At IAA, Director of SEC’s OCIE Says We're 'Picking Our Spots' Due to Budget Uncertainty

Rominger herself spoke briefly at the conference as well, noting that it was her first speech to any group as a regulator, rather than as a portfolio manager, not counting her testimony before Congress on her 16th day in her new job at the SEC.

She preceded di Florio to the lunchtime lectern. IAA Executive Director David Tittsworth (left), himself a lawyer, got a laugh from the audience of compliance professionals in his introduction of Rominger when he said, “I think it’s fantastic that she’s not an attorney. She’s a real portfolio manager!” 

Rominger told the group that she “understands the difficulties you face. Now more than ever it’s important not only to have good compliance,” but to have the compliance department of an advisory firm “build a good corporate culture of ethics.” She said the SEC has “the same goal as you do: to further the fundamental fiduciary relationship you have with clients.”

In di Florio’s speech, he addressed OCIE’s policy on its examiners, saying  that to make RIA exams “more efficient and effective,”  OCIE is working on “significant improvement to training examiners” so they have a “baseline competency” of expertise that is more consistent across the Commission. Moreover, he said that the SEC is taking its own medicine, having named its own chief compliance officer.

“It’s insufficient to examine only 9% of advisors every year,” he admitted, pointing to FINRA’s record of examining more than 50% of its member firms each year. That goes back to the funding issue for the SEC, which he noted could be solved in one of several ways, either through a user fee approach to exams, or through establishment of an SRO for advisors like FINRA, though he noted that an SRO would “have its own costs associated with it.”

Regarding Dodd-Frank implementation when it comes to the transfer of some 4,000 RIAs to state oversight, he reported that the Commission is holding biweekly conference calls with NASAA, the state securities regulators association, to ease that transition. He also noted that while the SEC is losing oversight of those RIAs with less than $100 million in AUM, the Commission is “getting a lot of new registrants” from managers of private investment vehicles, notably hedge fund and private equity managers.