Congress has made clear that efforts to recruiting and promote employees from all backgrounds are efforts that the SEC, and all other financial regulators, should be undertaking. In particular, Section 342 of the Dodd-Frank Act contains a clear Congressional mandate for the SEC to establish a new Office of Minority and Women Inclusion. This Office will be responsible for “all matters of the agency relating to diversity in management, employment, and business activities.” The Director of this Office is tasked by statute with a broad mandate to develop standards for:
- equal employment opportunity and racial, gender, and ethnic diversity of workforce and senior management;
- increased participation of minority-owned and women-owned businesses in programs and contracts of the agency; and
- assessing diversity policies and practices of regulated entities.
The new legislation specifically directs the agency to take affirmative steps to seek diversity in the workforce at all levels and includes steps that the SEC must undertake as a part of its outreach efforts. This new Office must be established within six months after the legislation went into effect — which means that this Office will have to be up and running in a matter of months. The SEC must by law undertake to increase diversity at every level of the agency’s workforce and I look forward to this new Office leading the charge.
In addition to government agencies needing to do better, financial market participants in the private sector also need to do more to achieve diversity in the workplace. The lack of diversity in the financial services industry is particularly acute. A 2006 Equal Employment Opportunity Commission report on employment in the financial services industry found that the percentage of African American and Hispanic managers and professionals was lowest in the securities sector (4 % and 3%, respectively).
Even more troubling, the GAO recently published a study finding that overall diversity at the management level in the financial services industry did not change substantially from 1993 through 2008. According to EEOC data cited by the GAO, in 2008 white males held 64% of senior positions, African-Americans held 2.8%, Hispanics 3%, and Asians 3.5%.
Clearly, the industry must do substantially better. Moreover, the financial services industry serves as an important pipeline into corporate boardrooms across this country. Improving the diversity statistics in the industry will significantly expand the pool of candidates for board seats.
For additional information on the mandate, see Wolters Kluwer’s Dodd-Frank Act requires Office of Minority and Women Inclusion for covered agencies, 8/24/2010.