Outgoing SEC Chairman Elisse Walter Alludes to Challenges in Regulating Jobs Act

Elisse B. Walter Chairman of SECIn a gracious and wide ranging speech given to students at George Washington University, current SEC Chairman Elisse Walter spoke about the mission of the Securities and Exchange Commission and the importance of the public sector in regulating markets and the overall health of the economy.  While not mentioning crowdfunding directly, her reference to the Jobs Act was clearly an allusion to the challenges of regulating  the portions of the act that pertain to crowdfunding.

As quoted from Ms. Walter’s remarks,

Although I personally feel that the SEC’s advocacy role is “first among equals,” ours is actually a three-part mission: protection of investors, maintaining the integrity of the markets, and fostering capital formation. And, at times, our critics claim that these roles priorities conflict or that we neglect one aspect of our mission to fulfill another.

Take, for instance, the JOBS Act. It’s a law that seeks to remove some of the regulatory requirements placed upon companies seeking to enter the capital markets — a law enacted by Congress that the SEC is charged with implementing. Some say it could lead to rampant fraud — unless the new regulations are accompanied by significant investor protection measures. Others say any such measures would create unnecessary barriers to capital formation, and slow the growth of the dynamic companies our economy needs.

Chairman Walter goes on to explain the above as a “False Argument”,

I believe that this is a false argument. In my view, capital formation and investor protection go hand in hand — investors afraid of financial fraud simply won’t contribute the capital entrepreneurs need.

And in touching on the importance of the American Dream – hard work pays off, Ms. Walter notes,

There is an implicit promise in American life that if you work hard, have a good idea, or have the discipline to put aside some money and make rational decisions, you have a fair chance of earning your own security and even getting rich. What happens to our economy if that sort of optimism fades…

Most SEC followers note that final regulation of the Jobs Act and most specifically crowdfunding must wait until the new SEC Chairman, Mary Jo White, assumes the helm of the organization later this year.

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