More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
In laying out the Obama Administration's plan for financial services reform before Congress March 26, Treasury Secretary Timothy Geithner said that revamping the current financial services regulatory landscape would not take "modest repairs at the margin, but new rules of the game." He said those new rules "must be simpler and more effectively enforced and produce a more stable system that protects consumers and investors, that rewards innovation, and that is able to adapt and evolve with changes in the financial markets."
Among those new rules he put forth to a Congressional panel headed by Rep. Barney Frank (D-Massachusetts), would be reigning in risk-taking, putting tighter controls on hedge funds and money markets funds, as well as putting large financial institutions under tighter rules. In his testimony before the House Financial Services Committee, Geithner said the Administration's reform plan includes four broad components: addressing systemic risk, protecting consumers and investors, eliminating gaps in regulatory structure, and fostering international coordination.
Geithner's testimony March 26 focused on systemic risk, and he laid out the five areas that must be addressed in this area. First, he said, would be a single independent regulator with responsibility over systemically important firms and critical payment and settlement systems. Second would be requiring higher standards on capital and risk management for those systemically important firms. Third, the proposal would require SEC registration of all hedge fund advisors who have assets under management above a moderate threshold. Fourth, would be putting together a comprehensive framework of oversight, protections, and disclosure for the OTC derivatives market. And fifth, would be instituting new requirements for money market funds to reduce the risk of rapid withdrawals.
Geithner also said he would support legislation that would create an optional federal insurance charter.