U.S. financial regulator advisers consider new diversity disclosures
On Friday, an adviser to the top U.S. securities regulator said his subcommittee will likely suggest new disclosures. These disclosures will be about diversity from registered investment advisers and other steps to improve minority representation in finance.
These ideas, which will henceforth need approval, pointing the latest effort to highlight the small role held by women and ethnic minorities in the money management industry. Although they could also show the hurdles, regulators go through in taking up social issues.
Friday’s potential recommendations came from Gilbert Garcia, head of a Texas money management firm and chair of a subcommittee studying diversity issues for the U.S. Securities and Exchange Commission’s asset management advisory committee. The Washington regulator’s acting chair had said on Feb. 25 it should review diversity disclosure requirements.
In the webcast public hearing, Garcia said the subcommittee will likely suggest the SEC require investment advisors to report additional details on their Form ADVs such as the race and gender of directors and officers.
The subcommittee might also suggest the SEC discourage the usage of manager-selection parameters that exclude minority-owned firms, which tend to manage fewer assets and have shorter track records. “Many of the same participants who foster a closed financial system often do so under the shield” of fiduciary obligations, Garcia said.
Committee member Susan McGee, a director of Goldman Sachs affiliates, said after Garcia that a central question is how many rules and regulations should be in place to change public behavior.
“I do struggle with using the regulatory framework to push initiatives like this,” McGee said.
As per the activist researcher Just Capital, only 59 Russell 1000 companies make public their annual federal filing showing details of their employees by race and gender across various job categories or key information from the form. Just found 68% of the Russell 1000 release no racial or ethnic workforce data.
