Unpacking the SEC’s Four-Year Strategic Plan

In its recently-released Strategic Plan, the SEC outlined and reiterated its commitment and focus on pursuing three primary goals over the course of the next four fiscal years:

  • Understanding investors’ long-term interests
  • Embracing innovation to effectively allocate agency resources
  • Improving agency performance through continued investments in data and technology

Goal 1: Focus on Investors

Recognizing that the ways investors use security markets and capitalize on investment opportunities are changing, the SEC’s first strategic goal is to reassess its methods and approaches to protecting investors and to deploy agency resources in a way that best meets the needs of the “Main Street” investor.

The agency’s plan enumerated five initiatives it intends to pursue in the next four years toward reaching this goal:

  1. Enhancing its understanding of the channels investors use to access capital markets, so policy initiatives can be better tailored to address investor needs.
  2. Enhance investor outreach, education, and consultation efforts.
  3. Focus firm examinations on identifying and addressing misconduct that negatively impacts individual investors, and expand enforcement efforts in these areas.
  4. Modernize disclosures to make information more useful, readable, and timely for investors.
  5. Focus on the investment opportunities available to investors, seeking ways to increase both the number and range of investment options.

Goal 2: Adjust Efforts and Allocate Resources to Address Significant Developments and Trends in Evolving Capital Markets

Technological changes in recent years have fundamentally changed the way investors interact and transact with their brokers, advisors, and the companies in which they invest. While there are numerous benefits associated with technology enhancements in the securities industry, investors and firms alike also face new risks, including cybersecurity threats.

The initiatives the SEC identified related to this second goal are as follows:

  • Improve market oversight capabilities to be better able to identify, understand, and address risks.
  • Identify outdated SEC rules and ways of doing things in order to improve on and modernize them.
  • Ensure registrants have programs designed to mitigate cybersecurity risk.
  • Review, update, and test the SEC’s emergency preparedness and response plans.

Goal 3: Enhance the SEC’s Analytical Capabilities and Strengthen Human Capital Management Programs

In its third and final outlined goal for the next four years, the SEC recognized that the agency needs to find innovative ways to leverage data and technology and to continue to attract and retain a skilled workforce in order to stretch its resources further.

Specific initiatives that will help the SEC meet this goal are as follows:

  • Emphasize an effective, highly-skilled workforce by focusing efforts on attracting and retaining talent and fostering diversity, inclusiveness, and mutual respect.
  • Increase investment in the use of data analytics, data streams, and other technology tools, ultimately treating data as an agency-wide resource. This is expected to provide greater analytical capabilities at reduced costs.
  • Leverage investments in data and tools used to prevent, detect, and prosecute securities law violations.
  • Strengthen the agency’s cybersecurity program and appoint a new Chief Risk Officer to protect the SEC’s enterprise IT infrastructure.
  • Find new ways to improve collaboration within and between agency departments, better enabling the SEC to carry out its mission.

Evaluate Your Firm’s Goals and Initiatives in Light of the SEC’s Stated Plan

While it doesn’t contain any notable surprises, the SEC’s Strategic Plan does provide some insight and transparency into what firms can expect from the SEC in the coming years.

One common thread woven throughout the SEC’s stated goals and initiatives is a focus on improving and better leveraging technology. Firms subject to SEC oversight should take note and review their own technological capabilities, in order to better serve clients, manage risk, and keep up with the regulators.