Facebook CEO Mark Zuckerberg Defends Libra

In testimony before the House Financial Services Committee, Facebook CEO Mark Zuckerberg defended his company’s proposed virtual currency, “Libra.” The Committee also considered several bills related to technology and the financial services industry.

Mr. Zuckerberg emphasized that Facebook would not launch the Libra payment system until it has the support of U.S. regulators. He warned that, while these issues are being “debate[d],” China and other countries are working to launch similar payment systems. He argued that since Libra would be backed by U.S. dollars, it would “extend” U.S. financial leadership. He also addressed several concerns, assuring the legislators that:

– a recent white paper co-authored by Facebook (see previous coverage) was intended to start a dialogue with financial experts and regulators, rather than serve as the “final word”;

– Facebook does not intend to “circumvent” regulators; and

– the intended purpose of Libra is to provide for the transfer of money through an online payment system, not to be a replacement for sovereign currency.

Mr. Zuckerberg also affirmed Facebook’s commitment to preventing discrimination among Facebook’s advertisers. To “combat[]” discrimination, he stated, Facebook has made specific changes to policies in order to prevent discriminatory advertisement targeting. For example, Facebook banned the use of age, gender or zip codes in housing and credit advertisements.

Committee members at the hearing discussed several bills concerning technology and finance related to issues raised by the testimony. These included:

H.R. Draft “Keep Big Tech Out of Finance Act” would prohibit large platform utilities (i.e., Facebook) from (i) being authorized as, or affiliating with, a U.S. financial institution or (ii) operating a digital asset that is intended to be “widely used” as a method for exchange, pursuant to the Federal Reserve.

H.R. Draft “Stablecoins Are Securities Act of 2019” would make clear that a managed stablecoin is subject to the same securities laws’ requirements as other securities that are meant to protect investors, such as disclosure, antifraud and conflicts of interest.

H.R. Draft “Bill to Prohibit the Listing of Certain Securities” would limit issuers of stablecoins access to capital markets prohibiting certain trading on U.S. national securities exchanges.

H.R. Draft “Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data” would create more “transparency” on how consumer data is collected by requiring commercial data operators to disclose (i) the type of user data collected, (ii) an examination of how valuable the user data is and (iii) third-party contracts involving the collection of the data.

H.R. Draft “Diverse Asset Managers Act” would require SEC registrants to (i) consider at least one “diverse” asset manager when seeking asset management services and (ii) report to the SEC the extent to which diverse asset managers are used.

LOFCHIE COMMENTARY

Facebook’s attempted entry into the digital currency market accelerated the inevitable: Congress and the financial regulators are more closely scrutinizing the entry of technology firms into the financial markets. What was not inevitable was Congressional overreaction. While it now seems universal practice to refer to Libra as a Stablecoin, it is not: it is an asset-backed coin (try “ABCoin”). Because the managers of Libra would have had the ability to shift the assets supporting Libra, Libra is not stable. Because of the management of the underlying assets backing the product, Libra almost certainly would have been a “security,” at least in the absence of an exemption, and therefore, it is not necessary to amend the securities laws to that end.

A true Stablecoin, whether backed by the dollar or another currency (or even a pool of currencies) may be issued as a custodial receipt that is not a security, and need not be regulated as a security. It would thus be a shame if such Stablecoins, which may very well provide an attractive alternative to other payment methods, were made impossible because of an overbroad reaction to Libra.

Mr. Zuckerberg is absolutely correct that the United States benefits if a global stablecoin backed by the dollar were to emerge. Facebook’s principal mistake, which arguably reflects a certain lack of sophisticated understanding of financial regulation, was to go forward with a managed ABCoin, rather than a true Stablecoin.

IRS to Ask Taxpayers about Virtual Currency Transactions

The IRS proposed an amended draft of the 2019 Form 1040 that includes a question about taxpayer virtual currency transactions.

As previously covered, the IRS provided updated guidance in the form of a revenue ruling and an FAQ on the tax treatment of virtual currency transactions. The FAQ addressed (i) when a cryptocurrency on a distributed ledger undergoes a protocol change that permanently divides the legacy from the existing distributed ledger (i.e., a “hard fork”) and (ii) when units of a cryptocurrency are delivered to the distributed ledger addresses of multiple taxpayers (i.e., an “airdrop”), typically following a hard fork.

