Commissioner Uyeda Delivers Remarks at ICI Investment Management Conference

In March, SEC Commissioner Mark Uyeda delivered remarks to attendees at the ICI’s Investment Management Conference. His remarks noted the blistering pace of rulemaking, and he went further to state, “Many of the Commission’s rulemaking proposals are interrelated and interconnected, yet these proposals are not evaluated pragmatically and holistically.” Commissioner Uyeda noted the impact these regulations would have on smaller firms noting the consequences for the industry may “lead to a concentration of strategies, a decrease in choice for investors, and the potential for large financial monoliths that vote and invest the same way.”

Commissioner Uyeda also touched on the recent open-end fund proposals noting, “if registered investment companies are regulated to the extent that they are less desirable options for 401(k) and other retirement plans, collective investment trusts and other less regulated investment options may fill the gap.” He added, “… investors will have fewer protections and will not have the robust fund disclosures, limitations on conflicts of interest, and board oversight that they do today…” Uyeda noted the limitations in relying on academic studies, differences between the European distribution channels and those in the US, and the lack of sufficient evidence that the imposition of swing pricing is necessary to stem liquidity risk and the “first mover advantage.”

Commissioner Uyeda also touched on the proposed rules on climate disclosure for investment advisers and investment funds, as well as proposed changes to the Names Rule. He noted investors are currently receiving ESG disclosures and “Investors that wish to pay for ESG strategies should continue to have that choice and the current disclosure regime provides them with sufficient information to do so.” He also mentioned the issues European markets and regulators have encountered with their ESG disclosure proposals. On the Names Rule, Uyeda remarked “The supposed benefits to investors – which include the presumption that investors solely look at the fund’s name in choosing an investment – do not appear compelling, at least as presented in the current proposal.” He closed by stating the Commission needs to remain vigilant to the costs of implementation of new rules as well as utilizing concept releases and holding public roundtables in order to understand the potential impact of a proposal before it reaches the public comment stage.

Click here to read Commissioner Uyeda’s speech at the ICI conference.