By Anita Anand
Observers of the financial markets are asking: how will investors and foreign companies be treated under Trump’s presidency? Without question, the Securities and Exchange Commission’s long-standing mandate to protect investors and maintain efficient capital markets will remain the regulatory centerpiece regardless of the change in presidents.
Trump’s appointment of Carl Icahn as special advisor on regulatory reform does appear to be good news for activist shareholders (including Icahn himself). Perhaps with this appointment some of the key issues for institutional investors and hedge funds, such as shareholders’ ability to nominate directors and say on pay, will not be as difficult to initiate and bring forward. In terms of retail investors, one hopes that the Department of Labor’s fiduciary duty rule for financial advisors will remain in place.
Yet it is unlikely that investors as a whole will benefit significantly under Trump’s reforms. Why? Both Trump and Icahn have advocated the reduction of bureaucratic red tape to allow businesses to flourish. They have also suggested repeal of the Dodd-Frank Act, which currently regulates the financial industry for the purposes of consumer protection.
While portions of the Dodd-Frank Act may be clawed back, it is unlikely that the entire piece of legislation will be repealed especially given the strong voices of Senators Warren and Sanders on issues of concern to investors. (Consider the comments of Dan Ryan on the HLS Forum on Corporate Governance who seems to agree with this position at https://corpgov.law.harvard.edu/2016/12/07/ten-key-implications-of-donald-trumps-electoral-victory-for-financial-and-securities-regulation/.)
Ultimately investors, especially those in the middle class, will surely lose as a result of such drastic regulatory measures. Going forward, much will depend on who President Trump appoints to be the next SEC Chair after current Chair Mary Jo White steps down. I will comment more on investors’ potential well-being when this occurs!
As a final note, one must ask how Canadian corporations will fare if the SEC appoints someone who seeks to redefine legal boundaries in the interests of “America first.” For example, will the multi-jurisdictional disclosure system (MJDS) be open for renegotiation or withdrawal? Will Canadian companies have access to US capital markets to the extent that they have now (say via a private placement or public offering)? Again, we will be looking for direction on these issues once the new SEC Chair is nominated, confirmed and begins to initiate policy.