By Michael Hornung on March 14, 2025March 14, 2025 Earlier this month, it was a back-to-school week here at GVA Compliance, and I – Michael Hornung, GVA’s Director of RIA Compliance – had the privilege of attending the Investment Adviser Association’s Compliance Conference from the 5th through the 7th for some networking and education. The timing was no accident. Held in Washington, D.C. and attended by the SEC’s Commissioner Hester Peirce alongside panels of well-placed and tuned-in professionals from the private and public sector alike, this Conference was the place to be at a time when much is in transition, and when on some days it feels like nothing the government has done or will do can be taken for granted. It’s a time – and it’s my job – to pay very close attention. The Conference did not disappoint. In the very first session, Commissioner Peirce herself spoke, speaking directly to some of the most pressing questions about the Commission and its near future. What follows is a series of quotations, of phrases that pay as my professors at Temple Law taught me to look for. The first set comes from Commissioner Peirce directly – later, from other bright minds at the event. I would not be doing my job as a compliance officer if I did not lead these quotations with the same disclosures/disclaimers that were delivered to me when they were first said: These statements reflect the opinions of the speakers, and do not necessarily reflect the official policy or stance of any organization or institution. The same goes for this article itself – this article contains my own opinions about the included statements and what they might mean and should not be construed as any form legal advice. Nevertheless, I believe the following is illuminating. Commissioner Peirce’s first order of business, whether for diplomatic reasons or otherwise, was to convey the message that the SEC has been paying attention to criticisms it’s received in recent years with keen interest and an open mind. Conceding some validity to claims that enforcement has been centered excessively around technicalities, the Commissioner extended an olive branch; she expressed her high opinion of the industry writ large, of Advisors as important and well-meaning investor advocates, and affirmed her belief that the present transition was an opportunity to turn over a new leaf. Echoing speculation heard elsewhere that the Commission intends to return its focus to keeping the industry Honest rather than just Busy, she said: We risk fundamentally changing the industry, to an industry of box-checkers…I would love to see some return to bread and butter issues. The Commissioner’s observations about the industry were by no means all warm and fuzzy, however. Speaking specifically and directly about the fact that the d-word – Deregulation – has been spoken in the rumor mill as of late, she did not mince her words. The SEC knows that this perception is out there, is concerned about bad-faith actors seeing an opportunity to take advantage and has every intention of setting the record straight as vigorously as may be necessary to dispel all notions that a free-for-all is on the table. It was in this vein that she said, almost ominously: The rules are still on the books. But intention and operational capacity are two separate questions. Politics. Will the two match? It can be said without controversy that there are agencies, offices, and divisions of the federal government whose raison d’etre either has been or will be called into question by the new Trump administration. For better or worse, serious questions are being raised about their ongoing operations or existence. The SEC is not one such agency. Apolitically, in the context simply of a discussion of the Commission’s commitment to its mission and its values, Commissioner Peirce spoke in terms pitch-perfect for a Law & Order Administration, bringing every reason to expect it to enjoy the Administration’s favor into focus: We have great capital markets because we have the Rule of Law. And as much as any questions may nevertheless linger about the Commission’s ability to pursue its goals in an era marked by steep government cuts, the Commissioner projected confidence: There will be difficult departures, but the Commission’s talent runs deep. With that, here in GVA Compliance we consider ourselves to be on notice: An SEC is emerging that is lean, focused, and feels it has a point to prove. There’s ample reason to feel good about this change, as the Commission focuses in on core values of good faith and fair dealing in investor protection that are by and large uncontroversial. And there just as much reason to want to take great care stay on its good side as it re-affirms its commitment to these values. Here at GVA Compliance, that’s exactly the plan. But far be it from us to stop at taking the Commissioner’s word for it on any of these subjects and call it a day. The beauty of a forum like the IAA’s Conference is the privilege of being able to hear a lot from different directions. In this case, the other side of the regulatory coin: The perspectives shared from where the rubber meets the road, by attorneys and compliance officers throughout the industry, speaking to their experiences on the other side of the SEC’s Enforcement on panels throughout the event. Select words of wisdom included: Expect the commission to get back to basics. Echoing the commentary of the Commissioner herself, panelists representing high-powered firms spoke repeatedly and consistently of an SEC that they anticipate will go back to its roots as an investor protection agency. And in the same vein as the Commission’s expressed concern over rumors of “deregulation”, every attorney on-site made a point of cautioning against perceiving a policy pivot away from pursuing technicalities as a sign of weakness. Quite the contrary – a hard-nosed and hard-charging Commission is expected to emerge from the present flux. And with a reaffirmed commitment to keeping our industry Honest, a high volume of enforcement actions is expected to follow. Focus on Fraud: Misstatements. As fits a Commission focusing in on Integrity, predictions for the next four years centered in no small part around pursuing instances of Fraud and its adjacent violations. And the crucial thing to be mindful of, several panelists urged, is just how broad the domain of activity covered by a concern over “fraud” can be in practice. Far from being confined strictly to policing obvious and severe criminal activity, the Commission’s concerns on the subject cover matters of true, honest communications and fair dealings with Clients very generally. Accurate information, adequate disclosures, and business practices that comport with Regulation Best Interest (as one panelist said, “even if a fee is disclosed – were you actually entitled to receive it?”) are all expected to be subject to the SEC’s focused scrutiny in the years ahead. Expect clarity regarding “Cooperation” – both in what it is, and what it’s worth. One of the more interesting calls came down to questions that have always existed around Cooperation, namely with the SEC themselves. While the Commission has always maintained that its policy is to encourage and reward self-reporting, cooperation during the enforcement process, and the like, what it hasn’t always done is communicated clearly about how one precisely is expected to do so, or just how much it has reduced (or will reduce) a fine by when it gets what it wants. On this front, at least one panelist was tentatively optimistic; In the best-case scenario, a hard-nosed, straight-shooting Commission with a mind to press for more honest and transparent communication in the marketplace would be one that takes its own advice in this regard. Many – including us here at GVA – will be watching closely to see how much new guidance may come out about how the SEC would have us all interact with it going forward. Watch out for Flavors of the Month. (This Month: AI) As a note to finish on it feels appropriate to observe, as one astute panelist did, that amidst all of the changes on the table presently there are still some things that never change. And AI, notwithstanding all the ways that it absolutely has and will change our industry and our lives, raises this point beautifully. This season it’s AI, in seasons not too long past there was crypto and ESG, but through all these seasons there is one constant: There is always something new and exciting out there, and there are always people in our industry getting themselves in trouble for saying the wrong things – from mistaken and misleading to outright false and fraudulent – about it. For Commissions past this has always been low-hanging fruit to pursue, and this Commission is expected to be no exception. A dozen other topics and a thousand other details were discussed at what proved to be an informative, information-packed conference, but for the reader looking ahead to the regulatory landscape to come, I’d summarize the approach we recommend in three action items that I suspect will be surprising to no-one. As long as the SEC is focused on fundamentals, after all, we might as well be too: Work with Integrity. Always do right by your clients. When things get complicated – come speak with Compliance pros, like my colleagues and myself. We’ll be here to help! Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor and separate entity from LPL Financial. Compliance Tracking #: 710518