SEC Commissioners Leave, Rules Put on Ice
Welcome to News Brief, a roundup of some of Ignites' top stories of the past week.
And then there were three. Last week, Securities and Exchange Commission Chair Gary Gensler and Democratic commissioner Jaime Lizárraga said they would step down from their roles at the top securities regulator in January. Gensler's last day will be inauguration day and Lizárraga's a few days prior. Lizárraga's term was set to end in 2027, but he is leaving to spend time with his family as his wife fights breast cancer. The two departures will leave the SEC with three commissioners, the minimum number required to advance rules, Ignites' Beagan Wilcox Volz reported.
Which may be just as well, given that the heads of the newly proposed Department of Government Efficiency have said they would "immediately" halt enforcement on federal regulations that were not explicitly authorized by Congress. The new heads – Strive Asset Management Founder Vivek Ramaswamy and Telsa CEO Elon Musk – plan to invoke two recent Supreme Court decisions to keep a lid on federal bureaucratic power, Joe Morris reported. One of those rulings was the decision in the case of West Virginia v. Environmental Protection Agency regarding the so-called major questions doctrine. Since that ruling, the Investment Company Institute, SEC Commissioner Mark Uyeda and others have argued that the major questions standard invalidates several rules that would impact the fund industry.
In other news, State Street Global Advisors has inked a deal with Bridgewater Associates to launch an ETF. This is SSGA's second recent deal with a major financial services provider to create an ETF offering alts exposure. Bridgewater would subadvise the proposed SPDR All Weather ETF, which would invest in a model portfolio provided by the hedge fund firm.
CCOs on AI: No Thanks
More than half of compliance chiefs surveyed said they never use generative artificial intelligence for their jobs, and just 4% said they do so often, a recent Ignites Research survey found. Those who use the technology said it helps them parse lengthy documents, conduct research and train employees. Melat Kassa dives into the survey responses.
‘The Straw that Broke the Camel’s Back’
At least a dozen mutual funds have booted Franklin Templeton's Western Asset Management subsidiary from a combined $5 billion in subadvisory mandates since the affiliate put Co-Chief Investment Officer Ken Leech on leave over his trading activity, Daniel Gil reported.
"The regulatory stuff that has been going on with [Western] was the straw that broke the camel's back in a lot of cases," a Morningstar analyst told Ignites. "The challenge of that combined with performance has led to extremely negative flows." Leech has been charged with fraud and faces up to 20 years in prison.
Recommended by LinkedIn
Keep Reading...
Want more news for mutual fund and ETF industry professionals?
Sign up for a free trial to receive full access to Ignites for 14 days.