More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- 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.
Deputy Treasury Secretary Neal Wolin said Monday that Treasury is moving as “quickly and carefully” as it can to implement the Dodd-Frank Act, and cited several “broad principles” that are guiding Treasury’s efforts in this area. Wolin made his comments at a conference held at Georgetown University in Washington that was entitled, “Financial Reform, What’s Next?: A U.S. and Global Perspective Examining the Opportunities and Challenges Ahead.” The event was co-sponsored by PricewaterhouseCoopers and Georgetown University’s McDonough School of Business.
While Dodd-Frank addresses the “core problems that led to [the financial] crisis,” Wolin said, “enacting this law is just the beginning,” and the hard work has now begun with the implementation of Dodd-Frank.
Wolin listed seven broad principles guiding Treasury’s efforts to implement Dodd-Frank.
- First, wherever possible, he said, “We are quickly providing clarity to the public and the markets. But the task we face cannot be achieved overnight.” Wolin said Treasury must write new rules “in some of the most complex areas of finance; consolidate authority spread across multiple agencies; set up new institutions for consumer protection and for addressing systemic risks; and negotiate with countries around the world.” In getting this done, he continued, “we are making sure to get it right.”
- Second, Treasury is conducting the implementation process “out in the open, bringing full transparency to implementation activities,” Wolin said. “As we write new rules, we will consult with a broad range of groups and individuals. And as we seek their input, the American people will be able to see who is at the table. Draft rules will be published. Everyone will be able to comment.”
- Third, wherever possible, we will streamline and simplify government regulation.
- Fourth, Wolin continued, “we will create a more coordinated regulatory process.” Ahead of this crisis, he said, “gaps and inconsistencies between regulators proved to be a major failure. Gaps allowed risks to grow unattended and inconsistencies allowed an overall race to the bottom. Better coordination will help prevent a recurrence.”
- Fifth, “we will create a level playing field,” he said. “A level playing field must exist not just between banks and non-banks here in the United States, but also between major financial institutions globally.”
- The sixth principle is protecting “the freedom for innovation that is absolutely necessary for growth,” Wolin said. “Our system allowed too much room for abuse and excessive risk. But as we put in place rules to correct for those mistakes, we have to achieve a careful balance and safeguard the freedom for competition and innovation that are essential for growth.”
- And seventh, Wolin said Treasury is “keeping Congress fully informed of our progress on a regular basis.”
Wolin also made note of three of the agencies “at the heart” of Dodd-Frank--the Financial Stability Oversight Council, the Office of Financial Research, and the Consumer Financial Protection Bureau (CFPB).
Wolin chairs the Financial Stability Oversight Council, which held its first meeting in early October. The Council’s second meeting, he said, will be held on Nov. 23 and the Council will likely “continue its work on systemic risk and discuss the criteria for designating systemic non-bank financial institutions and financial market utilities. I also expect that the Council will make further progress on decisions about its operations, including budget, staffing, and organizational structure.”
As for the CFPB, which is being built by Elizabeth Warren (left), Wolin said the CFPB “implementation team” has working groups focused on setting up key functions of the bureau such as research and supervision of financial institutions. Other working groups, he said, “are focused on building the CFPB’s supporting infrastructure, from procurement and budgeting to human resources and legal services.”
Treasury Secretary Timothy Geithner has designated July 21, 2011, as the date on which the CFPB will assume existing authorities of seven federal agencies. “We have made substantial progress preparing the CFPB to incorporate staff and assume authorities from those agencies,” Wolin said.
Treasury, he said, has begun “planning and preparations for certain rules mandated by the Dodd-Frank Act so the CFPB can meet statutory deadlines,” and is working with the agencies that will transfer rulemaking authority “to coordinate and ensure a smooth transfer.” For instance, he continued, “we are coordinating fulfillment of certain rule writing mandates under the Dodd-Frank Act with the Federal Reserve Board to speed clarity for the market and meet statutory deadlines.”