Investment Management

Posted on Wednesday, March 8 2017 at 10:41 am by

SEC Issues Guidance to Ease Fund Implementation of “Clean Shares”

By Andrew Sachs and John I Sanders

In January, we authored a post[i] discussing an SEC no-action letter, dated January 11, 2017, to Capital Group (the “Capital Group Letter”), the parent company of American Funds.[ii]  In the Capital Group Letter, the SEC agreed that Section 22(d) of the Investment Company Act of 1940 (the “Act”), which prohibits selling securities except at “a current public offering price described in the prospectus”, does not apply to brokers when acting as agent on behalf of its customers and charging customers commissions for effecting transactions in so-called “Clean Shares”.[iii]

Clean shares are mutual fund shares stripped of any front-end load, deferred sales charge, or other asset-based fee for sales or distribution that are sold by brokers who set their own commissions in connection with such sales.[iv]  We noted in January that the ability to replace the distribution fees typically charged by its mutual funds with commissions charged by a broker would give funds a new measure of flexibility to meet the demands of the Fiduciary Rule and competition generally, and we anticipated that many mutual fund companies would explore the concept of Clean Shares.

On February 15, 2017, just a month after publication of the Capital Group Letter, the SEC was compelled to issue guidance (the “FAQ”) addressing some of the questions it had received from mutual fund companies to-date.[v]  Below, we summarize FAQ as it relates to Funds seeking to implement Clean Shares.

Initial Implementation of Clean Shares

A mutual fund company issuing Clean Shares must, of course, amend its registration statement to include disclosure of the new share class.  Such an amendment might be affected through a Rule 485(a) filing or through a Rule 485(b) filing, depending on whether the amendment is “material”.[vi]  Typically, funds prefer Rule 485(b) filings because they become effective immediately,[vii] while Rule 485(a) filings are subject to a 60 day review.[viii]

In the FAQ, the SEC confirmed that “Funds should create these new Clean Shares, like any new class, by making a filing under Rule 485(a).”  To minimize the burdens of filing under Rule 485(a), if the only disclosures being amended are those describing the new share class, we advise mutual fund companies to seek selective review of the Rule 485(a) filing.  The request for a selective review should be made in the cover letter accompanying the 485(a) filing and must include (i) a statement as to whether the disclosure in the filing has been reviewed by the staff in another context; (ii) a statement identifying prior filings that the registrant considers similar to, or intends as precedent for, the current filing; (iii) a summary of the material changes made in the current filing from the previous filings; and (iv) any specific areas that the registrant believes warrant the SEC staff’s particular attention.[ix]

Adding Clean Shares to Multiple Funds

A mutual fund family adding Clean Shares to multiple funds need not file Rule 485(a) filings for each fund.  Instead, the FAQ confirms that mutual funds companies introducing Clean Shares across multiple funds can request Template Filing Relief pursuant to Rule 485(b)(i)(vii).  A registrant requesting Template Filing Relief would make a single Rule 485(a) filing with a Template Filing Relief request for all other funds with “substantially identical disclosure”.[x]

We note, however, that a request for Template Filing Relief must include (i) the reason for making the post-effective amendment; (ii) the identity of the Template filing;[xi] (iii) the identity of the registration statements that intend to rely on the relief (“Replicate filings”).[xii]  Additionally, the registrant must represent to the SEC that (i) the disclosure changes in the template filing are substantially identical to disclosure changes that will be made in the replicate filings; (ii) the replicate filings will incorporate changes made to the disclosure included in the Template filing to resolve any staff comments thereon; and (iii) the replicate filings will not include any other changes that would otherwise render them ineligible for filing under rule 485(b).[xiii]  Selective Review and Template Filing Relief can save registrants adding Clean Shares to existing funds time and money.

Existing Share Classes Qualify as Clean Shares

One of the more interesting aspects of the FAQ was the acknowledgement by the SEC that certain existing share classes of funds (such as institutional class shares) might already meet the requirements of Clean Shares, thereby offering a path to offering Clean Shares to many registrants without a Rule 485(a) filing.[xiv] In such a case, the SEC noted that a 485(a) filing would not be necessary “solely to add the prospectus disclosure described in the [Capital Group Letter]”[xv] where the fund already offers a share class that meets the requirements of the Capital Group Letter.[xvi]  Instead, a Rule 485(b) or Rule 497 filing will suffice.

