The Trump administration has championed the cause of financial deregulation, with regulators moving recently to ease rules on proprietary trading at large banks, cap payouts to corporate whistleblowers and restrict the ability of small investors to propose rules for shareholders of public companies to vote on.
Business executives have largely supported these actions, but the Securities and Exchange Commission’s latest effort at easing regulatory burdens was met with near universal scorn from both Wall Street and public-interest advocates.
In July, the SEC proposed a new rule to greatly increase the assets-under-management threshold at which investors have to disclose their equity holdings to $3.5 billion from $100 million. The move would shrink the number of firms that have to disclose such information by 90% — from 5,089 to 550, according to one analysis .
The SEC proposed the rule in part to reduce compliance costs on asset managers with fewer than $3.5 billion under management, with the aim of regulating the same share of asset managers today as when the $100 million threshold was adopted in 1978.
The SEC solicited comments on the new rule from the public and an analysis from Goldman Sachs published Monday showed that only 24 comments out of 2,238 were supportive. Those opposing the rule represent a wide-ranging group that includes Democrat Maxine Waters, chairwoman of the House Financial Services Committee, the CFA Institute, the New York Stock Exchange , Nasdaq /zigman2/quotes/205547889/composite NDAQ +0.05% and the Business Roundtable.
The CFA institute wrote that increasing the threshold at which investors like mutual funds and hedge funds would have to disclose their equity investments “would harm … investors, issuers, researchers, and the affected institutional investment managers themselves.
“The significant number of letters from investors who use and value the 13(f) disclosures that would be lost under this Proposal should alert the Commission to the disclosures’ value to market participants,” the comment continued. “It also provides strong evidence that the proposed reduction in disclosures would undermine investor confidence.”
The proposal would also make it more difficult for companies to know who owns their stock, and in extreme cases, leave them blind if an investor was mounting a hostile takeover.
“In order to better understand shareholder needs and what behaviors shareholders prioritize, companies need to know who their shareholders are,” The Business Roundtable, an association of chief executives at major U.S. companies, wrote in a comment.
SEC Commissioner Allison Herren Lee, a Democrat appointed by President Trump, took the unusual step releasing a statement announcing her opposition to the changes.
“This proposal joins a long list of recent actions that decrease transparency and reduce both the Commission’s and the public’s access to information about our markets ,” she wrote.
“I’m unable to assess the wisdom of today’s proposal because it lacks a sufficient analysis of the costs and benefits,” she added. “The costs of losing transparency are glossed over in brief narrative form and largely discounted.”
One of the few comments in support of the proposal came from the Private Investor Coalition, an organization that represents family-owned businesses The group asserted the new rule would reduce compliance costs for smaller investment managers.
“After the SEC reads the 2,262 comments, we expect it will rescind the proposal,” Goldman Sachs analysts wrote.