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Senators urge SEC to adopt measures to make $70 trillion asset management field more diverse

Diversity leads to innovation, Sen. Bob Menendez, D-N.J., says.
Diversity leads to innovation, Sen. Bob Menendez, D-N.J., says.

U.S. Sen. Bob Menendez, D-N.J., and nearly two dozen other lawmakers called on the Securities and Exchange Commission on Monday to implement measures that could increase racial and gender diversity in the $70 trillion asset management field.

Menendez sent a letter to SEC Chairman Gary Gensler urging the commission to accept recommendations by a subcommittee of its Asset Management Advisory Committee that could reduce disparities in an industry whose leadership ranks remain predominantly white and male.

Companies owned by women or people of color manage less than 1% of global financial assets, according to the letter, citing findings from the subcommittee. Meanwhile, roughly 84% of the sector's executives are white and about 75% are men.

That lack of diversity means both the industry and investors are leaving money on the table, the letter claims, noting a series of reports that have found more diverse leadership in the C-Suite and board room boosts profits.

"Given this data,'' the letter said, "It is clear that the promotion of diversity within the asset management industry would not only improve performance to the benefit of investors, it would also align with the SEC’s diversity and inclusion goals and its mandate to protect investors and facilitate fair and open markets."

After the murder last year of George Floyd, an unarmed Black man in Minneapolis, corporations pledged to take concrete steps to rectify deep racial disparities in their workforces and practices.

However, a USA TODAY investigation a year after Floyd's death found significant inequities remain with people of color – particularly women – at the most influential positions in the nation's most valued companies and industries. Meanwhile, the investigation found, people of color and women were concentrated in lower level, lower-paying jobs.

Corporate America talks diversity, but hasn't gotten there: ‘We are fundamentally a racist and sexist society’: How top companies in US are struggling to diversify leadership

Corporations lag in diversity: Racial justice in the workplace: In-depth look at diversity’s struggle to crack corporate boardrooms

Amazon makes progress but has a long way to go: Amazon has more Black and Hispanic employees than ever, but most people in top jobs are still white and male

The subcommittee unanimously approved its set of recommendations in July.

They include advising the SEC to require asset management and investment firms to do a better job of providing information on the gender and racial makeup of their staffs and boards, and that the SEC look at the role political contributions play in how assets are invested.

The subcommittee also called for the SEC to make it clear that managers overseeing a smaller amount of assets can be considered for a client's business, and the SEC should set up a process that ensures complaints about discrimination in the industry get steered to government entities that can best handle such accusations.

Menendez began releasing corporate diversity surveys in 2010, frequently noting that they demonstrated the failure of corporate America to make its leadership reflect the diversity of the marketplace it serves.

In February, Menendez introduced a bill that would strengthen the SEC's diversity disclosure guidelines, requiring public companies to be more transparent about the racial and gender diversity of their executives and boards.

The letter sent to the SEC on Monday was co-signed by nearly two dozen senators including Sens. Sherrod Brown, D-Ohio, Elizabeth Warren, D-Mass., and Alex Padilla, D-Calif.

This article originally appeared on USA TODAY: Sen. Bob Menendez calls on SEC to take steps to improve diversity