SEC Commissioner Peirce on the how to get rid of ants in the house vinegar Need to Reexamine Rules CLS Blue Sky Blog

I talk frequently about my home state of ohio. In the ensuing conversations, I have learned that people from the coasts do not how to get rid of ants in the house vinegar know a lot about the middle of the country. “ohio? That’s the state that grows all the potatoes, right?” my response usually goes something like: “no, actually, that’s idaho, which is about 1600 miles away from my beloved buckeye how to get rid of ants in the house vinegar state.” were someone to make that mistake today, I might respond with a bit more enthusiasm: “actually, you are thinking of idaho, which does have lots of potatoes, but doesn’t have any regulations.” that would be a slight exaggeration. Last month, idaho’s legislature did not reauthorize the rules on the state how to get rid of ants in the house vinegar books, which meant, absent emergency action to retain them, they would all expire in july. [1] idaho’s rules sunset every year unless they are reauthorized. Usually they are. This year, they were not. Most rules likely will remain on the books through a how to get rid of ants in the house vinegar temporary workaround, but the governor announced that he would “use the unique opportunity to allow some chapters of idaho how to get rid of ants in the house vinegar administrative code that are clearly outdated and irrelevant to expire how to get rid of ants in the house vinegar on july 1, 2019.” [2]

Even though idaho will celebrate july 4 th with most how to get rid of ants in the house vinegar of its rules intact, watching from afar the state’s regulatory introspection has caused me to do some thinking how to get rid of ants in the house vinegar about the SEC’s rules. The SEC has been around for 85 years. We are not as old as idaho, but we are not young either. In that long life, we have managed to accumulate a lot of regulations. I wonder what our rulebook would look like if we how to get rid of ants in the house vinegar had a process in place that did not automatically carry how to get rid of ants in the house vinegar over rules from one year to the next. My guess is that we would have fewer and simpler how to get rid of ants in the house vinegar rules in place of the complex tangle we have now.

Simplicity is important, but elusive. To quote the marquis de lafayette, who allegedly once slept here—or at least near here, [3] “laws must be clear, precise and uniform.” [4] we strive for clarity, precision, and uniformity, but one concern that I commonly hear from the entities how to get rid of ants in the house vinegar we regulate is just how difficult it is to divine how to get rid of ants in the house vinegar what our rules require. The prospect of facing an enforcement action because you did how to get rid of ants in the house vinegar not understand what the rules were keeps many compliance officers, accountants, and in-house lawyers up at night. Our corner of the law is highly complex, not only because our rules interact with one another in how to get rid of ants in the house vinegar interesting ways, but because the markets they regulate also are intricate, intertwined, and ever-changing. To make matters worse, knowing the letter of the law is not enough; our rules come to life through guidance from the commission how to get rid of ants in the house vinegar or the SEC’s staff and judicial decisions, so the regulatory lawyer—already tired from reading through the rulebook—must be on the lookout for relevant guidance and case how to get rid of ants in the house vinegar law.

We do not have a simple set of rules, but perhaps flexibility of application is an unintended benefit of how to get rid of ants in the house vinegar all this complexity? Not really, but maybe there is some hope for progress on the how to get rid of ants in the house vinegar flexibility front. Idaho has a unique opportunity to jettison a lot of how to get rid of ants in the house vinegar outdated rules in one fell swoop; getting rid of antiquated rules at the SEC involves more how to get rid of ants in the house vinegar procedural hurdles, but we can develop a culture of revisiting our rules how to get rid of ants in the house vinegar periodically. In some recent rulemakings, for example, we have explicitly committed to collecting data and revisiting the how to get rid of ants in the house vinegar rules or particular aspects of them based on what the how to get rid of ants in the house vinegar data say. [5]

We also can do a better job of encouraging our how to get rid of ants in the house vinegar examinations and enforcement staff, who have deep knowledge about what is going on in how to get rid of ants in the house vinegar the industry, to flag for our rulemaking divisions rules that are in how to get rid of ants in the house vinegar need of updating. Enforcement attorneys, for example, have frontline knowledge about how our transfer agent rules need how to get rid of ants in the house vinegar to be updated and strengthened to better protect investors from how to get rid of ants in the house vinegar fraud, and our compliance examiners routinely in the course of their how to get rid of ants in the house vinegar work see the need for updates to our advertising and how to get rid of ants in the house vinegar custody rules. If the only recognition staff receives is linked to enforcement how to get rid of ants in the house vinegar actions, enforcement lawyers and compliance examiners are unlikely to be part how to get rid of ants in the house vinegar of the agency’s broader effort of identifying rules that need to be how to get rid of ants in the house vinegar modernized. We need, therefore, to reward staff whose insights inform our rulemaking priorities, rather than simply counting the number of completed enforcement actions how to get rid of ants in the house vinegar their work generates.

