From the August 2014 issue of Investment Advisor • Subscribe!

10 Ways Regulators Can Improve Dodd-Frank

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from 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.
  • 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.

Since its inception in 2012, the Bipartisan Policy Center's financial regulatory reform initiative has proposed 100 recommendations to improve Dodd-Frank. Here are 10 recommendations BPC released in mid-July.

  1. Create a consolidated exam force. Prudent regulators should improve regulation by establishing a pilot program for a common bank examiner pool that provides for a unified examination and reporting process.

  2. Increase FSOC transparency. FSOC should allow market participants to make more informative decisions by releasing further information about its decision-making process, beginning with more detailed minutes similar to those reported by the Federal Open Market Committee.

  3. Set SIFI bail-in rules. The Fed should make financial institutions safer and processes for market participants more predictable by setting long-term debt holding requirements that will better enable large financial institutions to absorb losses.

  4. Converge resolution planning processes. The FDIC and Fed should use existing authority to help move toward a process to wind down too-big-to-fail institutions without cost to taxpayers by converging the living will and single-point-of-entry processes. Section 165 of Dodd-Frank requires all SIFIs to create “living wills” to facilitate “rapid and orderly resolution, in the event of material financial distress or failure.”

  5. Implement Volcker the right way. Agencies should take account of real-world conditions by coordinating implementation of Volcker Rule regulations in a way that is phased in and updated iteratively based on data and metrics.

  6. Improve CFPB Process. The CFPB should provide greater opportunity for input from all stakeholders by pursuing policies through rulemaking rather than through individual orders and guidance.

  7. Clarify orderly liquidation. The FDIC should make the resolution process more predictable for investors, debtors and other stakeholders by issuing a policy statement on the single-point-of-entry strategy, including a statement that the strategy will be the presumptive path for resolving failed institutions.

  8. Assess international impact. The FSOC should strengthen the global financial system to improve coordination among U.S. and international regulators by conducting an assessment of the cross-border impacts of Dodd-Frank's rules and regulations.

  9. Coordinate capital markets regulation. The CFTC and SEC, two agencies with at times overlapping jurisdiction, should improve coordination by holding joint board meetings.

  10. Improve CFPB data collection and storage. The CFPB should enhance the quality of its data security for institutions and consumers; improve coordination with other regulators on data requests.

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