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April 27, 2012 at 08:32 AM
SEC Commissioner Luis Aguilar told members of the Investment Advisers Association on Thursday that he remained unsupportive of a self-regulatory organization and continued to believe in the “highest” definition of a fiduciary standard.
“The issue is one of resources,” said Aguilar (left), who has been one of five members on the board of the SEC since 2008. “It’s really not the best choice to go the path of an SRO,” he explained in his remarks, which he made as an individual and not on behalf of the SEC.
In addition, there are issues of harmonization that make the SRO formation very complex, he described in a fireside chat during the IAA’s annual conference in San Francisco. Aguilar referred the roughly 200 members of the audience, as well as moderator and IAA Executive Director David Tittsworth, to his speech before them in May 2009.
Three years ago, the commissioner explained to the group, “I do not believe that the answer is to create another SRO — particularly when it would be one without any experience in dealing with the investment advisory industry and the Advisers Act regulatory tradition … Now is not the time to fragment even more, but to consolidate and employ smart regulation.”
Aguilar, who was appointed by President George W. Bush, also said Thursday that the highest fiduciary standard was the best one — “putting a client’s interests above his or her own, and I believe the industry discussions about this have gotten sidetracked.”
Though he acknowledged that he’d opposed the Sarbanes-Oxley Act of 2002 because of the expenses it imposed on companies valued at more than $75 million, the commissioner said he’s now more accepting of the legislation.
“The costs over the past few years have come down and normalized,” Aguilar stated. And, he added, he’s seen some issues come up with companies not subject to these rules.
As for the recently passed JOBS Act of 2012 design to support the growth on younger, smaller firms, the commissioner said the legislation was a “hodgepodge,” and the disclosure and other exemptions in it have raised concern among some experts.
“I used to be more cowboy-ish,” shared Aguilar. “Now I see the fleecing every week of hardworking men and women … I hope the JOBS act won’t lead to more of this. And I do fear that fraud will be easier to affect and harder to protect.”
When asked by Tittsworth (right) about his experience during the financial crisis, the commissioner shared that he considers himself a bit of a “workaholic,” and – before taking the job – had been concerned that he would have to take up a hobby to keep himself busy in his time away from the office. 