More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
As Congress readies to hold hearings on the Securities and Exchange Commission’s (SEC) budget this week, Bloomberg is reporting that the Boston Consulting Group’s (BCG) preliminary review of the SEC, which was mandated by the Dodd-Frank Act, has found that the securities regulator needs 400 more employees to manage its current workload.
A spokesperson for BCG says that the report, which entails a top-to-bottom analysis of the SEC, has yet to be finished and will be delivered to the SEC and members of Congress by March 14, as mandated by Dodd-Frank.
On Thursday, March 10, Rep. Steve Garrett, R-N.J., chairman of the House Financial Service Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises, and Sen. Jack Reed, D-R.I., chairman of the Senate Banking Committee’s Subcommittee on Securities, Insurance, and Investment will both hold early morning hearings on the SEC’s budget. The following week, on March 15, the House Appropriations Committee has scheduled its own hearing to dissect the agency’s budget.
“The next couple weeks are very important for the SEC,” says Stephen Crimmins, a former deputy chief litigator at the SEC who’s now a partner at K&L Gates in Washington.
The SEC’s budget will be a negotiating tool as members of Congress try to hammer out a long-term solution regarding the 2011 federal budget. During this critical time, the SEC remains “in a period of risk” as to whether it will see the budget boost it needs, Crimmins says. “Things [on Capitol Hill] are still fluid” regarding SEC funding, he says, adding that members of Congress are still debating where they stand on a funding increase for the agency.
The BCG findings follow numerous outcries from within the SEC, among members of Congress and industry executives that the securities regulator is in desperate need of more money to do its job. “The SEC is critical to pulling us out of the worst financial crisis” since the Great Depression, Crimmins says.
According to Bloomberg, the BCG report also cites poor communication between the agency and self-regulatory organizations (SRO) the agency oversees, including the Financial Industry Regulatory Authority (FINRA), which regulates broker-dealers. Bloomberg cites the BCG report as suggesting “the SEC could adopt a much deeper and broader oversight program specially dedicated for FINRA” and that it needs “multiple and deep lines of defense” against gaps in FINRA regulation.