Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • Consultants
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2023
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • DC Plan Design: Improving Participant Outcomes
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
  • Print
Breadcrumb
  1. Home
  2. GOVERNANCE
February 10, 2020 12:00 AM

SEC makes another push to get diversity data from managers

Danielle Walker
  • Tweet
  • Share
  • Share
  • Email
  • More
    Pamela Gibbs
    Pamela Gibbs said the SEC wants managers to share their self-assessments.

    The Securities and Exchange Commission is, again, asking its regulated entities, including money managers, to voluntarily disclose their diversity policies, practices and workforce data. Since its first attempt to collect this data in 2018, the agency has taken additional measures to improve the response rate, which has so far been tepid.

    Surveys have been sent to the first group of potential respondents while all others will receive the "diversity assessment report" by November, the agency confirmed.

    "The SEC has taken steps that will hopefully get more entities to share information about efforts to enhance diversity and inclusion in their organizations," said Pamela Gibbs, director of the SEC's office of minority and women inclusion, in a Jan. 28 email.

    "At educational events and conferences hosted by industry trade associations and professional organizations, we have encouraged regulated entities to conduct self-assessments of their diversity policies and practices and share their self-assessments with the SEC," Ms. Gibbs said.

    The commission's Office of Minority and Women Inclusion also contacted chief compliance officers of SEC-regulated entities and requested that they provide the appropriate point of contact within their organization for the diversity assessment report, she added.

    The assessments, which were introduced in January 2018, are primarily intended for regulated entities with more than 100 employees, the SEC said at the outset of its first round of surveys that year. Regulated entities include those reporting as investment advisers, broker-dealers and private fund advisers to the SEC, as well as self-regulatory organizations, such as FINRA. The SEC, which expects to collect the information every two years, created the survey to assess the diversity policies and practices of the entities its regulates, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

    In the aftermath of the first survey, only 5%, or 69 of the 1,367 regulated entities that received the survey, responded, according to data provided by the SEC.

    Commitment to diversity

    The assessment asked firms about their commitment to diversity and inclusion, how this is implemented in employment practices, and steps taken to provide business opportunities to diverse suppliers in the procurement process, among other questions.

    In the 2018 survey, even fewer respondents provided specific data on the diversity of their workforce, such as the percentage of men and women in executive and other roles at firms, as well as a breakout of race and ethnicity by job category.

    The SEC received a total of 38 responses to its diversity assessment report in the first year, which technically represented 69 regulated entities since larger financial services firms in some instances provided information for more than one division or subsidiary regulated by the SEC. The SEC received responses from investment advisers, a reporting group that includes money managers, as well as broker-dealers and self-regulatory organizations, Ms. Gibbs said. Responses were not broken down by the type of entity.

    Only aggregated findings are published. In the 2018 survey sent to participants, the commission said it "will not publish any information that identifies a particular regulated entity or discloses confidential business information.''

    Among the 38 responses, only 17 included all of the requested workforce diversity statistics and seven responses included no workforce diversity statistics at all.

    Some findings from the 38 responses submitted to the SEC in the 2018 survey round include:

    • 89% of firms had written diversity and inclusion policies.
    • 84% of firms had a senior level official with experience in diversity and inclusion who oversees and directs the firm's diversity and inclusion efforts.
    • 71% of firms regularly evaluated performance under its workforce diversity and inclusion programs.
    • 61% of firms included diversity and inclusion objectives in performance plans of their managers.
    • 55% of firms' supplier diversity policies were aimed at providing business opportunities to diverse suppliers, including minority- and women-owned businesses.
    • 50% of firms measured the percentage of contract dollars awarded to minority- and women-owned businesses by gender, race and ethnicity.
    • 50% of firms published information about progress toward achieving diversity and inclusion in the workforce on their websites.
    The full report

    Read the SEC's report.

    SEC Diversity Assessment Report >
    Firms hesitant

    For money managers that are considering disclosing such data, there are probably multiple factors that give them pause, sources said.

    JoAnn M. Strasser, a Columbus, Ohio-based partner and vice chair of the corporate transactions and securities practice group at law firm Thompson Hine, said that while "money managers appreciate the role that the SEC and other regulators play in protecting investors, there is some level of distrust of any regulator."

    "Engaging in any disclosure of information on a voluntary basis can be a challenge just because of the nature of the relationship" between regulators and regulated entities, said Ms. Strasser, who is also head of the investment group at Thompson Hine.