The IRS proposed adding the following question to the 2019 Form 1040: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

Comments on the revised draft must be submitted to the IRS within 30 days after October 11, 2019.

FRB Vice Chair Randal Quarles Reviews FSB Activity

Federal Reserve Board Vice Chair Randal K. Quarles reviewed Financial Stability Board (“FSB”) activity and raised issues that continue to affect the global financial system. In a speech at the European Banking Federation’s European Banking Summit, Mr. Quarles highlighted the following:

OTC Derivatives. The FSB focused on the following issues as to OTC derivatives: (i) central clearing of standardized OTC derivatives, (ii) trading standardized OTC derivatives on an exchange or through an electronic trading platform, (iii) “reporting to trade repositories” and (iv) capital and margin requirements.

Prudential Bank Standards. Mr. Quarles addressed the work done by the Basel Committee to improve prudential standards for internationally active banking organizations (a/k/a “Basel III”). Mr. Quarles said that each of the 24 FSB jurisdictions have implemented the fundamentals of Basel III to incorporate risk-based capital and liquidity measures.

Key Attributes for Effective Resolution. As a solution to the “too-big-to-fail” dilemma, the FSB published “Key Attributes for Effective Resolution.” Mr. Quarles explained that the guidance offered procedures for national resolution regimes to follow if an important financial institution is failing.

Nonbank Financial Intermediation (“NBFI”). To better understand NBFI, the FSB conducted a “global monitoring exercise” and concluded that the overall size of NBFI to the global economy was $184 trillion. The FSB report also contained categories of NBFI activity and identified potential vulnerabilities.

Mr. Quarles also emphasized two issues the FSB is monitoring concerning the future of the global financial system.

– Financial Innovation. Mr. Quarles said that in response to an “explosion of financial innovation” in recent years, the FSB published a report on the potential implications and benefits of FinTech for the global financial system. Mr. Quarles highlighted multiple regulatory issues, such as (i) operational risks from third-party service providers, (ii) cyber risks and (iii) macrofinancial risks that may arise from FinTech activity.

– Market Fragmentation. While noting that market fragmentation will never “disappear,” Mr. Quarles explained that since the financial crisis, there have been growing concerns that globalization in the markets is slowing down. Mr. Quarles said that the FSB is working to assess the possible implications of market fragmentation, such as (i) the potential for regulatory “arbitrage” and (ii) an increased regulatory burden on firms.

FCM Settles CFTC Charges Resulting from Cybersecurity Failure

A futures commission merchant (“FCM”) settled CFTC charges for failing to enact sufficient cybersecurity measures and to notify customers of a $1 million cyber breach.

According to the Order, the FCM, Phillip Capital Inc. (“PCI”) failed to implement sufficient cybersecurity and customer disbursement policies and procedures that ultimately allowed hackers to access their email systems and withdraw customer funds. After discovering $1 million in customer funds had been withdrawn, PCI (i) approved reimbursement of the mistakenly wired customer funds, (ii) notified the CFTC Division of Swap Dealer and Intermediary Oversight the day of the fraudulent wire and (iii) implemented measures to prevent further fraudulent transfers. The CFTC found that PCI failed to disclose in a timely manner the material facts of the cyber breach and fraudulent wire to current and prospective customers.

The CFTC credited PCI the $1 million restitution as a result of its prompt reimbursement of the customer funds upon discovery of the fraud. PCI also agreed to (i) cease and desist from further violating CFTC Rules, (ii) report remedial efforts to the CFTC and (iii) pay a civil monetary penalty of $500,000.

LOFCHIE COMMENTARY

This enforcement action is an illustration of both (i) what can go wrong in connection with a cybersecurity failure and (ii) how much the task of compliance has changed as a result of the need to deal with cybersecurity, as well as other technology, issues.

The firm’s initial problems resulted from the fact that its employees were deemed not be up to their cybersecurity tasks. Allegedly, the firm’s IT Manager “had limited training in cybersecurity, and cybersecurity was not broadly within the IT Engineer’s sphere of responsibility.” Apparently, neither the firm’s CCO, who was responsible for maintaining the firm’s Information Systems Security Program (“ISSP”), nor the CCO’s staff was qualified to manage cybersecurity defenses or problems. Even when firm employees discovered the breach, they failed to respond adequately and the hacker immediately rebreached the system. (The firm was arguably lucky that the hacker was so impatient. Had the hacker bided his time following the firm’s initial discovery, it is certainly possible that a second breach might have gone undiscovered for a longer period.)

