Remarks as prepared for delivery

Standard disclaimer given

Good morning.  It is a pleasure to be here, especially during Filipino American History Month.  I want to thank AAAIM and Jim Park for the invitation, and thank you Suzanne Wong for the lovely introduction.  AAAIM is a non-profit with a compelling mission and goal—one of inclusion and empowerment.  The idea that inclusion and purposeful investment can transform our society and lift up all communities is noble and inspiring.

Today, I will talk about the power of representation and financial inclusion in the American Dream.  I will share with you the story of my Dad Augusto Romero, known as Romy—an immigrant from the Philippines who lives his American Dream, and with purpose, helps others live theirs.  As AAAIM addresses advancement for Asian Americans, I hope it will be helpful for me to share with you my perspective about my own career journey.

I will also want to talk to you about the tremendous opportunity that you have as investment managers to help people live their American Dream.  I will talk about the fallout when there is not representation in financial services, including people losing everything after placing outsized trust in uncredentialled members of a community, and at worse, affinity fraud.  To help combat affinity fraud and other financial fraud, I will end by sharing my proposal for a national financial fraud registry.

Romy Romero

Let me start with Romy.  I am very proud to be the daughter of my Dad who came to America with nothing but the hope that if he worked hard, he could live the American Dream.  Born on a small island in the Philippines, my Dad became an American citizen after joining the U.S. Navy, where he served for 20 years.  His public service inspired my own 21 years of public service at the Securities and Exchange Commission, Department of Treasury, and the CFTC.

Like so many others, I do not come from generational wealth, or frankly, any wealth at all.  My Dad chose public service, and I am one of seven children.  He never went to college, but it was important to him that his children pursued higher education.  It took many decades for my Dad to move from living paycheck to paycheck to have the opportunity to own his own home and to invest in the stock market.

Romy reflects the power of representation.  My family eventually settled in Virginia Beach, Virginia, a Navy town, that now has a very large Filipino population.  After retiring from the Navy, my Dad worked at various jobs, always as a manager, with his last job before retirement as a manager at Walmart.  Known as a “Jobs Guy,” my Dad purposely gave many new immigrants their first job in America, opening the door for their first shot at the American Dream.  He knew how important that first opportunity can be.  He continues to support his community, opening doors and making connections.     

I hope Romy’s story impacts you in two ways.  First, just as important as living the American Dream, is contributing to others’ American Dream.  Second, as investment managers, you have a unique opportunity to help build and protect the American Dream for so many.

Greater Representation and Inclusion

First, it’s important to be purposeful in opening the door for others, just as someone opened the door for you—and to provide those much-needed rungs on the ladder of advancement.

There is certainly much room for greater inclusion and representation in regulated financial services.  The study AAAIM released this week “found substantial AAPI underrepresentation at the ownership level – only 2.4% of firms, 1.8% of funds, and 0.3% of [assets under management] AUM in the US are AAPI-owned. When looking at AAPI women in particular, 0.01% of US AUM is managed by AAPI women.”[1]  The study also showed that AAPI-owned funds outperform non-AAPI-owned funds across most asset classes.[2]

I also want to address representation in the federal government.  Before coming to the Commission, I spent more than a decade at Treasury running a law enforcement and government watchdog office known as SIGTARP, for which I was appointed by President Obama.  Law enforcement is an area of historic racial and gender underrepresentation.  With my Dad as an example, and having been given the opportunity by President Obama, I purposely developed a more inclusive environment.  Under my leadership, as of 2021, nearly half of all employees identified as a racial or ethnic minority.  Importantly, more than half of SIGTARP’s leadership team identified as a racial or ethnic minority.

The Biden Harris Administration understands the power of representation.  For the first time, there is an AANHPI Vice President.  President Biden signed Executive Order 14031 establishing the President's Advisory Commission on Asian Americans, Native Hawaiians, and Pacific Islanders.  As of December 2022, 14% of candidates appointed or nominated identify as AANHPI, including at many agencies that serve our economy.[3]  Most relevant to the investment management industry, this includes appointing the first AANHPI SEC Commissioner, my friend of 16 years Mark Uyeda, and two AANHPI Commissioners at the CFTC, my friend Commissioner Caroline Pham and myself.