As we write rules, we need to be thinking of ways we can inject how to get rid of ants in the house vinegar some flexibility into the obligations we impose to make them how to get rid of ants in the house vinegar better able to change with the times. If we avoid baking particular technology into rules when we how to get rid of ants in the house vinegar write them, they will accommodate changing technology. I have urged caution, for example, in mandating that firms use particular record-keeping technology or particular data-tagging technology. We can set objectives that different firms can achieve in how to get rid of ants in the house vinegar different ways. For example, I have argued for greater flexibility to allow financial professionals how to get rid of ants in the house vinegar and funds to deliver information to retail customers in whatever how to get rid of ants in the house vinegar way works best for each firm’s customer base. We can allow companies to grow into their regulatory obligations how to get rid of ants in the house vinegar by building relief for small entities into our rules, something that our new small business capital formation advocate and how to get rid of ants in the house vinegar new small business advisory committee are likely to urge us how to get rid of ants in the house vinegar to do.

Last week, we started the process of updating and making more flexible how to get rid of ants in the house vinegar one rule that has proved—since it was first adopted—to be quite costly. Section 404(b) of the sarbanes-oxley act requires public companies to have their internal controls how to get rid of ants in the house vinegar audited by an independent auditor. Specifically, we proposed to allow certain small, low-revenue companies to opt out of the auditor attestation requirement. [6] contrary to some reports, these companies will still undergo the normal financial statement audit, and managers will still be required to conduct an assessment how to get rid of ants in the house vinegar of the companies’ internal controls. We simply made optional the additional safeguard of having an how to get rid of ants in the house vinegar independent auditor attest to those internal controls.

We want to hear feedback about whether such a change how to get rid of ants in the house vinegar lines up with investors’ weighing of the costs and benefits of such an attestation. On the one hand, having an auditor look at a company’s internal controls provides a measure of comfort that the how to get rid of ants in the house vinegar company is not squandering precious investor capital. On the other hand, the costs of auditor attestation are especially difficult to stomach how to get rid of ants in the house vinegar and likely not as meaningfully protective for investors in a how to get rid of ants in the house vinegar company that is not producing revenues and is therefore reliant how to get rid of ants in the house vinegar on outside capital to cover all expenses. Many small companies and their investors have expressed concern about how to get rid of ants in the house vinegar the diversion of desperately scarce resources to the 404(b) audit. In fact, at a meeting a few days before we announced our how to get rid of ants in the house vinegar proposal, a small company CFO told us that auditor attestation would how to get rid of ants in the house vinegar add 20 to 33 percent to his independent auditor bill. [7]

Although the proposal is a positive step from the perspective how to get rid of ants in the house vinegar of making our rules more flexible, we missed an opportunity to make our rules simple. In 2007, the SEC introduced the concept of the smaller reporting company how to get rid of ants in the house vinegar or “SRC.” [8] such companies are eligible for scaled disclosure and, pursuant to our 2007 rulemaking, were automatically exempt from 404(b) attestation requirements. At the time, the commission noted the benefit to smaller companies of aligning how to get rid of ants in the house vinegar these categories and therefore simplifying the process. Almost one year ago, we adopted amendments to our definition of srcs, to expand the pool of companies eligible for scaled disclosure. [9] we did not, however, make complementary changes to the 404(b) exemption. I voted in favor of those amendments, but with reservations about their limited scope because they did how to get rid of ants in the house vinegar not deal with the auditor attestation piece, which I understood to be a major concern for many how to get rid of ants in the house vinegar companies and investors. [10] last week, we proposed amending our definition of accelerated filers, and again I supported the proposed amendments, but again with reservations about their scope. Had we proposed to re-align the non-accelerated filer and SRC definitions, not only would all srcs be able to opt out how to get rid of ants in the house vinegar of the attestation requirement, but we would restore some much-needed simplicity to the regulatory framework for small companies. Indeed, it is hard to explain in words, even when supplemented with pictures, which companies are eligible for which relief and for how how to get rid of ants in the house vinegar long. As I suggested at last week’s open meeting, GPS developers may find mapping regulatory obligations a bigger challenge how to get rid of ants in the house vinegar than mapping highways.