The firm’s cybersecurity weakness was exacerbated by the fact that it had very weak “change of address” and disbursement policy controls. That was not of itself a cyber failure, but had those policies been up to speed, it is very likely that the major damage from the cyber failure itself could have been averted.

Finally, the firm failed to provide timely notice as to the breach. These days, firms must anticipate the possibility of a breach. While it seems unattractive to go public with information as to the breach, it is also risky not to do so.

SEC Provides Proxy Voting Guidance, Clarifies Obligations of Advisers

In a three-to-two vote, the SEC approved (i) guidance on an investment adviser’s responsibilities in proxy voting and in vetting any advice that the adviser may itself receive from a proxy advisor, and (ii) an interpretation and related guidanceon rules for solicitation of proxies and proxy voting advice.

Proxy-Advisor Guidance

In the proxy-adviser guidance, the SEC clarified an investment adviser’s fiduciary duty and obligations under Advisers Act Rule 206(4)-6 (“Proxy Voting”) in connection with an adviser’s proxy voting for clients. In its guidance, the SEC:

  • recognized that the adviser-client relationship should not be handled with a “one-size-fits-all” approach; and
  • recognized the wide variety of ways that investment advisers can use proxy advisory firms’ services while fulfilling their fiduciary duty to clients.

SEC Commissioner Elad L. Roisman voted in favor of the guidance, asserting that it (i) conforms to the Proxy Voting Rule’s flexible, principles-based approach to investment advisers’ proxy voting responsibilities, (ii) modernizes the Staff Legal Bulletin 20 (“SLB 20”) and (iii) highlights the importance of serving a client’s best interests.

SEC Commissioner Robert J. Jackson, Jr. dissented, expressing concern that the guidance would further concentrate the “proxy-advisory industry” due to the additional costs of compliance. According to Mr. Jackson, smaller institutions may not be able to bear the necessary costs, which could lead smaller investors to opt out of voting. Mr. Jackson noted that although the “role of proxy advisors has been hotly debated for decades,” all sides know that a competitive market helps both investors and issuers.

SEC Commissioner Allison Herren Lee voted against the guidance, saying that it “creates significant risks to the free and full exercise of shareholder voting rights.” Specifically, Ms. Lee criticized the guidance stating it:

  • would increase costs and “time pressure”;
  • would require more issuer involvement, despite “widespread agreement” that it would “undermine the reliability and independence of voting recommendations”; and
  • should undergo a notice and comment period or a cost-benefit analysis.

Interpretation and Guidance on Proxy Voting Advice

The SEC also provided an interpretation of SEA Rule 14a-1 (“Solicitation of Proxies – Definitions”). The SEC stated that proxy voting advice by a proxy advisory firm generally constitutes a solicitation under federal proxy rules. The SEC clarified that solicitations that are exempt from proxy filing requirements nonetheless remain subject to SEA Rule 14a-9 (“False or Misleading Statements”).

Commissioner Roisman supported the interpretation of SEA Rule 14a-1, emphasizing that it reiterates previous SEC statements that proxy voting advice is generally considered a “solicitation” under the rule. Mr. Roisman said that the interpretation will not interfere with proxy advisory firms’ ability to rely on information and filing exemptions under the federal proxy rules. Further, Mr. Roisman stated that the guidance on Rule 14a-9 offers “helpful” information on proxy voting advice, such as what information proxy advisors should disclose.

Commissioner Lee opposed the interpretation of SEA Rule 14a-1, stating that the SEC is planning to review the solicitation rules and may soon change the underlying exemptions. Ms. Lee highlighted the potential compliance burdens, which would force market participants to implement processes to comply with a regulatory framework that may soon change.

Future Actions

SEC Chair Jay Clayton stated that the interpretation and guidance provided a “first step” toward modernizing the proxy system. Mr. Clayton added that the SEC is also considering recommendations to amend SEA Rule 14a-2(b) (“Solicitations to Which § 240.14a-3 to § 240.14a-15 Apply”), which provides information and filing requirement exemptions. These exemptions, according to Mr. Clayton, were “adopted decades ago and warrant a fresh look.”

