issue right. In the last few months, sec commissioners made a couple Public Comments<\/a> that i believe have been viewed by some as evidence to that the sec may be softening its approach as it relates to proxy adviser reform, among other things. Commissioner royceman suggested that the final rule may include a speed bump that limits investors to use set it and forget it mechanisms to automatically populate ballot with proxy advisers recommendations. Seems that might be different than the peer review process that was outlined previously. Could you comment how the sec intends to ensure that issuers have the opportunity to correct erroneousmisleading recommendations, that theyre peer reviewed, the speed bump process, and whether or not one approach is more favorable than the other . So heres you have outlined the issue were trying to address. Which is when youre making a voting decision, do you have the best information thats available to you to make that decision in a timely manner . And the process we have now can be improved. Thats clear. And were trying to approve it in the . cay that creates the least friction for people to be able to express their opinion. But the people who have to vote, you know, they should have a robust amount of information. And to the extent practicable, it should be accurate. So we want to make sure that the system produces that type of information. Thats we got a lot of helpful comments. Ideas, theres a speed bump people mentioned. Thats where im driving transparency and good information. I appreciate your work and your colleagues work on this important topic. Do you have an estimate as to when you believe a rule may be finalized on this . Like ive done throughout my tenure, we put it on the agenda, and we try to get it done on the time of the agenda. So our current agenda hasnt completed has it completed by the end of the fiscal year. I continue to expect that well be able to complete it by the end of the fiscal year. I appreciate your work on the topic. Chairman clayton, as you know, emerging Growth Companies<\/a>, i think its a valuable tool for helping startups focus on innovation and job creation and growth. I think the egcs are especially important today as we deal with the ongoing coronavirus pandemic. Since many investors are in particular in the biotechnology industry. Im concerned that many ecgs are facing the loss of that status and may see significant increases in their compliance burdens in the near term as a result. I think the timing is unfortunate given the economic managerial challenges associated with the pandemic, as well as the role that the ecgs could really play in this recovery. And so im working on legislation to insert egcs that face a loss of their status, can receive a shortterm reprieve. Im not asking for you to comment specifically on the legislation. I know that you wouldnt be doing that. Can you comment how the economic turmoil that weve been experiencing is impacting some of our emerging Growth Companies<\/a> that need access to Public Markets<\/a> . Look, let me say this as a general matter because of the actions of congress, the fed, and the treasury, financing markets have been fairly open. Both equity and debt. People have been able to term out debt, get liquidity, alter their Balance Sheet<\/a>s, add equity to their Balance Sheet<\/a>s. Always as you go further down the size spectrum, similarly situated companies almost always have a bit of a hard time. I think by and large egcs have been able to get financing, as well. But it is an area that we need watch because, you know let me put it this way its much easier to allocate capital in a chunk to a Large Company<\/a> than it is to allocate a chunk to a whole bunch of smaller companies. Thats just something we have to recognize. I appreciate your time today and respect my time. I yield back. Thank you. Thank you. The chair notes that i actually i care about the health of my colleagues or at least most of them, and therefore i urge all members to wear masks at all times. With that, well go to webex. Thank you, chairman sherman, and thank you for being here, chairman clayton. Appreciate it. One thing that i hear constantly from companies is that their greatest asset, of course, is their people. And i couldnt agree more with that. Chairman clayton, was hoping you could explain generally why you think understanding a companys work force is crucial for investors to evaluate the company. Well, its a its a personal belief through my professional experience the best companies are the companies that understand their work force, however it is structured in the best way. More generally and from a financial point of view, the contribution of Human Capital<\/a> and employees to companies has entertained in proportion if you look 30 years ago, plant property and equipment was a lot of the assets on the Balance Sheet<\/a>. Today the assets of a company are absolutely property, people, and the like by and large. And so yes, its extremely important. We have a pending rulemaking where we are going to encourage through our principlesbased disclosure System Companies<\/a> to