    Additionally, firms facing a number of regulatory demands are unlikely to place voluntary disclosures on their list of priorities, said Emily P. Gordy, a Washington-based partner at McGuireWoods LLP who focuses on regulatory, compliance and enforcement issues in the financial services industry.

    "I think there are a number of different factors involved in the low response rate," Ms. Gordy said. "Probably, chief among them is because it is voluntary. I think there is an element of fatigue and prioritization that goes on with any firm in regards to what they are going to respond to, to whom and when."

    Despite the challenges, diversity disclosures would be "good for the industry at large, (including) financial services firms or asset managers," she said.

    "It projects and communicates that they are diverse and serving a diverse population," Ms. Gordy added.

    As the SEC urges regulated entities to participate in its voluntary diversity assessments, legislation passed the House in November that would require public companies to publish diversity data annually in proxy statements filed with the agency.

    Under the bill, H.R. 5084, which passed by a vote of 281-135, public companies would disclose the racial, ethnic and gender makeup of boards, executive officers and nominees for the board of directors. The SEC's office of minority and women inclusion director would also need to publish best practices for compliance every three years for companies, while the office would create an advisory council to advise on best practices.

    Rep. Gregory Meeks, D-N.Y., who introduced the bill, said in an interview that "the SEC has not been resistant to where we are going," as it seems to recognize that "we should have a diverse financial sector on top, (including) on boards and in the C-suite."

    Investors see benefit

    Juan J. Martinez, vice president, chief financial officer and treasurer of the $2.3 billion John S. And James L. Knight Foundation, Miami, said the low response rate that the SEC received to its diversity survey is consistent with asset owners' efforts to get similar data from money managers.

    "Detailed data on diversity is very hard to get," Mr. Martinez said of the asset management industry.

    He has seen that foundations, in particular, want to know not just company-level data on workforce diversity, but information specific to diversity on portfolio management teams.

    To delve further into firms' commitment to diversity, "you have to do much deeper due diligence, which is an extra cost and extra effort because the managers aren't necessarily being forthcoming with that data," Mr. Martinez said.

    "If the SEC is having trouble getting that data, you can imagine it is hard for an investor," he added.

    "When dealing with complex things like investments, there is evidence to suggest that having a diversity of opinions helps you to make more informed decisions. Knowing (an asset manager's) accounting staff is diverse doesn't help me know your investment team is. I can't measure how you're doing if you never give me a baseline," he continued.

    Agency under scrutiny

    The SEC has also been subject to scrutiny over diversity within its own agency as of late, and, separately, measures it is taking to address the lack of diversity in asset management.

    Last month, Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee, and Rep. Joyce Beatty, D-Ohio, chairwoman of the House Financial Services Subcommittee on Diversity and Inclusion, wrote a letter to SEC Chairman Jay Clayton about the lack of ethnic and racial diversity on the agency's four advisory committees, including its 23-member asset management advisory committee, which was formed in October.

    The SEC declined to comment on the matter.

    The congresswomen wrote that the new asset management advisory committee includes no black committee members and that "it is no surprise that the asset management advisory committee with its limited diverse membership would propose an agenda for its inaugural meeting with no plan to discuss the historical bias against and limited investment with diverse-owned asset management firms."

    Ms. Waters and Ms. Beatty went on to request data on the demographics of the SEC's advisory committee members since 2015, plus other information, including details on the advisory committee appointment process and how the SEC plans to increase representation of racial and ethnic minorities on its advisory board.

    Related Articles
    CalPERS diversity strategy using strength in numbers
    Hedge funds’ progress toward employee diversity improving
    Corporate boards should focus on gender diversity, climate risk – survey
    Recommended for You
    paycheck 1550_i.jpg
    CEO compensation hits second highest level – AFL-CIO tracker
    Securities_and_Exchange_Building_i.jpg
    Investor groups defend SEC's proxy authority
    Calculator
    Tracker offers investors new information on pay vs. performance
    Private Markets Get on the DC Plan Investment Menu
    Sponsored Content: Private Markets Get on the DC Plan Investment Menu
    Sponsored
    White Papers
    What a Fed pivot and ‘higher for longer’ mean for emerging markets
    A Guide to Home Equity Investments: The Untapped Real Estate Asset Class
    How to Modernize a School District Retirement Plan
    Q4 2023 Credit Outlook: Price Is What You Pay, Value Is What You Get
    There's More Than One Way to Be a Climate Investor
    Exploring the Commercial Application of Artificial Intelligence
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    October 23, 2023 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • Consultants
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2023
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • DC Plan Design: Improving Participant Outcomes
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
    • Print