LOFCHIE COMMENTARY

Investment advisers will need to take a close look, and a periodically ongoing look, at their proxy voting policies. Advisers should be mindful that nothing obligates them to vote their clients’ shares, as long as an adviser has made it clear in its agreement with its clients that it will not do so. For many advisers, voting shares will not be worth the effort.

Separately, the very interesting aspect of declaring that proxy advisors are subject to SEA Rule 14a-9 is that it imposes on proxy advisors a more significant burden to justify or support their advice and to disclose any conflicts related to that advice. Query whether the threat of liability under SEA Rule 14a-9 changes the way that proxy advisors go about their business?

CFPB Highlights Analysis on the Use of Non-Traditional Data in Credit Process

The CFPB highlighted the results of an analysis comparing the uses of traditional and non-traditional sources of information by consumers in the credit process.

In 2017, the CFPB granted no-action relief from certain Regulation B requirements to Upstart Network, Inc. (“Upstart Network”) to use alternative data (such as education and employment history) and machine learning for the purpose of an underwriting and pricing model. The no-action letter was contingent on Upstart Network providing the CFPB with information about compared results between (i) its credit underwriting and pricing model (a tested model) and (ii) a more standard model. Upstart Network was tasked with answering:

whether the Alternative Model’s use of alternative data and machine learning would increase access to credit; and
if the Alternative Model’s underwriting or pricing results create greater disparities than the traditional model (i.e., race, ethnicity, sex, age).
Based on the information gathered by Upstart Network, the CFPB found that:

access-to-credit comparisons showed the Alternative Model approved 27 percent more applicants than the traditional model, in addition to yielding 16 percent lower average annual percentage rates (“APRs”) for approved loans;
the expansion of credit access increased the acceptance rates in the Alternative Model for all tested races, ethnicity and sex segments by 23-29 percent while decreasing the average APRs by 15-17 percent;
“near prime” consumers in the Alternative Model with FICO scores between 620 and 660 were approved nearly twice as frequently;
applicants under 25 years of age in the Alternative Model were 32 percent more likely to be approved; and
consumers in the Alternative Model with incomes under $50,000 were 13 percent more likely to be approved.

LOFCHIE COMMENTARY

Should the regulators be approving credit models based on whether they are happy with the results? What happens if another credit scoring metric produces different or less favored results: does that metric become illegal to use without regard to the process of its production or its accuracy?

Big data raises lot of important social/moral questions; and “disparate impact” is one of the more complex ones. For some background discussion of “big tech,” “big data” and credit scoring, see “Big tech in finance: opportunities and risks,” particularly the discussion of credit provision beginning on page 60, and Senate Banking Committee Considers Testimony on Consumer Data Vendors.

Global Regulators Express Concern with Libra Network’s Ability to Protect Consumer Data

Data protection and privacy enforcement regulators expressed concern with the lack of information provided by Facebook and other members of the Libra Network regarding the proposed cryptocurrency.

In a joint statement, the UK Information Commissioner’s Office and authorities from Albania, Australia, Canada, Burkina Faso, the European Union and the United States expressed doubt about the Libra Network’s ability to protect consumer data given the (i) current lack of transparency regarding the digital currency and infrastructure and (ii) Facebook’s recent misuse of consumer data, which “had not met the expectations of regulators, or their own users.” The regulators warned that once Libra is launched, it could give the network access to “millions of people’s personal information.” Given these issues, the regulators emphasized that they were “surprised and concerned” that more information has not been provided regarding the network’s data protection efforts.

To achieve some clarity, the regulators called on the Libra Network to answer a number of very broadly phrased questions regarding data protection and privacy, and the ability of individual consumers to protect their information, including by deleting their accounts.

Monopoly Money: Facebook Executive Responds to Regulatory Concerns over Proposed Cryptocurrency

A Facebook executive responded to regulatory concerns over the company’s proposed blockchain-based cryptocurrency, “Libra.”

In testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Facebook subsidiary Calibra executive David Marcus emphasized that Facebook will not release Libra until it has addressed regulatory concerns and received the necessary approvals.

