More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
The Financial Services Committee of the U.S. House, chaired by Rep. Barney Frank (D-Massachusetts) will hold a hearing on Monday, January 5, at 2:00 PM Eastern time to discuss the Ponzi scheme allegedly perpetrated by Bernard Madoff and his firm, Bernard L. Madoff Investment Securities LLC.
In filing its charges against Madoff and asking a Federal judge in New York to freeze his assets and appoint a receiver for his business on December 11 (which was granted), the SEC quoted Madoff as saying that he had conducted a "giant Ponzi scheme" that amounted to at least $50 billion. The SEC confirmed that Madoff had met a December 31 deadline to supply to the Commission a list of his personal assets.
Rep. Paul Kanjorski (D-Pennsylvania), a member of the committee and chair of the House capital markets subcommittee, said in a December statement that hearings "will help us to discern whether or not the SEC had the resources needed to get the job done, how such a sizable scheme could have evaded detection for so long, and what new safeguards we need to put in place to protect investors." Kanjorski said that hearings on the Madoff scandal will help guide Congress "in undertaking the most substantial rewrite of the laws governing the U.S. financial markets since the Great Depression."
A live Webcast of the hearings is available through the Committee's Web site here.