discuss their Human Capital<\/a> as management views it. How do they evaluate it, how do they develop it, how do they increase the value of the company through their people. Thank you so much. I completely agree with you both a personal and a professional basis. Ive spent my career working in that arena, as well. Thats why i worked with senator warner to bring some light to this important piece of information. I also think that the coronavirus has certainly highlighted some of those issues, especially when it comes to Workplace Safety<\/a> and paid sick leave. And thats why myself along with senator warner sent you a letter. I believe that was last month, urging some action to get more disclosure on this. I didnt get a response to that letter. So since youre here, is that something that you would support . Actually, you will get a response. But in the meantime, i believe yesterday we put out guidance for secondquarter earnings and things that people should think about in their earnings reports and their communications with their investors. And those types of issues were included in that guidance. Great. Ill absolutely take a look at that. I just i want to let you know i do have a little bit of concern. I know that i appreciate your intent, but some of the concerns ive had around the principlesbased approach i believe which didnt require specific metrics and as somebody who spent my career working in strategic and organizational development, i know that companies are obviously already measuring these metrics and that turnover rate, for example, is something they all track and is meaningful. If the sec gives Management Discretion<\/a> in these disclosures, are you worried that it will result in some unclear information . And it wont give the numbers necessary for company toy Company Comparison<\/a> or comparisons for a company over previous years . Show to is a really good discussion because were not saying dont disclose the metrics. What were saying is disclose the metrics that you use, and, you know, if a company uses turnover, calculator it in a certain way, presumably they do it because thats how theyre managing their business. Thats what the investor would want to know. What i dont want to do is adopt a standard across a bunch of industries. Its not how it may be right for one industry and how management is using it, but its not right for others. And so what i dont want to do is to get compare ability, give up meaningfulness. Thats the term we have with metrics that are broad. We encourage companies to share the metrics that they use. You know, take the pharmaceutical industry and turnover very different from the tech sector, different from the transportation industry, and how they may look at it. Well, i appreciate that. And i think theres an opportunity to work through some of those issues. I do think were looking at a risk here, though. And id advise you to take a look at the letter that i sent with my Work Force Investment<\/a> disclosure act which lays out some very specific disclosures that could be required. Workplace safety violations, for example, can tell you a heck of a lot about how many of these companies are going to get back on line more quickly due to covid. But moving on, were running out of time. I wanted to quickly turn to tax disclosures. As we all know, Large Companies<\/a> are paying half of what the statutory rate is. Im wondering if you can tell me if you think theres some opportunity for us at sec to be looking at countrybycountry disclosures. You raise an excellent point. It goes to both points on tax and on operational and safety issues. Yet when you have these Multi National<\/a> companies, trying to give investors a flavor for what happens across the various dictions are important and were looking at that. I recognize and want to be clear its becoming an increasing part of how sophisticated investors look at companies. I appreciate that. I know were out of time we are out of time. At this time we will go to mr. Gotheimer if youre up there. Please turn there he is. His camera on. Youre recognized for five minutes. Thank you, mr. Chairman. And thank you, mr. Chairman, for being here today. Given the covid19 pandemic and the current Racial Justice<\/a> issues facing our country, i think we can all agree its more important than ever that all americans have equal access and just access to credit. Every year, 15. 