Conclusion

The introduction of Clean Shares to the mutual fund industry presents an opportunity for mutual fund companies to improve the competitive position of their products, and we anticipate that there will be continued interest in Clean Shares even if the Department of Labor’s Conflict of Interest Rule does not become effective.[xvii]  If you have questions about Clean Shares of the SEC’s recent guidance, we encourage you to contact us.

 

[i] Andrew Sachs and John I. Sanders, Effects of the DOL Fiduciary Rule Reach Mutual Fund Industry, Kilpatrick Townsend: Investment Management News and Notes (Jan. 27, 2017), http://blogs.kilpatricktownsend.com/investmentmanagement/.

[ii] SEC, Response of the Office of Chief Counsel Division of Investment Management, available at https://www.sec.gov/divisions/investment/noaction/2017/capital-group-011117-22d.htm (“Capital Group Letter”).

[iii] Id.

[iv] John Waggoner, Brace for Thousands of New DOL Fiduciary-Friendly Mutual Fund Share Classes, INVESTMENT NEWS (Jan. 6, 2017), http://www.investmentnews.com/article/20170106/FREE/170109955/brace-for-thousands-of-new-dol-fiduciary-friendly-mutual-fund-share.

[v] SEC, Frequently Asked Questions on IM Guidance Update 2016-06 (Mutual Fund Fee Structures, available at https://www.sec.gov/divisions/investment/guidance/frequently-asked-questions-mutual-fund-fee-structures.htm (“FAQ”).

[vi] 17 CFR 230.485(a)-(b) (2017).

[vii] 17 CFR 230.485(b) (2017).

[viii] 17 CFR 230.485(a) (2017).

[ix] SEC: IM Guidance 2016-06, available at https://www.sec.gov.

[x] Id.

[xi] This identifying information should include the name of the Fund and the registrant, the Securities Act file number, and the filing date of the rule 485(a) filing.

[xii] This identifying information should include the name of the registrant, the Securities Act file number, and the series and class name for each of the Funds that intend to rely on the relief.

[xiii] SEC: IM Guidance 2016-06, available at https://www.sec.gov.

[xiv] FAQ, supra note 7.

[xv] Id. at Question 5.

[xvi] See, Capital Group Letter, supra note 2 (Listing the registrant’s representations to the SEC:  The broker will represent in its selling agreement with the fund’s underwriter that it is acting solely on an agency basis for the sale of Clean Shares; The Clean Shares sold by the broker will not include any form of distribution-related payment to the broker; The fund’s prospectus will disclose that an investor transacting in Clean Shares may be required to pay a commission to a broker, and if applicable, that shares of the fund are available in other share classes that have different fees and expenses; The nature and amount of the commissions and the times at which they would be collected would be determined by the broker consistent with the broker’s obligations under applicable law, including but not limited to applicable FINRA and Department of Labor rules; and Purchases and redemptions of Clean Shares will be made at net asset value established by the fund (before imposition of a commission).

[xvii] Paul Foley and John I. Sanders, Department of Labor Set to Eliminate the Fiduciary Rule, JD SUPRA (March 3, 2017), http://www.jdsupra.com/legalnews/department-of-labor-set-to-eliminate-92801/.

Posted on Friday, January 27 2017 at 10:34 am by

Effects of the DOL Fiduciary Rule Reach Mutual Fund Industry

By Andrew Sachs and John I. Sanders

The Department of Labor finalized the so-called “Fiduciary Rule” in April 2016 and announced it would go into effect in April 2017.[i]  Since the finalization of the Fiduciary Rule, the annuities,[ii] brokerage,[iii] and advisory industries[iv] have all seen substantial changes to products or fee structures.  Now, the effects of the rule have reached the mutual fund industry as well, with the SEC’s recent approval of American Funds’ “Clean Shares” – shares stripped of any front-end load, deferred sales charge, or other asset-based fee for sales or distribution that are sold by brokers who set their own commissions in connection with such sales.[v]

On January 11th, the SEC issued a no-action letter to Capital Group, the parent company of American Funds.[vi]  The no-action letter stated that the SEC concurred with Capital Group’s view that Section 22(d) of the Investment Company Act of 1940 (the “Act”), which prohibits selling securities except at “a current public offering price described in the prospectus,” does not apply to brokers when acting as agent on behalf of its customers and charging customers commissions for effecting transactions in Clean Shares.[vii]

At least one publication predicts that thousands of mutual funds will create similar classes of shares.[viii]  We believe that the ability to replace the distribution fees typically charged by its mutual funds with commissions charged by the broker will give funds a new measure of flexibility to meet the demands of the Fiduciary Rule and competition generally.  For those wishing to more fully understand the costs and benefits of adopting a similar share class, we are here to help.

