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.
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
Mary Schapiro, chairman of the Securities and Exchange Commission (SEC), told a Senate Appropriations Subcommittee on Wednesday that the agency would use the recent $74 million funding boost that it received under the FY2011 continuing resolution to fill vacancies “to meet key strategic needs, perform tasks required by the Dodd-Frank Act, and continue to improve agency operations.”
The funding boost, Schapiro told the Subcommittee on Financial Services and General Government, which is chaired by Sen. Dick Durbin, D-Ill., will allow the SEC to “address important staffing needs,” particularly within the Division of Trading and Markets, Division of Enforcement, and Office of Compliance Inspections and Examinations (OCIE). Schapiro said the agency will use the funds to revitalize “core programs such as enforcement and inspections activities, as well as addressing new responsibilities such as enhancing oversight of credit rating agencies and adding staff with expertise in critical areas such as derivatives.”
In the last five months of FY 2011, Schapiro said that the SEC will also use some of the additional funds to modernize and enhance the agency’s outdated technology. “We will be making key investments in general IT infrastructure modernization, including refreshing old technology and system hardware and software,” Schapiro said.
The SEC’s $1.41 billion funding request for FY 2012, an increase of $222 million over the new FY 2011 appropriation level, if enacted, would allow the SEC to add about 780 positions by the end of FY 2012, Schapiro said. Forty percent (or 312 positions) would be used to “strengthen and support core SEC operations,” while 60% (or 468 positions) would be used to implement the Dodd-Frank Act.
As to derivatives oversight, the House Agriculture Committee approved on Wednesday H.R. 1573, legislation that would extend the July 21 effective implementation date for the derivatives-related section of the Dodd-Frank Act by 18 months.
Ken Bentsen, executive VP of public policy and advocacy for the Securities Industry Financial Markets Association (SIFMA), said in a statement after passage of the bill that SIFMA believes “that the current July 21, 2011, deadline for the derivatives section of Dodd-Frank rulemaking does not provide adequate time for regulators to consider the critical issues related to this new regulatory system for over the counter derivatives markets.”
H.R. 1573, he said, “would provide additional time for regulators to draft rules, conduct additional cost-benefit analysis and consider the cumulative impacts of these rules on the market and how they would affect businesses and consumers.”