4 million americans are victims of credit card fraud or around 42,000 people every day. The ftc previously found that one in five consumers have verified errors in their credit reports, and one in 20 consumers have errors so serious they are denied credit or pay higher interest rates, affecting everything from their Small Business<\/a> loans to a mortgage to a car loan. Thats up to 42 million americans with errors in credit and ten million with errors that can be life altering. Next week the house will consider Bipartisan Legislation<\/a> that protecting your credit act which will croat a portal to provide americans with free, unlimited access to their credit reports and scores, the ability to easily disputes errors and fraud, and the ability to secure and track their credit data. All to increase transparency and help americans boost their credit and Financial Security<\/a> through economic declines and beyond. Chairman clayton, are you concerned particularly during the pandemic about credit issues and americans ability to have transparency to their credit . I am let me start by saying that in general, provision to credit is not within our authority. I do talk about it a lot because i always say to people, before you get involved in investing, understand your credit get your credit under control. Thats the best thing you can do for yourself. Now with respect to your question about access to credit, we have a consumerdriven economy to a large extent. I believe that the swift actions taken by congress and by the fed and the treasury to enable credit to continue to flow have significantly dampened the negative effects of the covid19 response. So yes. Consumer credit, having Consumer Credit<\/a> that is appropriately priced and transparent, is extremely important to our economy. To that point, do you think we should make it easier for people, americans to get their Credit Information<\/a> for free and initiate disputes given i know as youve pointed out how important peoples Credit Information<\/a> is . Look, im going to stay in my lane as to what particular policy rationale, legislation, and the like. Thats not our area. I dont want to tread on other peoples area. But i affirmatively believe that having access to credit in a transparent way is important. Thank you. Our legislation does that. It puts a centralized portal managed by the Credit Bureaus<\/a> to give people more information, the ability to dispute that. Separately, arps Fraud Watch Network<\/a> recently reported theres been a steep increase in scams targeting the elderly and other vulnerable communities this month. I know this is part of your jurisdiction directly. The issue has been driven by the covid19 pandemic. These nefarious actors, domestic and international, are using the pandemic and preying on peoples fragile states during these uncertain times, to target hardearned retirement accounts, unemployment checks, and other savings. Chairman, millions of seniors across the country have been the victims of financial scams, cheated out of their rightful retirements. I want to know and i talk before about the Senior Security<\/a> act. In general do you agree we should be doing Everything Possible<\/a> to prevent seniors from being robbed of their lifes savings . Yes, i believe we should be doing Everything Possible<\/a> to prevent seniors from being vulnerable to fraud, particularly financial fraud. Thank you. The Senior Security<\/a> act is a bipartisan bill. I introduced to my good friend, mr. Hollingsworth, to create a Senior Investor Task<\/a> force designed to stop financial predators from scheming seniors out of their savings. Its passed out of the house overwhelmingly and bipartisan, 39220. Its now in the senate. Would you support the legislation moving through the senate . Im not going to support a specific piece of legislation here. But as youve described it, were doing this already at the sec. Were happy to work with you. Were happy to follow the legislation, of course, if Congress Tells<\/a> us to do more, well do more. But i want you to know that we are already focused on seniors. And making sure that seniors are are having access to the products that are appropriate, not products that are inappropriate for them, and that theyre not the victims of fraud. I think thats part of the your Retail Strategy Task<\/a> force. And people specifically focused on making sure that that seniors, let me put it there way, inspections, examinations, all of that, we have a senior focus, and let me try and say this in the way im able. Its important to understand when you look across accounts and you do surveillance and the lake whether accounts have seniors or not which is one of the reasons why data birth data or year of birth data is important in our oversight. you. Time of the gentleman thank you very much, mr. Chairman. Has expired. Mr. Casten . Thank you. Thank you so much for your time, chairman clayton. If it were up to me, were nearing the end. Alexander kerns was a College Student<\/a> in naperville, illinois, in my district. Recently took his life. He took up trading during the covid lockdown when he saw that his robin hood account had a negative balance of 730,000. Turns out he didnt know the whole amount. I want to read you most of his suicide note that his father found. If youre reading this, then i am dead. How is a 20yearold with no income able to get assigned almost 1 million worth of leverage . The puts i bought sold should have canceled out. I have no clue what i was doing now in hindsight. There was no intention to take this much risk. Robin hood added three million users in 2020. Its my understanding that they have made changes to their platform, and mr. St. Nicholas, you know, spoke about protecting Retail Investor<\/a>s, and i certainly share your view that people should not take risks they cant afford. Other than reg