I am sure many of you are looking forward to your well-earned celebrations after today’s commencement exercises, so I will heed the advice that President Franklin D. Roosevelt gave to speechmakers: “Be sincere, be brief and be seated.”

Perhaps the most challenging part of delivering a commencement speech is the realization that whatever one says will soon be forgotten. Frankly, my memory of the commencement speech at my own graduation is a bit hazy. So today I will ask you to remember just two things: First, the challenges you will face in life – and there will be many – are just new opportunities to learn and further your education. And second, it is always better to do the right thing, even if that may seem the harder choice.

Commencement is a good time for looking back, as well as for looking forward. When I graduated from Georgia Southern during the last century – well, 1976 – our school was called Georgia Southern College. The school only had about 6,000 students, mostly from the Southeast, and there was no football team. Today, Georgia Southern is a major university with more than 20,000 students coming from almost all 50 states and over 80 countries. And the Eagles will soon be dominating the Sun-Belt Conference.

…continue reading: Preparing for Challenges and Opportunities

The staff of the U.S. Securities and Exchange Commission (“Commission” or “SEC”) is planning to hold an SRO Outreach Conference (the “Conference”) this month. In anticipation of the Conference, I would like to address the challenges faced by self-regulatory organizations (“SROs”) as a result of the significant changes that the securities markets have undergone in the last decade, and the need for robust Commission oversight of SRO activities to enhance investor protection, maintain fair, orderly, and efficient markets, and facilitate capital formation.

The roles of SROs have a long tradition in our securities markets. As a practitioner in the securities industry for over 30 years, I’ve interacted with SROs as a member of the private sector as well as a Commissioner. I fully appreciate their role in the regulation of our marketplace by setting standards, conducting examinations, and enforcing rules among their members.

…continue reading: The Need for Robust SEC Oversight of SROs

Today [May 1, 2013], the Commission considers issuing a release proposing rules and interpretive guidance applicable to certain market intermediaries, participants, clearing agencies, data repositories, and trade execution facilities that are involved in cross-border transactions of security-based swaps. The proposed release is over 1,000 pages, contains over 2,000 footnotes, and requests comments on more than 630 questions with many subparts. Although the questions posed are many, they are intended to be balanced and fair to solicit views from all sides. This is a welcome approach, because it contributes to a healthy debate and dialogue that is vital to the Commission’s processes.

Today, the Commission also votes to reopen the comment period on the various outstanding rulemaking releases and policy statement concerning security-based swaps and market participants to allow the public additional time to analyze and provide comments in light of our cross-border release.

The length of the cross-border release and the reopening of the comment periods reflect the complexity and importance of the issues involved in securities-based swap transactions. In issuing today’s proposal and asking for comments on the Commission’s proposed approach to regulating the securities-based swap market, the Commission recognizes the interactions among many important rules in this area. It is important, therefore, that our rules avoid gaps and loopholes, and that they work together to provide the needed transparency, accountability, and protection to our economy, the markets, and, most importantly, to investors.

…continue reading: Proposed Rules for Global Derivatives Market

I am particularly pleased to be at a conference that focuses on the role of institutional investors and their impact on corporate control, market liquidity, and systemic risk. The SEC has a great deal of interest in these areas and I hope that you will provide us with any observations that can help inform the SEC’s understanding.

Role Played by Institutional Investors

The topic of your conference recognizes the important role played by institutional investors and the great influence they exert in our capital markets. The role and influence of institutional investors has grown over time. For example, the proportion of U.S. public equities managed by institutions has risen steadily over the past six decades, from about 7 or 8% of market capitalization in 1950, to about 67 % in 2010. The shift has come as more American families participate in the capital markets through pooled-investment vehicles, such as mutual funds and exchange traded funds (ETFs).

Institutional investor ownership is an even more significant factor in the largest corporations: In 2009, institutional investors owned in the aggregate 73% of the outstanding equity in the 1,000 largest U.S. corporations.

…continue reading: Institutional Investors: Power and Responsibility

This Annual Conference is an important opportunity for representatives of NASAA and the SEC to come together to discuss how best to accomplish our common goal of protecting investors. These annual conferences provide an opportunity to increase collaboration, communication, and cooperation for the benefit of investors, and to promote fair and orderly markets. I have been honored to have served as the SEC’s liaison to NASAA for the past four years. I know and appreciate NASAA’s mission of protecting main street investors and the critical role that state securities regulators play in the enforcement of the securities laws. You are often the first to receive complaints from investors and identify the latest scams devised to steal from investors.

I want to take this opportunity to highlight some of the recent achievements of NASAA’s members. According to the latest statistics, as of October 2012:

…continue reading: Fighting on Behalf of Investors Despite Efforts to Weaken Protections

Recently I have had the privilege to speak at a number of forums to discuss the importance of diversity and inclusion in corporate America and in government agencies such as the SEC. I strongly believe that regulators and corporate America should reflect the broad range of American society. The following remarks are a compilation of my remarks delivered on (i) March 5, 2012, at the Greenlining Institute’s Diversity Summit in Washington, DC, (ii) March 5, 2013, at the SEC’s Unconscious Bias Training Seminar in Washington DC, (iii) March 16, 2013, at the Renaissance Gathering Dinner in Atlanta, Georgia, and (iv) March 19, 2013, at the Chicago United Annual Meeting in Chicago, Illinois.