Mr. Marcus clarified that, among other things:

– Libra is like cash and will serve as a payment tool, “not as an investment”;

– Libra Reserve will be subject to its respective government’s monetary policies;

– Libra Association does not intend to compete with sovereign currencies or engage in the “monetary policy arena”;

– Facebook will hold a leadership role until the Libra network launches, after which Facebook will have the same voting power as all other members;

– Libra Association will be supervised by the Swiss Financial Markets Supervisory Authority and intends to register as a money services business with the Financial Crimes Enforcement Network;

– Libra will adhere to anti-money laundering and Bank Secrecy Act requirements; and

– Libra Association “cannot . . . and will not” monetize data from the blockchain.

Mr. Marcus outlined the structure and management of Calibra, established “to provide financial services using the Libra Blockchain.” Mr. Marcus distinguished Libra and Calibra, saying that the entities are separate and that they will not exchange individual customer data. Additionally, Mr. Marcus noted that, with exceptions, Calibra will not share customers’ accounts and financial information with Facebook, and that the information will not be used for ad targeting. Facebook said that Calibra will increase user activity on Facebook, thereby generating greater advertising revenue.

COMMENTARY / STEPHEN LOFCHIE

The principal point of the statement was to assert that Libra will be operated in full compliance with all relevant national laws. As to one of the key questions concerning whether Libra coins might be a “security,” Mr. Marcus stated that it would not be because “Libra is a payment tool, not an investment. People will not buy it to hold like they would a stock or bond, expecting it to pay income or increase its value. Libra is like cash.”

Notwithstanding Mr. Marcus’ assertion, Libra raises a number of very difficult (or at least unresolved) legal questions. Unlike “stablecoins” that are completely linked to the value of a single currency (they are just representations of bank deposits), it is intended that Libra will be backed by a reserve of a number of different currencies. The relative proportions of various currencies to be held in the reserve is uncertain. The fact that Libra is not simply a virtual dollar means that, at least under current law, each purchase and sale of a Libra could be a taxable event for U.S. taxpayers. There are also securities law issues raised by, for example, the fact that the determination of the assets to back a Libra will involve discretion as to the purchase and sale of securities.

From a business standpoint, Mr. Marcus suggests that the real market for Libra may be outside of the United States or of any developed economy. Rather, the market for Libra could be principally in countries where the local currency is volatile or where there is significant uncertainty as to the soundness of the banking system. That actually makes a good deal of sense. Consumers in the United States may not have much use in their daily lives for a currency tied to a global basket of other currencies and securities that fluctuates each day, even if not that much, against the dollar. On the other hand, consumers in Venezuela might find such a currency very appealing.

SEC Chair Jay Clayton Responds to Criticism of Reg. Best Interest

SEC Chair Jay Clayton refuted criticism of the SEC’s recently adopted rulemaking package designed to strengthen protections afforded retail investors on services provided by broker-dealers and investment advisers. The rulemaking package consists of (i) Regulation Best Interest (“Reg. BI”), (ii) the Form CRS Relationship Summary, (iii) an interpretation of investment advisers’ fiduciary duty (the “Fiduciary Interpretation”), and (iv) an interpretation of the “solely incidental” prong of the broker-dealer exclusion under the Advisers Act.

In a speech in Boston, Mr. Clayton responded to seven claims that he believes are inaccurate, asserting that:

1. It is unrealistic to believe that it is possible to eliminate all conflicts of interest, and Reg. BI goes as far as is practicable in addressing broker-dealer conflicts of interest.

2. Reg. BI’s principle-based approach is preferable to a more prescriptive approach to the definition of “best interest,” which assumes that it would be possible to identify the “best” transaction for a particular investor.

3. The Fiduciary Interpretation applicable to investment advisers does not weaken the existing fiduciary duty but, rather, codifies existing SEC practices.

4. The Fiduciary Interpretation does require advisers to “avoid” conflicts.

5. The standards of conduct requirements under Reg. BI and the Fiduciary Interpretation cannot be met by disclosures alone, but require that firms act in the best interest of their customers.

6. Imposing an ongoing monitoring requirement on broker-dealers would not enhance Reg. BI and effectively would impose on them the duty to act as investment advisers.

7. The Form CRS Relationship Summary, along with online education resources, will provide material assistance to retail investors in understanding the duties they are owed by financial service providers.

STEVEN LOFCHIE COMMENTARY

When Regulation Best Interest was proposed, then-Commissioner Stein dissented from the proposal, saying it did not go as far as the DOL’s Fiduciary Rule Proposal; and while Commissioner Jackson voted to allow the proposal to go forward, he also criticized it as not going far enough. This should have served as a warning to Chair Clayton than any regulation that he adopted short of an imitation of the DOL’s Fiduciary Rule was going to be the target of substantial criticism. Chair Clayton proceeded on the basis that there was some middle ground of compromise that would satisfy detractors. That was simply not going to be the case.

