More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
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.