SEC report: 2010 reforms inadequate to prevent losses

Luis Aguilar

A recent staff report from the Securities and Exchange Commission found that reforms imposed by the agency in 2010 may not have been adequate to prevent losses in the money market fund industry during the recent financial crisis.

SEC commissioner Luis Aguilar said that reforms to the money market fund industry should be driven by the findings of the SEC’s staff report. Efforts to reform the industry have been hampered by objections from several commissioners, including Aguilar.

As Schapiro prepares to leave the agency for retirement, the SEC will be split between two Republican commissioners and two Democrat commissioners. Aguilar said that he may be willing to accept a proposal to include a “properly-structured floating net asset value as part of a proposal,” MarketWatch reports.

While the commission’s two Republicans have opposed further reform to the industry, Daniel Gallagher, one of the two Republicans, has also indicated that he may support a floating share price for money-market funds.

Aguilar expressed concern that further reform of the industry could push capital to unregulated international and U.S. markets.

“The outflow of money fund assets to an unregulated market is a significant risk concern and can result in harm to our market and investors,” Aguilar said, according to MarketWatch.

The SEC staff report, however, made no recommendations.

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