Regulator’s five-year plan also foresees more direct communications with companies on compliance
The SEC will intensify its scrutiny of proxy advisory firms, update its technology to stay abreast of developments in areas such as high-frequency trading, and improve its disclosure rules, according to a draft of the commission’s five-year plan.
The plan also calls for more direct communications with board members and CEOs on compliance issues, greater analysis of its regulations on investment advisers and broker-dealers, and strengthened independence of FASB, the regulator says in its Strategic Plan 2014-2018. It says it will spend much of the coming years working on regulations and fallout related to the 2008-2009 financial crash, including full implementation of the Dodd-Frank Act and the JOBS Act.
The regulator highlights its need to address the complexities of advancing technology, which has led to flash crashes and massive accidental trading losses in recent years. Planned technological upgrades will also help it improve its electronic discovery tools and better organize and analyze rapidly growing volumes of data.
‘Sophisticated technology brings remarkable speed and efficiency to the financial markets, making both routine trades and complex transactions easier and less expensive to execute,’ the SEC says. ‘At the same time, this technology brings new risks of accidental or intentional disruptions that are capable of spreading across markets, international borders and institutional firewalls.’
The regulator says it will also ‘consider issues related to the mechanics of proxy voting and shareholder-company communications, including the role of proxy advisory firms’ and ‘consider how to modernize its beneficial ownership reporting requirements’. Improvement in disclosure rules could focus on issues of executive compensation, companies’ financial condition, risk management and other areas.
The SEC further plans to engage more directly with companies on compliance issues, including direct engagement with senior executives, board members and chief compliance officers. The SEC’s efforts in this area will include ‘compliance outreach events’, issuing risk alerts to companies and outlining best practices related to compliance.