To put the CFTC in perspective, according to data from 2020, around 5% of CFTC employees were AANHPI females and around 5% were AANHPI males.[4]  These numbers decrease when it comes to leadership.  2020 data reflected that only around 3 percent of managers were AANHPI males and only 1 percent of managers were AANHPI females.[5]

Now there are two AANHPI female Commissioners.  We have both hired Asian American counsel in our office.  And in recognition that we oversee global markets, we have both traveled to Asia to meet with market participants and foreign regulators.

My Perspective on My Own Career Journey

AAAIM’s study showed that AAPIs in Asset Management see 50% career attrition from entry level to senior level positions, and that female AAPI representation, especially as senior-level executives, remains staggeringly low.[6]

I cannot speak for this industry.  I can only share with you my perspectives on what has worked for my own career advancement.  My success in my career could not have come without support from so many people.  People opened doors for me, introduced me to others, and recommended me.

I had to be willing to ask for support, be willing to take chances, and step outside of my comfort zone.  I left a large law firm just before partnership in search of greater purpose, becoming a line staff attorney in the SEC’s Enforcement Division.  After four years, I had the honor to become counsel to SEC Chairman Chris Cox and later Chair Mary Schapiro.  I then stepped out of the very secure SEC to join a startup office at Treasury that no one had heard of and had only a handful of staff.  I joined SIGTARP as the Chief of Staff to build a federal office that assisted in making our financial system safer after the financial crisis.  I then had the privilege of President Biden nominating me to be a CFTC Commissioner.  I have loved each of these experiences, and the whole time, I was a Mom raising three daughters.

While I had support from many, I stepped outside my comfort zone and took chances.  I did this in the pursuit of purpose and of greater meaning.  Financial stability and investor protection are driving forces for me.  I looked for places where I thought that my contributions in these areas would be both meaningful and well-received.

I am glad that groups like AAAIM are focusing on education, networking, and empowerment in underrepresented groups.  I love that word “empowerment.”  I had to really go for each of my leadership opportunities, put myself out there and really lean into explaining why I would be successful in these roles.  Having the confidence to do that can be hard, particularly in any culture where you are raised to be humble and not self-promoting.

Helping Others Build the American Dream

As investment managers facilitating capital formation, you have a unique opportunity to help build and protect the American Dream for so many.  This includes expanding access to regulated financial services for many who do not have generational wealth.  I always think about what it could have been like for my parents if they had access to someone educated, trained, and this part is especially important—licensed—in helping them manage their money, savings, and retirement.

I look across this room at all of the knowledge, training and experience that you have to help others build their American Dream.  Not only to build their American Dream, but to protect that Dream, which is fundamentally important during times of market volatility.

I also want to talk about the importance of investing in American communities.  In addition to helping individuals, you have the opportunity to consider inclusion and purposeful investment that as AAAIM says, “can transform our society and lift up all communities.”  Communities are the lifeblood of America, something that I experienced in my role as SIGTARP, as I oversaw $570 million in investments in a TARP program for community lending through Community Development Financial Institutions.

Community investments includes investments in small businesses that are a critical part of the American Dream.  There is room for greater representation here in private investment.  According to the U.S. Small Business Administration’s latest data, only 2.8% of federal contracting dollars went to APA or AA-owned small businesses in Fiscal Year 2020.[7]  I was purposeful in doing my part in this area at SIGTARP.  Under my leadership, SIGTARP won a Treasury Department award every year (or nearly every year) over the last decade for high percentages of contracts to women and/or minority owned small businesses.  I want to emphasize that these were all well-qualified small businesses.

