Securities and Exchange Commission acting chair Allison Herren Lee said disclosure rules have failed to help everyday investors especially as they focus more on environmental and social issues. She called the N-PX forms that companies file “unwieldy, difficult to understand, and difficult to compare across fund complexes.”

“It is high time to revisit this critical form and make it useful in creating needed transparency around the fundamental exercise of shareholder voting,” Lee said in a speech to the Investment Company Institute, the fund industry’s main trade group.

SEC’s Lee seeks more proxy vote details from powerhouse funds [Reuters]

Which brings us to the concept of free stock trades. Sure, you can log on to your Schwab or TD or Robinhood account and buy or sell a share commission-free, if in fact the service of your choice is able and willing to make the trade you’d like. And this may seem genuinely free, since rules and regulations of course require those platforms to conform with “best execution obligations,” one of which is getting a customer the best price possible. So, here’s something that’s truly free, yes?

Well, the fact that Robinhood, et. al.’s trading costs are eagerly covered by the execution firms paying for that order flow is a pretty good sign that, yea, nothing is truly free. And in the wake of l’affaire GameStop—and the forced retirement from public service of one Jay Clayton—this incongruity has finally occurred to the Securities and Exchange Commission, with a little nudge from an old friend, of course.

“When big sharks like Citadel and Robinhood come out ahead no matter what happens, and when the information they gather isn’t disclosed, and when it’s secret how that information is used, it’s easier for these giants to skim off the top at the expense of small investors,” the Massachusetts Democrat said in a Senate Banking Committee hearing on wild market swings in shares of the gaming retailer and other stocks.

In a letter made public Tuesday, SEC Acting Chairwoman Allison Herren Lee said regulators should examine such arrangements to make sure practices are fully disclosed and “consistent with best execution obligations….” Ms. Lee’s letter also said the SEC should consider new regulations, such as greater disclosure of short selling and steps to ensure small investors understand how options work.

GameStop Saga Prompts SEC to Weigh Review of Payment for Order Flow [WSJ]
Warren Says ‘Sharks’ Citadel, Robinhood Prey on Customers [Bloomberg]

Unlike Joseph Otting or Kathy Kraninger, however, Jay Clayton never really fit the mold of the tear-it-all-down Trumpian regulatory appointment. He seemed content to more or less sit back and do nothing as chairman of the Securities and Exchange Commission, which is, in fairness, a very effective approach to financial services regulation under Trump, which may explain why the president likes him so much. But even Clayton isn’t immune from the end-of-days enthusiastic fear and loathing running through Washington at the moment, and the great beneficiaries are those unseemly paper pushers always getting lucky, the hedge fund managers. In addition to spending much of the coronavirus pandemic defending hedgies from the slings and arrows of continental sorts, Clayton’s SEC has recently moved to get them more investors, cheaper market data and to safeguard their most powerful weapons in proxy battles. Now, he’s looking to free them of some paperwork.

Only groups with assets of more than $3.5bn will have to submit so-called 13F filings with the regulator — one of the few ways of tracking which stocks hedge funds are buying and selling. The current threshold is just $100m….

Allison Herren Lee, the SEC’s lone Democratic commissioner, said the proposal lacked “a sufficient analysis of the costs and benefits” and reduced transparency.

“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 said in a statement.

Uh, yea, Allison: That’s the point. That it will also deprive lazy journalists and bloggers a quarterly source of some super easy if highly misleading copy is an added bonuses. And since Clayton will apparently be forced to stick around D.C. through the end of the year if he wishes to keep drawing a government paycheck, he might as well see this one through, as he has just enough time to do so.

The public has 60 days to submit comments to the SEC, after which commissioners will vote on a final proposal.

Most hedge funds to be allowed to keep equity holdings secret [FT]