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Schapiro considers action on pay to play

The US Securities and Exchange Commission (SEC) is currently considering pay-to-play activities and will report back on any proposed action in the next few weeks, according to its chairman Mary Schapiro, speaking via video at the annual International Corporate Governance Network conference this week.

Schapiro said pay-to-play activities distorted the process by which investment advisers were selected and affected public pension plans’ fees and investments, and has asked staff to revist the SEC’s 1999 proposals for dealing with the issue.

Pay-to-play schemes have been banned by a number of large US public pension schemes in recent months, including New York and California, with some industry observers saying regulation of the practice has been undertaken by the market, instead of the authorities.

This is one of a number of key overhauls Schapiro is undertaking as part of her aim to return the SEC to its investor advocacy roots.

Other areas of focus on which the SEC is calling for comments include strengthening the regulatory regime around money market funds, including the requirement that these funds be stress tested and have monthly reporting; and the rule on facilitating shareholder director nominations.

“I am striving to bring an investor focus back to the SEC,” she said. “We need to be constantly improving ourselves not just in a crisis. We need to be alert to the risks of dynamic innovation in how financial products are developed and sold.”

In addition the SEC’s new 18-member investor advisory panel will be considering the Principles for Responsible Investment and enviornmental, social and governance disclosure in SEC-registered companies at its first meeting later this month.

The SEC oversees 35,000 registrants and has a staff of 3600.


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