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ASA Issues Statement Ahead of FSGG Budget Hearing

Calls on FSGG Committee to hold SEC and Chairman Gensler accountable to the American people

WASHINGTON, D.C. — Today, the American Securities Association (ASA) released a statement on a number of issues ahead of U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler’s testimony before the House Appropriations Subcommittee on Financial Services and General Government’s (FSGG) budget hearing.

SEC Regulatory Agenda: For some time now, the SEC has estimated the legal and compliance costs associated with its aggressive rulemaking agenda to be $400 an hour. Since SEC Commissioner Mark Uyeda sounded the alarm on this error, the SEC has quietly adjusted the hourly compliance rate to $600 an hour. Last week, ASA CEO Christopher Iacovella penned an op-ed published in the Washington Times highlighting The True Cost of the SEC’s Regulatory Overreach.

“The sky-high cost of the SEC’s ambitious regulatory agenda is grossly underestimated—even by its own estimates,” ASA CEO Chris Iacovella said. “To restore public confidence and fairness in the rulemaking process, the SEC must immediately reopen the comment period and recalculate the cost-benefit analysis for every proposed rule with the wrong cost estimates—we call on this Committee to ensure that happens.”

Consolidated Audit Trail (CAT): The SEC required the CAT to collect the personal and financial information (PII) of retail customers without their consent and then have that information sent to a centralized database in Washington, D.C.

In May 2020, ASA filed a lawsuit — first announced in a Wall Street Journal op-ed — against the SEC to protect American investor privacy and launched, a nationwide grassroots movement mobilizing all Americans to stop the collection of retail investor data. ASA withdrew its lawsuit after the SEC issued a request for public comment. Unfortunately, it has been almost three years since we submitted comments on this proposal, and we believe Congress and the American people need to know why the SEC has not finalized this rule.

“The SEC’s CAT disregards the privacy rights of every American investor and treats them as if they have violated an SEC rule without ever having done so, and it needlessly exposes investors to identity theft and financial ruin by putting all of their data in a single location for hackers and cybercriminals from Russia and China to target. We call on this committee to stop the SEC’s CAT and CAIS databases from collecting any of American retail investors' PII because privacy still matters in this country,” Iacovella said.

Regulation Best Interest (Reg BI): Reg BI was finalized in June 2019 after an exhaustive, years-long examination of broker-dealer standards of conduct by Congress and the SEC. Reg BI increased investor protections and established a strong, national standard of conduct for broker-dealers when they make investment recommendations to their customers.

“Any effort by the SEC to undermine Reg BI would only confuse investors, increase costs, and reduce access to financial advice for Americans. It would also upend years of progress and existing investor protections that strike the right balance without limiting investor choice and access for working families and those just starting off. We ask this committee to prevent the SEC from engaging in a costly and confusing ideological crusade to change a rule that works,” Iacovella said.

MIFID II: In February, ASA sent a letter to the U.S. House Financial Services Capital Markets Subcommittee outlining concerns related to the SEC reversing a staff “no-action” letter to adopt a European Union Markets in Financial Instruments Directive (MiFID II) that has had such a negative impact on small businesses in Europe that the European Commission is taking steps to reverse it.

“We see no reason for the SEC to import MiFID II — regulation that has done nothing but exacerbate the lack of research coverage for public companies across European markets — into U.S. markets. If the SEC wants to do this, then it must allow the public to comment on the negative consequences of this misguided policy,” Iacovella said.



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