More On Legal & Compliancefrom The Advisor's Professional Library
- Scope of the Fiduciary Duty Owed by Investment Advisors A fiduciary obligation goes beyond the suitability standard typically owed by registered representatives of broker-dealer firms to clients. The relationship is built on the premise that the advisor will always do the right thing for the person or entity receiving advice.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
John Walsh, associate director and chief counsel in the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE), plans to retire from the agency at the end of September.
Walsh, who’s been at the SEC for 23 years, will be joining the law firm Sutherland Asbill & Brennan in the firm’s Financial Services Group and Securities Enforcement and Litigation Team in Washington, D.C., effective Oct. 1.
Walsh not only played an instrumental role in creating OCIE, designing and implementing the SEC’s securities compliance examination practices, first as a senior advisor for compliance policy and then as associate director-chief counsel, but he also lived through the Bernie Madoff years at the agency.
OCIE administers examinations of the nation’s registered entities, including broker-dealers, investment managers, funds and self-regulatory organizations.
During a congressional hearing in September 2009, in which SEC officials were taken to task after the securities watchdog’s inspector general released a scathing report on the SEC’s failure to detect the Madoff Ponzi scheme, Walsh told lawmakers that while he sincerely regretted the SEC’s failure to catch Madoff, the agency was working hard to revamp its operations.
Walsh said that there were two primary causes for the SEC’s failure in catching Madoff: the examiners failed to obtain third-party verification of information that Madoff was giving them, particularly as to his trading volume. “We now require third-party verification,” Walsh said. The second cause was that the exams were too focused on certain technical issues.