Director Birdthistle Testifies in Capital Markets Subcommittee Hearing

Securities and Exchange Commission (SEC) Director of the Division of Investment Management, William Birdthistle, testified in front of the House Financial Services Subcommittee on Capital Markets as part of a series of oversight hearings with SEC division directors. The hearing focused on rulemaking at the Commission including the recently finalized private funds rule, the swing pricing proposal, and the predictive data analytics proposal. Many members of the Subcommittee also voiced concern over the short comment periods and number of proposals the Commission has proposed under Chair Gary Gensler’s tenure.

In her opening statement, Subcommittee Chair Ann Wagner (R-MO) voiced her opposition to the SEC’s swing pricing, hard close, and liquidity risk management proposal, noting “[t]hese proposals lack a solid evidentiary foundation and rigorous analysis, raising questions about their alignment with the SEC’s mandate to protect investors and maintain fair markets.” The Subcommittee’s Ranking Member, Brad Sherman (D-CA), noted swing pricing amounts to a redemption fee, adding it is “unfair” to impose a “fee” on folks trying to sell their mutual fund shares. Representative Bryan Steil (R-WI) highlighted the costs associated with the Names Rule (which was finalized the day after the hearing) noting the costs associated with compliance will likely be passed down to the investor.

In his testimony, Director Birdthistle noted, “As of last year, more than half of American households – 54.7% – and more than 115 million U.S. individuals own registered funds…reveal[ing] the enormous shift of American household wealth to these types of funds in just over a single generation, from only 25% of households in 1990 and less than 6% in 1980.”

Click here to read Director Birdthistle’s written testimony.
Click here to watch an archived video of the hearing.