Andrew Sachs is a partner with Kilpatrick Townsend & Stockton’s Winston-Salem office. John I. Sanders is an associate in the firm’s Winston-Salem office.

 

[i] Department of Labor, Fact Sheet: Department of Labor Finalizes Rule to Address Conflicts of Interest in Retirement Advice, Saving Middle Class Families Billions of Dollars Every Year, https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/dol-final-rule-to-address-conflicts-of-interest.

[ii] Greg Iacurci, Insurers Developing Fee-Based Fixed-Index Annuities Post-DOL Fiduciary Rule, INVESTMENT NEWS (July 14, 2016), http://www.investmentnews.com/article/20160714/FREE/160719964/insurers-developing-fee-based-fixed-indexed-annuities-post-dol.

[iii] Katherine Chiglinsky and Margaret Collins, AIG CEO Blames Obama Retirement Rule for Broker-Dealer Exit, BLOOMBERG (Jan. 27, 2016), http://www.bloomberg.com/news/articles/2016-01-27/aig-broker-dealer-exit-fueled-by-obama-retirement-rule-ceo-says.

[iv] Darla Mercado, How the New “Fiduciary” Rule Will Actually Affect You, CNBC (Oct. 13, 2016), http://www.cnbc.com/2016/10/13/how-the-new-fiduciary-rule-will-actually-affect-you.html.

[v] John Waggoner, Brace for Thousands of New DOL Fiduciary-Friendly Mutual Fund Share Classes, INVESTMENT NEWS (Jan. 6, 2017), http://www.investmentnews.com/article/20170106/FREE/170109955/brace-for-thousands-of-new-dol-fiduciary-friendly-mutual-fund-share.

[vi] SEC, Response of the Office of Chief Counsel Division of Investment Management, available at https://www.sec.gov/divisions/investment/noaction/2017/capital-group-011117-22d.htm.

[vii] Id.

[viii] Waggoner, supra note 5.

Posted on Tuesday, January 17 2017 at 8:39 am by

SEC Announces 2017 Exam Priorities

By Paul Foley and John I. Sanders

Each year, the SEC’s Office of Compliance Inspections and Examinations (the “OCIE”) releases its priorities for the upcoming year.  For regulated entities such as investment companies and investment advisers, the release of the OCIE’s priorities is highly significant.  The reason, simply put, is that your regulator’s priorities must also be your own priorities.

Among the OEIC’s newly-released examination priorities for 2017 are the following:[i]

  • Never-Before Examined Investment Advisers
  • Cybersecurity compliance procedures and controls
  • Robo-advisors’ marketing, recommendation formulation, and security procedures
  • ETF exemptive relief compliance, sales practices, and risk disclosures
  • Elder abuse detection and prevention practices
  • Money market funds’ compliance with the newly effective rules
  • FINRA oversight

We agree with the OCIE Director who stated earlier this week that the release of examination priorities is an important opportunity for regulated entities to evaluate their own compliance programs and make the necessary enhancements prior to examinations.[ii]  Therefore, we encourage you to read the full text of the SEC announcement, consider your compliance programs in the prioritized areas, and contact us with any questions you may have.

 

Paul Foley is a partner with Kilpatrick Townsend & Stockton’s New York and Winston-Salem, North Carolina offices.  John Sanders is an associate based in the firm’s Winston-Salem office.

[i] SEC, SEC Announces 2017 Examination Priorities (Jan. 13, 2017), https://www.sec.gov/news/pressrelease/2017-7.html.

[ii] Id.