Diversity at the SEC

Before speaking about the many benefits of diversity and inclusion in Corporate America, I need to be upfront about my agency’s own diversity. For those not familiar with the SEC, let me describe our role. The SEC is the agency responsible for overseeing most of Wall Street and the capital markets. This includes oversight of approximately 35,000 entities, including about 12,600 investment advisers, 9,900 mutual funds and exchange traded funds (ETFs), and over 4,500 broker-dealers with more than 160,000 branch offices. In addition, we have the responsibility for administering a disclosure regime that covers more than 9,100 reporting companies.

When all is said and done, the SEC’s core mission is to protect investors. I strongly believe that a diverse workforce at the SEC is critical in order for the SEC to achieve its core mission; however, and, to put my cards on the table, the SEC has much to do in order for its workforce to reflect the communities we live in. The statistics reflect that 31.6% of the SEC’s workforce was comprised of people of color in 2012, and that just 12.9% were at the senior employee level. The most telling numbers are those relating to our senior officers. As of fiscal year 2012, the SEC’s senior officers were approximately 86.7% white, while 5.5% were African-American, 3.9% Hispanic, and 3.1% Asian-American. The gender breakdown among these officers is 68.8% male and 31.3% female. Clearly these numbers can be improved. Unfortunately, though our lack of diversity is well-known and has been publicly discussed, the SEC’s recent hiring activity has not resulted in much improvement in our numbers. The SEC just hired 567 employees for fiscal year 2012 and the first quarter for fiscal year 2013, and, with respect to the attorneys hired by the SEC, 38.5% were women and only 16.6% were persons of color. We can, and must, do better.

…continue reading: Corporate America and the SEC Should Reflect America

As many of you know, I am now in my second term as an SEC Commissioner and this is my fifth time participating at SEC Speaks. During that time, I have served with three different SEC Chairmen, and a fourth is now in the works. It has been, and continues to be, a great privilege to serve at a time during which the SEC’s role as the capital markets regulator has never been more important. However, I must admit being frustrated that we haven’t done more to protect investors.

Clearly, my tenure as a Commissioner has been dramatically impacted by the financial crisis and the pressing need to address the many failings that were brought to light by that crisis. Throughout my tenure, I have worked to be a strong advocate for fulfilling the Commission’s mission to protect investors, facilitate capital formation, and promote a fair and orderly market. To that end, I want to talk to you today about the need to protect investors through robust and effective market oversight.

I am growing increasingly concerned about the stability of our market structure as we lurch from one crisis to another, be it the flash crash or the Knight trading fiasco. Today, I plan to focus on the dangers that investors face from a trading market structure that has shown too many signs of weakness and instability.

…continue reading: Addressing Market Instability through Informed and Smart Regulation

There have been recent developments related to the Securities and Exchange Commission’s consideration of potential reform of money market funds that I would like to highlight.

On November 30, 2012, the SEC staff delivered to the Commission its report delving deeper into the causes of investor redemptions in 2008, the efficacy of the Commission’s 2010 amendments to strengthen Rule 2a-7 (the principal rule that governs money market funds), and the potential impacts of future reform on issuers and investors. This is a welcome development. As I previously stated, I have been requesting this analysis so that it could inform the dialogue as to any further money market fund reform. [1] The staff’s report is a response to a request made in mid-September by a majority of the Commission (Commissioners Aguilar, Paredes and Gallagher) that asked the Division of Risk, Strategy, and Financial Innovation to conduct a study to answer a series of questions intended to inform the continuing dialogue.

I look forward to the staff’s report being made public, so that the Commission can benefit from the public dialogue.

There have also been developments in the consideration of the potential impact of assets migrating from existing transparent, regulated money market funds to opaque, unregulated funds (sometimes referred to as Liquidity Funds) as a result of structural changes to money market funds.

…continue reading: Recent Developments in Money Market Funds

I would like to talk about capital formation and the critical role that accountants play in that process. I want to particularly focus on capital formation from the investor’s perspective. Too often, the investor perspective is lost in the discussion over capital formation. The companies, lawyers, and investment bankers that often dominate this discussion often see regulation only as an obstacle to be overcome. They focus the discussion on how to raise money quicker and more cheaply — but seem to forget that the money raised comes from the pockets of hard-working Americans. The capital raising process should not make investors more vulnerable, and attempts to raise money quicker and more cheaply should not come at the investor’s expense. I want to put the focus on investors and examine how protecting investors facilitates capital formation by enhancing confidence, promoting integrity, and fostering transparency.

…continue reading: Capital Formation from the Investor’s Perspective

Small business is a powerful engine for economic growth. Independent businesses with fewer than 500 employees account for half of all private sector jobs and more than half of nonfarm private GDP. [1] Growth in small business helps fuel the U.S. economy, generating opportunity, competition, and demand. Small businesses are essential to sustaining a strong economy, strong communities, and a strong middle class.

Today’s Forum reflects the Commission’s continuing interest in capital formation issues for small businesses. Indeed, the Commission has had a long-term focus on small business, and has utilized multiple avenues to regularly and consistently seek input from small business stakeholders. For example:

…continue reading: Effective Small Business Capital Formation