With the opportunities you have, comes the enormous responsibility of fiduciary duty to all that you serve—a duty that is paramount to investor protection, particularly retail investor protection.  I have seen with my family and community that there can be outsized and unearned trust placed in other members of a community.  Many AANHPIs feels more comfortable dealing in financial matters with other AANHPIs.  Trust can be given easily.  But not everyone has been educated, trained, and licensed in providing financial advice.

As investment managers, you stand in a position to provide help to others, to help them build and protect their American Dream.  Your fiduciary duty to your clients sets you apart.  More than just suitability, you know that you must consider the client’s position, and that you cannot put your interests before theirs.

The Fallout from a Lack of Qualified and Competent Representation in Financial Services

I have seen firsthand the fallout from a lack of qualified, competent representation.  In my two decades as a financial regulator and official in law enforcement, I have investigated and brought enforcement actions against those acting as financial advisers who were not trained or licensed, and their victims lost everything.

I have also investigated and prosecuted many affinity frauds—frauds that prey on the trust that racial, ethnic or religious communities provide to members of the community.  Investigating and prosecuting affinity fraud is tough.  Victims often do not want to cooperate with law enforcement.  Sometimes, it is out of shame or a distrust of law enforcement.  Many times, it is because they don’t want someone in their community to get in trouble, even someone who defrauded them.

The damage caused by affinity fraud and other financial fraud is so devastating that deterring fraudsters and protecting investors is a top priority of law enforcement.  According to the Federal Trade Commission, “Consumers reported losing more money to investment scams—more than $3.8 billion—than any other category” of scams in 2022.  “That amount more than doubles the amount reported lost in 2021.”[8]

In 2019, I proposed a National Financial Fraud Registry—a centralized record of all crimes and fines related to financial fraud.[9]  After seeing so many cryptocurrency fraud schemes in my time at the CFTC, I re-proposed the Registry last month at the annual meeting of the North American Securities Administrators Association.[10] 

It’s really heartbreaking when you talk to people who become victims.  This Registry is about getting information out for people to arm themselves, to stop fraud before it happens.  The public can easily check it to vet someone before giving someone their money, their trust, and their business.[11]  Investment managers could also check it.  

In Closing

I want to close with an update about Romy and his American Dream.  In his well-earned retirement, every morning he goes fishing, and he sends all of us kids a picture from the pier.  He has 12 grandkids, and 4 great-grandkids.  And in a couple of weeks, my daughter is due to have her second child, a boy whose middle name will be Romy.  The American Dream indeed.

Thank you for including me in this wonderful conference.  

[2] See Id. (The study found that nearly half of AAPI-owned PE funds appear in the top performance quartile; over 50% of AAPI-owned VC funds achieve top quartile performance as well.  The study also found that AAPI-owned hedge funds yield monthly returns of .50%, significantly outpacing the .19% monthly returns of their non-AAPI-owned counterparts.)

[3] https://www.whitehouse.gov/wp-content/uploads/2023/01/WHIAANHPI-2023-Report-to-the-President-FINAL.pdf

[4] See CFTC’s FY 2020 MD-715 Federal Agency Annual EEO Program Status Report to the U.S. Equal Employment Opportunity Commission, https://www.cftc.gov/media/6586/md715reportfy20/download.

[5] See Id.

[6] AAAIM, New AAAIM Study: AAPIs see 50% career attrition from entry level to senior level positions in asset management - AAAIM (May 9, 2023).

[7] U.S. Small Business Administration, SBA Releases FY 2020 Disaggregated Contracting Data | U.S. Small Business Administration (Dec. 1, 2021).

[8] Federal Trade Commission, New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022 | Federal Trade Commission (Feb. 23, 2023).

[9] What I propose is a coordinated approach by federal leaders to create a single public access point to information on fraud convictions and civil fines.  Once established, each federal agency would register its convictions, sentencings, civil fines and resolved enforcement actions.  State and local agencies could join to achieve a true national fraud registry.

[10] The CFTC has brought 115 crypto-related enforcement actions.

[11] Would-be fraudsters will not like that ease and accessibility, creating a powerful deterrence.  This would also ease government’s identification of repeat offenders.