Page 31 - Investment Advisor May 2021

Mellody Hobson is presi- has committed up to $200 million for Project Black.
dent and co-CEO of Ariel “The time is right for the formation of an investment firm
Investments — the first that scales sustainable, minority-owned businesses by simulta-
Black-owned mutual fund neously solving for two critical factors: capital and customers,”
company, which has about wrote Hobson recently.
$15 billion in assets. She Meanwhile, Ariel Investments’ three actively managed
also chairs the board of U.S.-focused mutual funds are enjoying strong performance.
Starbucks, making her the They outperformed their peers last year and year-to-date,
first Black chairwoman of as value investing in small- and mid-cap stocks has staged
an S&P 500 company. a comeback.
Hobson is unusual in the
financial industry in another Honorable Mentions:
way: She’s spent her entire Federal Reserve Chair Jerome Powell has maintained near-
Johnson: Andrew Harrer/Bloomberg; Palihapitiya: Mark Kauzlarich/Bloomberg; Wood: courtesy of ARK Invest; Fink: Stefan Wermuth-Bloomberg
career at Ariel Investments, zero interest rates underpinning a record rally in stocks,
starting in 1991 after graduating from Princeton University. which is why Wall Street is so focused on when the Fed
She became its president in 2000 and co-CEO in 2019. may reverse its lower-for-longer rate strategy and reduce
In February, she announced the formation of Ariel its monthly $120 billion purchases of U.S. Treasuries and
Alternatives, an affiliate of Ariel Investments whose first ini- mortgage-backed securities. Janet Yellen, Powell’s prede-
tiative, Project Black, will invest in middle-market companies cessor at the Fed, is now the first female Secretary of the
with the aim of transforming them into certified minority- Treasury. She has the responsibility for the U.S. economic
owned business enterprises of scale and developing a new recovery and getting relief to those who need it most.
class of Black and Hispanic entrepreneurs. JPMorgan Chase

Politics, Regulation & Compliance

Advisors got a shock in mid-February when the Labor 84-24 for insurance and annuity sales, to be modified to include
Department allowed the Trump-era fiduciary prohibited conditions similar” to some of those in the fiduciary PTE. “In
advice exemption to align with the Securities and Exchange other words, the exemptions will be more demanding.”
Commission’s Regulation Best Interest to go into effect. All
eyes now will be on whether new Labor Secretary Marty What will Gary Gensler
Walsh expands the fiduciary definition under the Employee tackle first as he assumes
Retirement Income Security Act and modifies other prohib- the role of chairman of the
ited transaction exemptions later this year. SEC? At his confirmation
hearing before the Senate
Banking Committee — in
which he was peppered with
questions from lawmakers
about the GameStop trad-
ing frenzy — Gensler laid
out the steps he’d consid-
er to address recent mar-
ket volatility related to the
GameStop Reddit squeeze,
as well as his approach to regulating cryptocurrencies.
Potential regulatory measures tied to the burst in the
“With regard to the fiduciary definition, I believe that the trading of some stocks could come first for Gensler, but
DOL would like to bring it more in line with the SEC’s best he’s also signaled to senators that he’s in favor of cryp-
interest rules for broker-dealers and investment advisors, tocurrency innovation. A professor of blockchain, digital
where a single recommendation is subject to the best-interest currency, financial technology and public policy at MIT,
standard,” said ERISA attorney Fred Reish of Faegre Drinker. Gensler has said he’d work with “fellow commissioners
Under Walsh, who will be a “fiduciary proponent,” Reish said, to both promote the new innovation but also at the core,
“we can expect other existing exemptions, for example, PTE ensure for investor protection.”

MAY 2021 INVESTMENT ADVISOR 29