b. I. , what is the sec doing affirmatively to ensure that people like alex cant get exposed like that again . Yeah. We are looking at this kind of disclosure. And boy. Let me say this i read that over the weekend, and just terrible. We need do something to make sure that these kind of things dont happen. I guess and i understand that you are, as you said, a disclosuredriven entity. The disclosures are only as good as the understanding of the person who reads them. Let me say i agree 100 with you. Thats what i was saying before. Disclosure is is only good if people can understand it. Yeah. And you got to be able to make an assessment of whether somebody can understand it. I thank you for saying that. I introduced when we passed on the house floor h. R. 1815 earlier this term, specifically to do market testings of those disclosures. It was with reg b. I. In mind. If people cant understand in plain english what theyre signing, we havent done our Market Research<\/a> well enough. And we got it in the senate, but you could do that by rule, take it up. I want to turn to private markets and some of my colleague from wisconsin was raising. They require a lot less disclosure than Public Markets<\/a>. I spent most of my career prior to getting here was running private equitybacked companies, complicated structures, very sophisticated people, constantly evolving capital structures. It was hard for me to keep up, and i was the ceo of the darn company. This month the sec proposed rules to expand exempt offerings in the private market. And given the issues and the lack of total understanding in Public Markets<\/a>, can just help me understand why you think we are protecting investors if we are allowing greater participation in private markets by less people who would not pass the reg b. Standard of a sophisticated investor . I think were looking at this in exactly the appropriate way for what youre describing. Right now we have a wealth test or an income test to ascertain whether somebody is sophisticated or not. Its its a binary test. Ive long believed that thats not the right test. Its integrated into our ecosystem. Were saying, are there better ways to test, whether somebody should qualify as a credited investor. The proposal says one of the ways to think about it is did you pass the series seven exam . Were you able to pass the exam that somebody who is selling securities has to pass . Do you understand exposure from the options and the like . I believe that that kind of component of the accredited investor test is important. Well, i agree in principle. Let me shift, if i may, to an area totally outside of your jurisdicti jurisdiction. Department of labor this week issued an information letter under erisa to allow 401 k Plan Sponsors<\/a> to have private equity as a component of diverse allocation funds. Im not going to ask you to speculate on erisa. But is it your view that a 401 k plan or an investor in a 401 k plan would pass the sophisticated test that would allow them to participate in ways that would not frustrate the spirit of section 506 of reg d as currently written . Another way, can the department of labor make that change without you making a without you making a corresponding changenegep so the way that was structured is not directly investing in private equity by erisa plan participants. I read the letter. I thought it was structured very well. It was the erisa plan fiduciary could pick a fund that has a fiduciary, or the fund has limited exposure to private equity. So not direct investment by an erisa beneficiary into private equity im out of time. But i well follow up with you off line. I think theres a concern that we could put unsophisticated money in places that were hard for me as the ceo of a company to understand. Yeah. I dont want that to happen. Thank you. Mr. Bud is now recognized virtually. Thank you, mr. Chairman. And chairman clayton, appreciate you being here today. In your capacity as chairman of the sec. I know theres been exciting news surrounding you lately. I want to talk about u. S. Accounting standards as a critical component of u. S. Capital markets. The deepest and most liquid Capital Markets<\/a> in the world. And for them to continue to operate efficiently and effectively, the u. S. Must maintain accounting and reporting standards of the highest quality. This is particularly true in times of instability. Similar to what were experiencing during covid19 pandemic. So as youre undoubtedly aware, ive long been an outspoken critic of the cecil accounting standard developed and in which the sec has direct supervision over. Now there were already serious concerns centered around cecil before the start of this pandemic, the crisis has highlighted those concerns further. How does the sec validate that all new accounting standards or significant revisions to existing accounting standards have been subjected to comprehensive field testing or Economic Impact<\/a> assessments . So just wanted to get your take on that, mr. Clayton. I think i think what we should be looking at, cecils performance during this time period. Let me say it theres two perspectives