Posted on Friday, December 16 2016 at 11:51 am by

7 Securities Law and Regulatory Changes Likely to be Considered During the Trump Administration

By Paul Foley and John Sanders

On November 8, 2016, political power in United States shifted in an unexpected and unprecedented way.  As of January 20, 2017, Republicans will hold the White House and both Houses of Congress.[1]  President-elect Donald Trump will also have the opportunity to appoint two SEC Commissioners and a new Chair.[2]  He and his party will have the ability to reshape securities law and regulation.  As this was unanticipated, there was little discussion before the election as to what it would mean for securities law and regulation.  We believe the following seven issues are likely to be part of the discussion in the weeks and months ahead.

1. Dodd-Frank Act – Volcker Rule

The Volcker Rule, a 900-plus-page rule adopted in December 2013, was intended to limit proprietary trading by banks.[3]  Championed by former Federal Reserve Chairman Paul Volcker, the rule was a last-minute addition to the 2010 Dodd-Frank Act.  For years, it stalled as regulators and commentators tried to distinguish between speculation (deemed bad) from investment (deemed good).  Few believe that the regulators were successful in properly drawing this distinction.[4]  Making the rule more susceptible to criticism, many experts have determined the rule “would have done nothing to mitigate [the Great Recession,] the worst financial crisis since the Great Depression.”[5]

President-elect Trump’s nominee for Secretary of the Treasury has promised “strip back” elements of the Dodd-Frank Act, including the Volcker Rule.[6]  If the new administration is dedicated to repealing the Volcker Rule, something that isn’t quite clear,[7] repealing it won’t be easy.  Legislative action would likely require bipartisan support in the Senate.[8]  Eliminating the rule through agency rule making, like adopting the rule, would require coordination between multiple independent agencies,[9] an opportunity for public comment,[10] and time.[11]  The easier (but less permanent) solution is for the new President to appoint agency heads who will interpret the rule differently or deemphasize its enforcement.[12]  The discussion of whether, and how, to repeal the Volcker Rule should be followed closely.

2. Delegated Authority for Enforcement

In 2009, the SEC delegated authority to the Director of Enforcement to open formal orders of investigation of persons and entities.[13]  The Director of Enforcement then took the unprecedented step of sub-delegating authority to Regional Directors, Associate Directors, and Specialized Unit Chiefs.[14]  The delegation supports Chair White’s “broken windows” approach by which deficiencies and misconduct of every size and nature are addressed.[15]  This approach has resulted in a record number of enforcement proceedings.[16]  However, many commentators have raised concerns about the ease with which proceedings can be brought and subpoenas issued and whether enforcement is now less effective because it is uncoordinated.[17]  If the new administration wishes to end the delegation, it can appoint SEC Commissioners and a Chair that will withdraw the delegation with an order[18] not subject to the lengthy formal rule making process.[19]

3. Fiduciary Rule

The Department of Labor (the “DOL”) finalized the so-called “Fiduciary Rule” in April 2016 and announced it would go into effect in April 2017.[20]  According to the DOL, investors lose billions of dollars in fees each year because their advisors are not acting in their best interests.[21]  The goal of the Fiduciary Rule, therefore, is to “stop advisers from putting their own interests in earning high commissions and fees over clients’ interests in obtaining the best investments at the lowest prices.”[22]  However, the net effect of the rule is unclear.  Among the potential negative effects of the rule are investors losing access to competent advice,[23] skyrocketing costs for affected accounts,[24] decreases of 25 to 50% in annuities sales,[25] and unnecessary corporate restructuring.[26]

If lawsuits aimed at preventing the rule from going into effect fail, those who advocate repealing the rule will find the job challenging.  First, the rule isn’t within the reach of the Congressional Review Act[27] and isn’t likely to be suspended by the Secretary of Labor who oversaw its creation.[28]  That means a lengthy formal rule making process would be required to repeal the rule.[29]  It is uncertain whether this is an effort the investment advisory industry would welcome after spending the past year working toward compliance, which included spinning off business units[30] changing long-standing pricing models,[31] and jettisoning certain clients.[32]

4. Consolidated Audit Trail

In 2010, as the SEC and CFTC attempted to trace the root cause of the Flash Crash, it became abundantly clear that the financial market regulators were ill-equipped to police modern markets.  Out of this realization came the idea for the Consolidated Audit Trail (the “CAT”).[33]  CAT is conceptualized as a market-wide system that tracks equity and option trades.[34]  It would help in both investigations and monitoring.  Proving manipulation and fraud, as well as identifying systemic risk, should become easier with CAT in place.  However, despite years of work, “a fully baked, centralized trail is still years away.”[35]  Given the benefits of an operational CAT to each of the SEC’s mandates, including maintaining the investor confidence that drives investment into our public markets, getting it up and running may be a priority.  However, many commentators argue that CAT would be a hacker’s dream.[36]  The new administration will signal its where it stands on CAT with its appointment of SEC commissioners and Chair.

