MutualFundWire.com: So Long, Mary Jo

MutualFundWire.com

The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication

Thursday, January 19, 2017

So Long, Mary Jo

It's time for fundsters to say goodbye to Mary Jo White, at least in her capacity as SEC Chair.

Mary Jo White
Securities and Exchange Commission
Chair

Tomorrow U.S. President Barack Obama will pass the reins of power over to President-elect Donald Trump, and White promised shortly after Trump's November victory that, though her current term ends in 2019, she will leave her post when Obama leaves his. Trump has picked a veteran M&A lawyer, the low-profile Jay Clayton (not hedge fundster Anthony Scaramucci or former SEC Commissioner Paul Atkins, both of whom are involved in Trump's transition team), to take White's place.

White, a political independent and a former U.S. Attorney who also spent time in the private sector at Debevoise & Plimpton, took over the SEC less than three years ago, on April 10, 2013. White took over from Obama's first SEC Chair, Mary Schapiro, and White carried a version of Schapiro's money market reform across the finish line. White brought a prosecutor's resolve and enforcement mindset to the regulatory agency, but her independence also brought her into conflict with populist, anti-Wall Street Democrats like Senator Elizabeth Warren who thought White's prosecutorial approach was not harsh enough.

Upon news of White's impending departure, the ICI, the Wall Street Journal, and members of the public quickly began singing her praises, while InvestmentNews pleaded with Trump to "get serious" when picking a new SEC chief. The WSJ calls White "no-nonsense," "a true independent," "the rare Obama regulatory chief who resisted politicization." The ICI lauds White's "exceptional leadership" and the "expertise, experience, and open process that the Commission has brought to asset management issues under [White's] leadership."

On Tuesday, in what might be White's last speech as SEC Chair, she said that there's "never a dull moment" in her public service. (Reuters reported on the speech, which White delivered at the Economic Club of New York.) She hearkened back to the SEC's deregulation of commissions back in 1975, using that turning point in Wall Street history as a reminder of why the SEC, in White's view, must maintain "a fierce independence."

The SEC has not been a key talking point for Trump so far, and though deregulation seems to be a key theme for the President elect's planned administration, it's anybody's guess as to how that will translate into the SEC's regulation of asset management and the rest of Wall Street. The WSJ calls Trump's SEC Chair pick, Clayton, "a 180 from Chairman Mary Jo White". Clayton, one lawyer reminds the paper, "is a deal maker rather than a prosector."

Meanwhile, as White departs, an international body, the Financial Stability Board (FSB), is at the gates, promising to revisit ideas for dealing with perceived systemic risks with large asset managers. White always defended the SEC's asset management regulatory turf against the advances of FSB and the Financial Stability Oversight Council (FSOC). The SEC, White insisted, was "the strongest voice for that." In her Tuesday speech, White called on Congress "to offer an unwavering defense" of both the SEC's independence and its actions:

The present moment is a delicate one. The post-crisis Commission has been revitalized and remains the investor's strongest advocate, but it is more susceptible than ever to the erosion of its expertise and authority by the partisan tides. It will remain independent -- and therefore able to meet its broad range of critical responsibilities -- only with Commissioners equipped and motivated to act expertly and with only our mission in mind ... Americans across this country are clearly deserving of a Commission that is empowered to independently carry out its unique and critically important obligations to investors and to our capital markets.