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.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
Is Eric Cantor the next Bond villain? As talks over the debt ceiling in Washington continue to sputter, the Huffington Post, the left-leaning website run by Washington insider Arianna Huffington, reports Democrats are accusing Rep. Cantor, R-Va., of a conflict of interest related to negotiations over the country’s debt ceiling, claiming he could profit from the country’s default.
The controversy stems from a June 17 Wall Street Journal article that reported the House majority leader “bought $15,000 in shares of ProShares Trust Ultrashort 20+ Year Treasury ETF (TBT) last December, according to his 2009 financial disclosure statement.”
The Journal notes that the exchange-traded fund “takes a short position in long-dated government bonds. In effect, it is a bet against U.S. government bonds—and perhaps on inflation in the future.”
Cantor spokesman Brad Dayspring told AdvisorOne that Cantor stands to lose much more if the government defaults, in part because of his investments in the Thrift Savings Plan portion of his congressional pension. The value of his investment in the ProShares fund is just 1% that of the value of his investment in the G Fund of government bonds, which would decrease significantly if the government defaults.
"The insinuation is so outrageous that it shows a fundamental lack of understanding about how the markets work, how the U.S. economy works,” Dayspring says. “For the conspiracy theorists—they would have to believe that Eric would want to lose hundreds of thousands of dollars to make a few thousands in return.”
A draft of a resolution circulated by House Democrats and obtained by HuffPo claims that Cantor "stands to profit from U.S. treasury default, which thereby raises the appearance of a conflict of interest," and that he "may be sabotaging [debt ceiling] negotiations for his own personal gain."
"Majority Leader Cantor has compromised the dignity and integrity of the Members of the House by raising the appearance of a conflict of interest in negotiations with the executive branch over raising the debt ceiling," the resolution adds.
But Cantor’s spokesman again denied any such compromise. “Putting aside the lunacy of it all, he [Cantor] would lose hundreds of thousands of dollars if he did what they suggest,” Dayspring added. “Any member of Congress who would seriously identify themselves with this ridiculous resolution reveals a complete inability to understand diversification and basic investing."
ProShares UltraShort 20+ Year Treasury seeks daily investment results, before fees and expenses that correspond to twice (200%) the inverse (opposite) of the daily performance of the Barclays Capital U.S. 20+ Year Treasury Bond Index, according the company’s website.
The fund lost 12.10% year-to-date, with one-year return of -11.98% and a three-year return of -51.04%.