A regulatory GPS would be of little value without international how to get rid of ants in the house vinegar functionality. Another rule proposal we issued last week illustrates the challenges how to get rid of ants in the house vinegar of regulating in a global market. This second proposal relates to the security-based swap markets. [11] this proposal is part of our effort to finalize rules how to get rid of ants in the house vinegar mandated by dodd-frank. Since the passage of dodd-frank, the rulemaking resources of the SEC have been stretched to how to get rid of ants in the house vinegar capacity, but the staff, under chairman clayton’s leadership, is making great progress toward completing the rulemaking. One of the challenges of building a new regulatory framework how to get rid of ants in the house vinegar for the security-based swap market in the united states is that our how to get rid of ants in the house vinegar domestic market is only part of a larger global market how to get rid of ants in the house vinegar that developed mostly free of the burdens of potentially conflicting how to get rid of ants in the house vinegar national regulatory requirements. Moreover, participants in the market, both at home and abroad, are almost exclusively sophisticated, institutional players. As a result, we and other regulators have had to work hard to how to get rid of ants in the house vinegar determine where our rules should end and those of our how to get rid of ants in the house vinegar regulatory counterparts overseas should begin. Last week’s proposal is an attempt to lay out a workable how to get rid of ants in the house vinegar framework that allows us an appropriate level of oversight of how to get rid of ants in the house vinegar these large markets without imposing duplicative or conflicting regulation on how to get rid of ants in the house vinegar global firms attempting to serve a global, sophisticated clientele. The proposal included guidance about how our rules would apply how to get rid of ants in the house vinegar to transactions in which involvement by U.S. Personnel is limited, two potential ways for modifying the way we count transactions how to get rid of ants in the house vinegar toward our de minimis registration threshold, and certain accommodations to reflect some points of conflict between how to get rid of ants in the house vinegar our rules and those of our foreign counterparts. This may sound like a stretch to a room full how to get rid of ants in the house vinegar of accountants, but resolving cross-border issues related to the swaps markets is a hot how to get rid of ants in the house vinegar topic at the SEC, and we are looking forward to receiving comments.

International accounting and auditing issues are top of mind at how to get rid of ants in the house vinegar the SEC too. Our chief accountant, wes bricker, has, of course, been spearheading efforts in these areas, including through his leadership at the international monitoring group. [12] the monitoring group brings together members committed to audit quality. Wes is an excellent ambassador with a keen interest in how to get rid of ants in the house vinegar ensuring that financial reporting responsibilities remain with their rightful owners how to get rid of ants in the house vinegar and financial statements retain their integrity.

While international harmonization is important, sometimes one jurisdiction’s early action in an area helps other jurisdictions to how to get rid of ants in the house vinegar think about how they address the same area. The question of compensation for research is one such area. The european union’s markets in financial information directive, or mifid II, required the unbundling of brokerage and research fees. The apparent result has been a marked drop in the how to get rid of ants in the house vinegar coverage of small companies. [13] to resolve concerns about how compliance with mifid II would how to get rid of ants in the house vinegar affect the provision of research in the united states, the SEC staff issued time-limited no-action relief when mifid II went into effect. [14] as the expiration date of that relief looms, we are assessing how to proceed, and the european experience will help inform that assessment.

So too in other areas we can learn from what how to get rid of ants in the house vinegar our foreign counterparts do. For example, we can look to bermuda’s experience with digital asset regulation to assess potential regulatory how to get rid of ants in the house vinegar approaches to this emerging asset class. [15] the bermuda monetary authority recently released draft guidance for crypto how to get rid of ants in the house vinegar custodial services. [16] this proposed code of practice addresses such difficulties as how how to get rid of ants in the house vinegar to store private keys for hot and cold storage while how to get rid of ants in the house vinegar preserving necessary liquidity, what safeguards should be in place to prevent unauthorized access, and how to frame internal audit of same transactions to how to get rid of ants in the house vinegar ensure their integrity. [17]

Not only can we learn from other regulators, but we can learn from academics like you. I was very interested to see the paper by shiva how to get rid of ants in the house vinegar rajgopal, who is presenting on the next panel. [18] that paper identifies the misalignment between academic accounting research and how to get rid of ants in the house vinegar real world problems and suggests some potential reasons for the how to get rid of ants in the house vinegar mismatch. I hope that you get to the bottom of the how to get rid of ants in the house vinegar issue in your discussion. Good research can help us identify and settle on solutions how to get rid of ants in the house vinegar for difficult problems. I have noticed, however, that it is often hard to align the needs of how to get rid of ants in the house vinegar policymakers and the research agendas of academics. This problem is not limited to accounting, but includes other disciplines like economics and law. In that vein, I appreciate your willingness to talk about an issue that how to get rid of ants in the house vinegar has profound implications for you; it is no small sacrifice to change the course of how to get rid of ants in the house vinegar one’s research agenda, when so many pressures in your profession counsel against doing how to get rid of ants in the house vinegar so.

Given the value that research can have for our research how to get rid of ants in the house vinegar agenda, we are always eager to hear ideas about how we how to get rid of ants in the house vinegar can work more productively with academics. I am pleased that our new chief economist, S.P. Kothari—a former professor of accounting and finance, in addition to being former deputy dean of the MIT how to get rid of ants in the house vinegar sloan school of management—brings with him to the commission an understanding of the how to get rid of ants in the house vinegar value of research that is aimed at addressing real world how to get rid of ants in the house vinegar problems with solutions that take account of how the world how to get rid of ants in the house vinegar works. You will hear more tomorrow from my colleague commissioner jackson how to get rid of ants in the house vinegar about academic research at the commission, so let me close by saying that I welcome your how to get rid of ants in the house vinegar assistance in helping us to think through issues on our how to get rid of ants in the house vinegar regulatory agenda and to identify issues that should be on how to get rid of ants in the house vinegar our agenda.

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