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Schapiro outlines reform agenda

By Staff Writer

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In a speech Monday, Securities and Exchange Commission Chairman Mary Schapiro highlighted the SEC’s commitment to reestablish investor trust through several policy proposals.

Addressing the Society of American Business Editors and Writers at its annual conference in Denver, Schapiro outlined several policy measures on the SEC’s agenda.

One such proposal will require enhancements to the rules governing the credit quality, maturity and liquidity provisions that currently apply to money market funds.

“In addition, we are reviewing whether more fundamental changes are needed to protect investors from runs on the funds, including floating rate net asset values,” Schapiro said.

Furthermore, in response to what Schapiro called a “rash” of Ponzi schemes, the SEC will be considering two proposals as part of a package of initiatives designed to better assure the safekeeping of investor assets:

“In short order, the commission will consider a proposal to strengthen the controls applicable to investment advisers with custody of client funds and securities. I anticipate that this proposal will include a consideration of ‘surprise’ examinations by a certified public accountant, and a requirement that investment advisers undergo third-party compliance audits,” Schapiro explained.

Schapiro noted as part of this package, a commission requirement is being drafted wherein a senior officer from broker/dealers and investment advisors with custody certify controls are in place to protect investor assets.

Schapiro highlighted one other proposal in which the commission will remove barriers that make it “costly and difficult” for a company’s owner to nominate directors.

“I believe such proxy access is in no small measure about making boards more accountable for the risks undertaken by the companies they manage. We want to ensure that any procedural requirements for access are rational, and not a means to thwart effective investor participation, yet we want to act expeditiously to resolve these longstanding issues.

“In addition to these we are looking at expanding the pay-to-play rules, better disclosure regarding municipal securities; regulating hedge funds and seeking whistleblower authority,” Schapiro continued. “These are of course just a few of the many proposals we are considering in the interest of investors.”

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