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.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
Sen. Dick Durbin, D-Ill., chairman of the Senate Appropriations Committee’s Subcommittee on Financial Services and General Government, said Wednesday he would fight to stop the budget cuts to the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Consumer Financial Protection Bureau (CFPB) under the House Republicans’ 2011 budget resolution, which passed on Tuesday.
“I’m going to fight to ensure House Republicans lose this fight” to cut these agencies’ budgets, “just as they lost” on trying to stop the passage of Dodd-Frank, Durbin said on a Wednesday conference call held by consumer advocate groups. “House Republicans have fought the Dodd-Frank bill every step of the way,” he said.
Under the House’s two-week budget resolution, which the Senate passed Wednesday by a vote of 91-9, the SEC would see a $231 million budget cut from what was requested under Dodd-Frank, Durbin said. The CFTC would face a $174 million budget cut, or 69%, of what was to be allotted to the agency under Dodd-Frank, he said, while the CFPB’s budget would be cut from $143 million to $80 million, a 40% drop.
The short-term funding bill would only last until March 18. In response to a question from AdvisorOne on when his “fight” would begin to ensure these agencies’ budget cuts were halted, Durbin said the House and Senate will be “meeting soon” to start the debate on a longer-term budget resolution, as there is only six months left in the current fiscal year. “All three of these agencies’ [budgets] will be part of the negotiation,” he said.
Sen. Jack Reed, D-R.I., chairman of the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment, told Reuters on Tuesday that he would “insist” on adequate funds for the SEC and CFTC as a precondition for a deal on the federal budget.