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.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Senate Republicans successfully used a procedural vote to block the Senate from moving to debate the Dodd financial services reform bill on April 26. The vote was 57-41, so the Democrats did not get the 60 votes they needed to move the bill toward debate. It is expected that Senate Majority Leader Harry Reid (D-Nevada) will immediately file another motion, with a second vote to come up later this week, while Senators Chris Dodd (D-Connecticut) and Richard Shelby (R-Alabama) continue negotiations over the bill. Prior to the April 26 votes, the GOP vowed to introduce an alternative financial services reform bill to the one proposed by Democrats.
Senator Shelby, ranking member on the Senate Banking, Housing, and Urban Affairs Committee, had predicted to David Gregory of NBC's "Meet the Press" on Sunday, April 25, that the Senate would not approve the cloture vote on April 26, but had also added, "I think we will get a bill."
The Wall Street Journal, among other news outlets, reported that Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, has agreed to include the recent derivatives bill passed April 21 by the Senate Agriculture Committee in his final reform package.
Meanwhile, as the chief executive of Goldman Sachs, Lloyd Blankfein, and David Viniar, Goldman's CFO, prepare to testify before the Senate Permanent Subcommittee on Investigations on April 27, the Securities and Exchange Commission's (SEC) Inspector General says he plans to launch an investigation into the timing of the securities regulator's decision to pursue fraud charges against Goldman.
David Kotz, the SEC's Inspector General, is performing the investigation into the timing of the Goldman suit at the behest of Rep. Darrell Issa (R-California) ranking minority member on the House Committee on Oversight and Government Reform. Issa and eight members of his committee wrote an April 20 letter to SEC Chairman Mary Schapiro asking her whether any "prearrangement, coordination, or advanced notice had existed between Commission officials or employees and supporters" of the financial services reform legislation.
In an April 21 response, Schapiro said that "The SEC is an independent law enforcement agency. We do not coordinate our enforcement actions with the White House, Congress or political committees. We do not time our cases around political events or the legislative calendar." The fact is, Schapiro continued, "regulatory reform has been pending for over a year. We have brought many cases related to the financial crisis over that period. On a personal level, I am disappointed by the rhetoric."
Dan Barry, the FPA's director of government relations, noted in an interview on April 23 that it was "interesting timing" that the SEC would sue Goldman Sachs just before the financial services reform bill hit the Senate floor, noting also that the 3-2, party-line vote among the SEC commissioners in deciding to sue Goldman was "unusual."