on which people have been looking at cecil and how it operates. One is from a regulatory capital perspective, what impact it has on regulatory capital from the Bank Regulators<\/a> perspectives. Im going to put that to the side. From my perspective and what cecl disclosure around expected losses is from the investor point of view, and we have had some we have had some significant swings. There are some things that we need to look at including whether different models used by comparable institutions produce significantly different results. If youre having two financial issuers with the same Balance Sheet<\/a> or similar Balance Sheet<\/a> that are coming up with different results, why is that happening, and do we need to make adjustments . Is somebody using a twoyear model versus a oneyear model . Is someone waiting unemployment in a time like this when unemployment is at a level that no one really thought it would be . So thats a longwinded way of saying we should look at how cecl is performed in this time of stress and assess whether guidance, et cetera, whatever, needs to be made. But its definitely something we should be looking at. Thank you. Does the sec conduct any independent an independent assessments of Investor Relations<\/a> to new or significantly modified accounting or reporting standards before theyre finalized or issued . And if so, why or why not . I think what youre getting at is our relationship with the faf and fasb and their independence. We do engage with them. I believe their independence is important. You know, i think we have a very good relationship, and back to your ceca point, were going to work on eevaluating how its been implemented and is working. Thank you. Would the sec be open to formalizing through noticing comment the review process for new accounting standards . Look, i think the process as it works today is a good process. I know that people are looking at in particular were having this back and forth on cecl. I think people are looking at it and continue to look at it with questions. Overall i think the current process is a good process. Happy to continue to discuss that with you. Id like to do that. It seemed that was kind of made it the feel of being made without direct input of the sec by an unaccountable board. So id like to continue that discussion. Thank you. Does the sec conduct independent investor outreach to validate investor considerations on a preissuance basis . And if not, would the sec be able to such a process . So, this is something that was important to me, and as weve looked at new trustees for the faf and fasb, ive made it a point to make sure that we have that investor perspective so that that perspective is brought to bear on their rulemaking. 40s, they should be reaching out to people who are the not just the preparers but the users of the financial statements. Very good. Thanks for being here today, and i yield back ply time. Thank you. We recognize ms. Dean. Thank you, mr. Chairman. I thank you for allowing me to be a part of this important hearing, and i thank you, chairman clayton, for your service at sec during this crisis. This terribly difficult time for our entire country. Mr. Chairman, i, too, would like to begin by discussing rating agencies. Im madeline dean from suburban philadelphia, by the way. Last week the Federal Reserve<\/a> chairman powell came before our economy and acknowledged that not all nrsros had equal access to emergency lending facilities. Since the Credit Rating<\/a> Agency Reform<\/a> act of 2006 conferred sole Supervisory Authority<\/a> of Credit Rating<\/a> agencies to sec, i want to raise this issue with you today. Because these lending facilities do not treat all nine of the rating agencies equally or uniformly. Id like more insight on how the Federal Reserve<\/a> came up with eligibility standards for rating agencies. You have said in earlier testimony that there has been some conversation between the fed and sec on this subject. Can you flesh out a little more what that conversation looks like and what if any recommendations were made by sec to the fed . So i havent been directly involved in those conversations, but let me give you my understanding of them. I did have a highlevel conversation with one of my counterparts at the fed. What weve done is if you look across those nine nrsros, some of them participate in a wide variety of markets corporates, products, and the like. And insurance, et cetera. Some of them only participate in very narrow aspects of the markets or have very limited participation in a market. You may im going to make up these numbers, but get them correct. You may have the Insurance Industry<\/a> where two or three do 90 of the insuranceistry that, and one there are a couple of others that do just a few companies. We provide that data to the fed, and then the fed can see which nrsros have sufficient experience to participate in the various facilities that theyre using. So thats well, mr. Chairman, im not actually thinking about market or where they participate because as i understand it, nrsros must satisfy the same criteria by the sec. Im wondering