5. Pay Ratio Disclosures

The Dodd-Frank Act instructed the SEC to adopt a rule requiring each publicly traded company to disclose “the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees.”[37]  The ratio would appear in registration statements, proxy and information statements, and annual reports that call for executive compensation disclosure.[38]  This seemingly simple calculation may “actually entail herculean bookkeeping for large, diverse companies.”[39]

The compliance date for the pay ration rule is January 1, 2017.[40]  Once the new Congress and SEC commissioners are in place, authorities should consider whether the rule serves any of the SEC’s three mandates: protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.[41]  If the rule is deemed inappropriate under those mandates, Congress may amend the Dodd-Frank Act and instruct the SEC to engage in a formal rule making process aimed at repealing the rule.  If the rule is deemed appropriate, or the political will to repeal the rule is lacking, it may remain in place with the SEC allowing companies “substantial flexibility in determining the pay ratio.”[42]

6. Political Contributions Disclosures

In 2011, a group of college professors argued that the Supreme Court’s Citizens United[43] ruling necessitated an SEC rule requiring public companies to disclose their political expenditures.[44]  The SEC received more than 1 million public comments – a record.[45]  Yet, the SEC did not act.  Senator Elizabeth Warren, less than a month before the recent election, openly urged President Obama to remove SEC Chair Mary Jo White for refusing “to develop a political spending disclosure rule despite her clear authority to do so.”[46]  This was perhaps a bit unfair.  Not only was the SEC restricted by law from working on the rule at that time,[47] but the rule has faced tremendous opposition.[48]  Business groups and Republicans have long argued that “a company’s political contributions are not related to its financial performance and that the disclosures are unnecessary.”[49]  A Republican Congress or appointments to the SEC may find 2017 is an ideal time to revisit this issue.

7. Liquidity Risk Management

On October 13, 2016, the SEC announced that it had finalized a rule that would require open-ended investment companies to develop liquidity risk management programs and make additional disclosures related to liquidity.[50]  The rule, among other things, requires an investment company’s board of directors to adopt a formal plan for managing liquidity risk and make disclosures classifying fund investments into one of four categories according to liquidity.[51]  In a letter to the SEC supporting the rule, Senator Sherrod Brown cited several sources for the proposition that the fund industry was growing and offering investments in less-liquid assets.[52]  Tellingly, Senator Brown cited widely-available public sources such as Barron’s and Bloomberg articles.[53]  If the public has access to multiple news stories about liquidity risk, risk disclosures in regulatory filings, and lists of fund holdings online, it is fair to ask whether the rule carries a benefit to investors along with its cost.  If the determination is made the costs of this rule substantially outweigh the benefits, then the SEC may engage in a formal rule making process to repeal the rule.

Paul Foley is a partner with Kilpatrick Townsend & Stockton’s New York and Winston-Salem, North Carolina offices.  John Sanders is an associate based in the firm’s Winston-Salem office.

[1] Richard Cowan and Susan Cornwell, Republicans Defend Grip on U.S. Congress as Trump Wins Presidency, Reuters (Nov. 9, 2016), http://www.reuters.com/article/us-usa-election-congress-idUSKBN13317Z.

[2] Mark Shoeff Jr., Where Donald Trump Stands on Top Financial Adviser Issues, Investment News (Nov. 9, 2016), http://www.investmentnews.com/article/20161109/FREE/161109909/where-donald-trump-stands-on-top-financial-adviser-issues.

[3] SEC, Final Rule: Prohibitions and Restrictions on Proprietary Trading and Certain Interests In, and Relationships With, Hedge Funds and Private Equity Funds (Dec. 10, 2013), https://www.sec.gov/rules/final/2013/bhca-1.pdf.

[4] The Volcker Ambiguity, The Wall Street Journal (Dec. 11, 2013), http://online.wsj.com/news/articles/SB10001424052702304744304579250393935144268.

[5] Ben Steil, Beyond the Volcker Rule: A Better Approach to Financial Reform, Council on Foreign Relations (April 2012), http://www.cfr.org/financial-crises/beyond-volcker-rule-better-approach-financial-reform/p27894.

