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.
- 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.
The President’s Working Group on Financial Markets (PWG) has released a report detailing options for reforms related to money market funds. The report particularly focuses on the vulnerabilities of money funds and how to avoid another run on money market funds that occurred when Lehman Brothers failed in September 2008.
Following the financial meltdown in 2008, the Treasury Department directed the PWG to develop this report to “assess options for mitigating the systemic risk associated with money market funds and reducing their susceptibility to runs,” which refers to the rapid redeeming of money market fund shares that occurred during the crisis. The PWG states in the report that while it agrees a number of positive reforms have been implemented, more should be done to address money market funds’ susceptibility to runs.
With its report in hand, the PWG is now requesting that the Financial Stability Oversight Council (FSOC), established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, “consider the options discussed in this report and pursue appropriate next steps.” The PWG states that the Securities and Exchange Commission, which regulates money market funds, will assist the FSOC in any analysis and that the SEC will solicit public comments, “including the production of empirical data and other information in support of such comments.” A notice and request for comment will be published in the near future.