More On Legal & Compliancefrom The Advisor's Professional Library
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
Daniel Gallagher, the newest commissioner at the Securities and Exchange Commission, revived the debate over whether a self-regulatory organization is needed to oversee advisors when he questioned in a recent speech whether the Financial Industry Regulatory Authority should be vying for the SRO spot.
“Is FINRA becoming a ‘deputy SEC’?” Gallagher, a Republican, asked during a recent speech at a Securities Industry and Financial Markets Association conference. “With all of the issues facing the broker-dealer industry it was created to oversee, should FINRA be seeking to branch out into entirely new fields of responsibility, such as regulating investment advisors?” he asked. “Is ‘mission creep’ affecting FINRA’s ability to perform its core duties?”
At a recent event held by the Institute for the Fiduciary Standard, David Tittsworth, executive director of the Investment Adviser Association in Washington, D.C., said the debate over whether there should be an SRO for advisors–and if FINRA should be that SRO–is the “biggest issue” advisors will confront next year. While the bill from House Financial Services Committee Chairman Spencer Bachus, R-Ala., calling for an SRO is “dead” this year, the SRO issue will be revived next year, with new players at the SEC, in Congress and possibly in the White House, he said.
Hester Peirce, senior research fellow at the Mercatus Center at George Mason University, agreed, stating that “interest in [the SRO] idea will continue because the SEC is clearly overwhelmed and the complexity of advisors that it is now overseeing [with oversight of hedge fund advisors] will pose challenges” to the agency.