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.
- Code of Ethics Rule The Code of Ethics Rule, found in Rule 204A-1, uses severe consequences for violation to help ensure investment advisors will do the right thing.
While members of Congress praised SEC Chairman Mary Schapiro July 14 for acting quickly to institute changes at the beleaguered agency, lawmakers said more work needs to be done at the SEC to protect investors.
The SEC "must continue to take bold and assertive action as it moves forward to bring enforcement actions against wrongdoers and to rewrite the rules governing the industry to better protect investors," Paul Kanjorski (D-Pennsylvania), chairman of the House Financial Services Capital Markets Subcommittee, said in his opening remarks at a July 14 hearing held to assess the current state of the SEC and its agenda.
Schapiro told members of the subcommittee that SEC staff has moved with a sense of urgency to institute changes designed to protect investors and promote investor confidence. She listed the changes the SEC is now vigorously engaged in. They include:
? working to fill regulatory gaps exposed by the economic crisis;
? seeking to strengthen standards governing broker/dealers and investment advisors;
? enhancing disclosure provided to investors;
? streamlining enforcement procedures and focusing on cases that will have the greatest impact;
? revamping the system for handling the approximately one million tips and complaints the Commission receives annually;
? improving the SEC's risk assessment capabilities;
? bolstering internal training; and
? bringing on new leadership and new skill sets.
Cleaning House; Maybe a Budget Hike?
In less than six months, Kanjorski noted, Schapiro has replaced nearly all of the agency's senior staff.
Kanjorski said he's developing a bill on financial services reform using the "ambitious set of 42 legislative proposals" that Schapiro recently sent to Congress, as well as ideas from the SEC's inspector general and the Obama Administration.
Kanjorski noted that one important proposal stands out: To put in place new standards that reward whistleblowers when their tips lead to catching fraudsters.
When asked whether an increased budget would prompt the SEC to not further explore the option of a self-regulatory organization for advisors, Schapiro said that "even though our budget is growing, I am game to explore the SRO because I think it will allow us to do a better job." She said the key to a successful SRO would be strict oversight by the SEC.