[6] Jacob M. Schlesinger, Trump Treasury Choice Steven Mnuchin Vows to ‘Strip Back’ Dodd-Frank, The Wall Street Journal (Nov. 30, 2016), http://www.wsj.com/articles/trump-treasury-choice-steven-mnuchin-vows-to-strip-back-dodd-frank-1480513188.

[7] Emily Stephenson, Trump Calls for ‘21st century’ Glass-Steagall Banking Law, Reuters (Oct. 26, 2016), http://www.reuters.com/article/us-usa-election-trump-banks-idUSKCN12Q2WA.

[8] Ryan Tracy and John Carney, How to Kill the Volcker Rule? Don’t Enforce it, The Wall Street Journal (Nov. 28, 2016), http://www.wsj.com/articles/how-to-kill-the-volcker-rule-dont-enforce-it-1480329002.

[9] Id.

[10] 5 U.S.C. 553 (2016), available at https://www.law.cornell.edu/uscode/text/5/553 (Outlining the process for rule making, as defined in 5 U.S.C. 551 (2016)).

[11] Tracy and Carney, supra note 8.

[12] Id.

[13] SEC, Final Rule: Delegation of Authority to Director of Division of Enforcement (Aug. 5, 2009), https://www.sec.gov/rules/final/2009/34-60448.pdf.

[14] Bradley J. Bondi, A Questionable Delegation of Authority: Did the SEC Go Too Far When It Delegated Authority to the Division of Enforcement to Initiate an Investigation?, Center for Financial Stability (Sept. 20, 2016), http://centerforfinancialstability.org/wp/2016/09/20/a-questionable-delegation-of-authority-did-the-sec-go-too-far-when-it-delegated-authority-to-the-division-of-enforcement-to-initiate-an-investigation/

[15] Jean Eaglesham, SEC Breaks Record for Number of Enforcement Cases, The Wall Street Journal (Oct. 11, 2016), http://www.wsj.com/articles/sec-on-track-to-break-record-for-number-of-enforcement-cases-1476198436.

[16] Id.

[17] Bondi, supra note 14.

[18] 17 CFR 200.30-4 (2016), available at https://www.law.cornell.edu/cfr/text/17/200.30-4.

[19] 5 U.S.C. 553(a)(2) (2016), available at https://www.law.cornell.edu/uscode/text/5/553.

[20] Department of Labor, Final Rule: Conflict of Interest Rule (April 8, 2016), https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/completed-rulemaking/1210-AB32-2.

[21] Id.

[22] Liz Skinner, Figuring Out Fiduciary: Now Comes the Hard Part, Investment News (May 9, 2016), http://www.investmentnews.com/article/20160509/FEATURE/160509939/the-dol-fiduciary-rule-will-forever-change-financial-advice-and-the.

[23] Robert Litan & Hal Singer, Obama’s Big Idea for Small Savers: ‘Robo’ Financial Advice, The Wall Street Journal (July 21, 2015), http://www.wsj.com/articles/obamas-big-idea-for-small-savers-robo-financial-advice-1437521976.

[24] Jed Morowitz & Mason Braswell, Exclusive: Merrill to End Commission-Based Retirement Business on Retail Accounts, AdvisorHub (Oct. 6, 2016), http://advisorhub.com/exclusive-merrill-end-commission-based-retirement-business-retail-accounts/.

[25] Skinner, supra note 22.

[26] Christine Idzelis, Sale of AIG Advisor Group May Signal Wave of Mergers Ahead, Investment News (Jan. 29, 2016), http://www.investmentnews.com/article/20160129/FREE/160129906/sale-of-aig-advisor-group-may-signal-wave-of-mergers-ahead.

[27] 5 U.S.C. 801 (2016), available at https://www.law.cornell.edu/uscode/text/5/801.

[28] Aaron Back, Eliminating Obama’s Fiduciary Rule Easier Said Than Done, The Wall Street Journal (Dec. 5, 2016), http://www.wsj.com/articles/eliminating-obamas-fiduciary-rule-easier-said-than-done-1480976385.

[29] 5 U.S.C. 553 (2016), available at https://www.law.cornell.edu/uscode/text/5/553 (Outlining the process for rule making, as defined in 5 U.S.C. 551 (2016)).