Now, in many respects, we have ended up with the worst of all possible situations: (i) the Reg. BI adopting release fails to make any strong intellectual argument for why it is not reasonable to expect that broker-dealers can be fiduciaries to their clients; (ii) Reg. BI fails to make any distinction between sophisticated and unsophisticated natural person clients (treating Warren Buffett no different from a high school dropout); (iii) Reg. BI imposes significant new obligations on broker-dealers that very well may reduce the willingness of broker-dealers to provide “full-service” brokerage to retail investors and instead result in retail investors seeking any level of advice to potentially pay a much higher charge to an investment adviser; (iv) Reg. BI fails to satisfy any of the critics who wanted a fiduciary obligation imposed on broker-dealers; and (v) states are adopting their own “suitability” rules – urged on by Commissioner Jackson – thereby moving U.S. securities regulation away from a unitary system of regulation to a fractured Brexit system. See generally Cadwalader memorandum: Choose One – Best Interest or Full Service (Apr. 26, 2018); see also SEC Adopts Regulation Best Interest (June 6, 2019).

SIFMA Dismisses State Fiduciary Proposal; Advocates for a Uniform Federal Standard

SIFMA criticized New Jersey’s proposal to create a state fiduciary standard, calling a federal standard the “optimal approach” compared with an “uneven patchwork” of state laws.

In a comment letter, SIFMA emphasized that Regulation Best Interest (“Reg. BI”) will better protect investors and avoid confusion, as compared to a state-by-state approach. According to SIFMA, New Jersey’s proposal would (i) impose costly and burdensome regulations on firms, (ii) incentivize firms to restrict their brokerage services in New Jersey and (iii) cause many middle-class investor to lose access to advice altogether.

Specifically, SIFMA stated that the proposal would:

create, in certain instances, a burdensome ongoing fiduciary duty;

establish an “impossible ‘best of’ standard for recommendations of account-types, asset transfers, purchases, sales or exchanges of securities, and transaction-based compensation”;

enact requirements duplicative of Reg. BI; and

fail to address certain common brokerage activities, such as principal trading.

SIFMA advised New Jersey to “substantially revis[e]” its proposal to avoid these potential consequences.

COMMENTARY / STEVEN LOFCHIE

The establishment of heavier federal and state burdens on broker-dealers providing clients with recommendations, combined with the potential great diversity of state regulation, is yet another blow to the business model of “full-service brokerage,” in which broker-dealers provide “suitable” recommendations to individual clients and are compensated by their receipt of securities execution fees. If broker-dealers are going to be tasked as fiduciaries in making any recommendation to investors, then they need to consider whether the economics of undertaking this obligation without being expressly compensated for it makes sense. (See generally the Cabinet memorandum Choose One – Best Interest or Full Service.)

Leaving aside the heavier burden the regulators would impose on broker-dealers, the complexity of a 50-state regulatory regime (combined with an already very complex regulatory regime) simply makes things worse for firms registered as broker-dealers. The number of broker-dealers will continue to decline, the ability of investors to obtain intermittent investment recommendations outside of a formal advisory relationship (and the associate fees) will continue to decline, and regulators will continue to bemoan the increased concentration of financial service firms (as if they were not a principal driving force of that concentration). (Cf. CFTC Commissioner Dan Berkovitz Wants Agency to Focus on Competition and Position Limits.)

Staying with the difficulties that will be created by a fifty-state regulatory regime, Commissioner Jackson’s dissent to the adoption of Regulation Best Interest was particularly disappointing. The Commissioner favored an even stricter regime imposed on broker-dealers than Regulation Best Interest provided. However, rather than accept the disappointment of the outcome, and perhaps win the day in another administration, he essentially advocated for each state to go its own way. While this may provide the Commissioner with what he believes to be a victory on this issue, the overall effect on the U.S. economy of this victory and others of a similar nature, not only in the area of financial regulation, is extremely damaging. In effect, it is advocating for a mini-Brexit, with each jurisdiction establishing its own regulatory regime, and so losing the benefit of a single unified market operating under a consistent sent of rules.