what is the internal distinction being made by the fed. Is it is it your opinion that after the sec registers an nrsro of a given asset class that they should be treated uniformly . And i think its a really good question. But it highlights the issue. Our registration does not qualify them for a particular asset class or not an asset class. Its just a general registration as an nrsro. So you could have somebody whos registered with you, who doesnt rate corporate debt. Or has no expertise in rating corporate debt. Its a not a merit analysis of their ability or not their ability. Thats i think i dont want to speak for the fed. They do a a good job at this. They need to look at the portfolio of ratings that those entities do and assess whether theyre appropriate for the facilities. I appreciate that. You may know and this has bipartisan support, as you know, that my bill would help achieve this uniform treat across the nrsros. Let me move on to pick up on the conversation that you had begun here with the very troubling firing of attorney berman. The u. S. Attorney for the Southern District<\/a> of new york. You said you began a conversation with the administration only this last weekend as to the possibility of is that correct . Let me be clear. The weekend of the 12th was the conversation. The initial conversation. Oh, okay. The weekend before the firing of berman. Im sorry, i didnt hear that the weekend before the firing of mr. Berman . Mr. Chairman the weekend of the 12th. Her question was inaudible. I think we needed to let please repeat your question. That would have been the weekend before the firing, the friday night firing of mr. Berman. Yes, the weekend of the 12th. And you said you had had these conversations with others, a wish to get back to new york. You were looking for a position back in new york. When did you begin that conversation with either attorney general barr or the preside president . The first time it was raised was the weekend of the 12th. And im going to leave it at that. It was raised by you by me. By me. This is let me be clear on this issue. This was entirely my idea. This is something that id been thinking about for several months as a possible continuation of Public Service<\/a> after my time why okay. And youre not a history of a prosecutor, but this was your idea you suggested it to the administration, is that correct . Mr. Chairman yes i extended the gentleladys time a bit for the technical problem. But the Ranking Member<\/a> points out thank you. I apologize, i did not have the timer visible to me. I apologize. Thank you very much, mr. Chairman. Thank you. And you can submit questions for the roarment and we expect mr. Clayton to respond i will. I yield dbh back. Now as our last questioner, the very distinguished gentlelady from texas, ms. Garcia. Thank you, mr. Chairman. As a member of the Financial Service<\/a>s committee and also the Judiciary Committee<\/a>, i wanted to just pick up where ms. Dean has left. And mr. Clayton, who approached you . You said it was the weekend of the 12th. Who approached you about it, or did you approach the administration . I just want to be clear on that. Let me let me be clear on this. And this is not a confirmation hearing. Im here as the chairman of the sec, but i want to be clear on this. This was entirely my idea. It was something that i had been thinking about and talking with others as to whether i could go back to new york, which i had committed to do, to my family and intend to do when im finished my service here, and continue in Public Service<\/a>. This was a position that was very attractive to me based on my work with the Southern District<\/a> and my extensive work with people who are alumni of the Southern District<\/a>. Theyre an incredible work of people, they work hard, they are committed to Justice Without<\/a> fear or favor. This was something of interest to me. It came up the weekend of the 12th. And thats how thats the genesis for this. And im im going to leave it at that. Well, unfortunately, i cant. I mean, i think that you understand that i understand that and you understand this is not a confirmation hearing. But the reality is that you are before congress, youre before a committee. And any time anyone comes to testify before the United States<\/a> congress, they know theyre subject to just about any question about anything. And you know, you may feel uncomfortable, you may not want to answer the questions, but until you run to be a member of congress, i goat ask the questions. So again, im mr. Chairman, parliamentary inquiry. Is this line of questioning even relevant to the title or the subject of what the hearing is supposed to be about . The gentlelady from texas is correct. Youre a member of congress, its your time. If i start editing the questions and comparing it to the title and crafting the titles to exclude the questions that i dont want to hear, im not sure youre going to be happy with the result. So ill ill it seems, mr. Chairman, at least in the lane your parliamentary inquiry has been responded to. If you have an oped to write is it going to be your common