[30] Greg Iacurci, Insurance Based Broker-Dealers Plan to Use BICE Under DOL Fiduciary Rule, Investment News (July 7, 2016), http://www.investmentnews.com/article/20160707/FREE/160709959/insurance-based-broker-dealers-plan-to-use-bice-under-dol-fiduciary.

[31] Id.

[32] Andrew Welsch, Raymond James follows Morgan’s Lead in Keeping Commissions Under Fiduciary, OnWallStreet (Oct. 27, 2016), http://www.onwallstreet.com/news/raymond-james-follows-morgans-lead-in-keeping-commissions-under-dol; See also Robert Powell, New Rules Force Financial Advisers to do What’s Best for their Clients, USA Today (April 6, 2016), http://www.usatoday.com/story/money/columnist/powell/2016/04/06/investors-new-fiduciary-rule-protection/82661384/.

[33] SEC, Final Rule: Consolidated Trail (July 18, 2012), https://www.sec.gov/rules/final/2012/34-67457.pdf.

[34] Nick Fera, What New Developments in the Consolidated Audit Trail Spell for Broker-Dealer Compliance, The Street (June 13, 2016), https://www.thestreet.com/story/13604582/1/what-new-developments-in-the-consolidated-audit-trail-spell-for-broker-dealer-compliance.html.

[35] Id.

[36] Dave Michaels, SEC Approves Consolidated Audit Trail to Detect Market Manipulation, Wall Street Journal (Nov. 15, 2016), http://www.wsj.com/articles/sec-to-vote-on-consolidated-audit-trail-to-detect-market-manipulation-1479240411.

[37] SEC, SEC Adopts Rule for Pay Ratio Disclosure (Aug. 5, 2015), https://www.sec.gov/news/pressrelease/2015-160.html.

[38] Id.

[39] Richard Levick, The Pay Ratio Rule:  Businesses Face Unprecedented Executive Pay Disclosure Burden (Feb. 9, 2016), http://www.forbes.com/sites/richardlevick/2016/02/09/the-pay-ratio-rule-businesses-face-unprecedented-executive-pay-disclosure-burden/#a044585cf077.

[40] SEC, Final Rule: Pay Ratio Disclosure (Aug. 5, 2015),  https://www.sec.gov/news/pressrelease/2015-160.html.

[41] SEC, What We Do, https://www.sec.gov/about/whatwedo.shtml.

[42] SEC, SEC Adopts Rule for Pay Ratio Disclosure (Aug. 5, 2015), https://www.sec.gov/news/pressrelease/2015-160.html.

[43] Citizens United v. Federal Election Com’n, 558 U.S. 310 (2010).

[44] Committee of Corporate Political Spending, Rulemaking Petition to SEC (Aug 3, 2011), available at https://www.sec.gov/rules/petitions/2011/petn4-637.pdf.

[45] Ranee Merle and Jim Tankersley, Elizabeth Warren Urges President Obama to Remove the Head of the SEC, The Washington Post (Oct. 14, 2016), https://www.washingtonpost.com/news/wonk/wp/2016/10/14/elizabeth-warren-asks-president-obama-to-remove-the-head-of-the-sec/.

[46] Id.

[47] Pub. L. No. 114-113, 129 Stat. 3030 (2016), available at https://www.congress.gov/bill/114th-congress/house-bill/2029/text (stating that no funds made available under the Consolidated Appropriations Act would “be used by the [SEC] to finalize, issue, or implement any rule, regulation, or order regarding the disclosure of political contributions.”)

[48] Andrew Ackerman, Elizabeth Warren to Obama: Fire SEC Chief Mary Jo White, The Wall Street Journal,  (Oct. 14, 2016), http://www.wsj.com/articles/elizabeth-warren-to-obama-fire-sec-chief-mary-jo-white-1476439200.

[49] Merle and Tankersley, supra note 45.

[50] SEC, Final Rule: Investment Company Liquidity Risk Management Programs (Oct. 13, 2016), https://www.sec.gov/rules/final/2016/33-10233.pdf.

[51] Id.

[52] Letter from U.S. Senator Sherrod Brown to SEC Chair Mary Jo White (July 6, 2016), available at https://www.sec.gov/comments/s7-24-15/s72415-247.pdf.

[53] Id.