More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
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.