practice to have discussion on issues that are outside of our it is my practice as chair to recognize a member and to recognize that as a member of congress who can ask the questions they want and to protect their time from interruptions. I will ask the staff to restore about half a minute. Mr. Chairman, parliamentary inquiry. They stopped the clock when my inquiry started. There is no need to add time. The train of thought was certainly interrupted. So well keep that in mind as we go forward. Im sorry, ms. Garcia. And hopefully there will be no further inquiries. Youre recognized for the remainder of your time. Well, mr. Chairman, its regrettable that hes refusing to answer a direct question from a member of congress. And the American People<\/a> deserve to know some of these questions because yes, he did say earlier that he was not this process did not require his current attention, the confirmation process. But the reality is when youre youre a potential nominee or youre a nominee, its all fair game, and the American People<\/a> have a right to know. Ill move on. This wednesday, Judiciary Committee<\/a> heard from several employees from the department of justice, either current employees or who have testified, and the department is pursuing cases based on the president s political and personal whim and not based on the rule of law. For example, mr. Salinsky testified that he was told the department wanted to lessen the sentencing recommendations for stone because the u. S. Attorney was afraid of the president. And so agreed to treat stone differently than any other person. Mr. Clayton, should the president be treated differently other than dependents . Let me tell you how we approach matters at the sec and how i would approach matters anywhere. It does not matter who the subjects are. You pursue it without fear or favor and to do justice. Thats the way that the people who will have worked with me, the 1,300 people in our Enforcement Division<\/a> at the sec have performed it. And that is the right way to go forward. Well, i agree with you with with the fear or favor is certainly the principle involved here. But what if you get an order do you believe the president has a right to tell you to order a sentencing recommendation or drop charges entirely for his friends or for political allies . Im going to talk about at the sec . At the sec what we do is we approach this through our enforcement directors, through our staff. They are empowered to do what they think is right. Well, again, im asking you, you know, you want to be the attorney general. You is said youd had oversight of prosecutors. Can you commit to us today to report any political influence or any kind of undue influence coming from the white house or the president or his agents, to to you or your office as attorney general if anything like that occurs, that you would report it to congress . I can i can commit to continuing to do my job as i have and any other job like it as i have, which is without fear or favor, with independence, and without inappropriate influence. I think in response to ms. Porters questions you said that you had not had any discussion or any kind of influence either while you were playing golf with the president or any other time s. That correct . What im going to say is i have conducted myself in my job in a way that i have not had any improper influence on any enforcement matter. Im completely confident in saying that. So you are mr. Chairman . The time of the gentlelady has expired. I wish i could continue to get allocate you more time, but the rankings being assertive here. Thank you i yield back. Questions for the record will be submitted in the requisite number of days which i believe is what . Five legislative days. And we hope chairman clayton that you can get us an answer within a few weeks, a very few weeks, to those written questions. Mr. Chairman . Yes . I ask unanimous consent to enter into the record a june 24th letter from the u. S. Chamber of commerce to both yourself and myself. The letter provides comments to the legislative text attached to this hearing. Apparently they need to amend that to make this the confirmation hearing. But it is on the text of this attached hearing. Without objection, the document will be entered. Id like to thank mr. Clayton for his testimony. Without objection, all members will have five legislative days in which to submit additional written questions for mr. Clayton to the chair which will be forwarded to the witness for their response. I ask mr. Clayton to please respond promptly. Without objection, all members will have five legislative days in which to submit exstrainious materials to the chair for inclusion in the record. I remind members to submit your written questions and materials for the record to the email address provided to your staff. And now according to these notes, im supposed to hit and say were adjourned. Mr. Chairman . Thank you. Thank you. Thank you for your participation. Lawmakers are just ending a hearing on how the coronavirus pandemic impacted emergency lending. 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