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Posts Tagged ‘SEC OCIE hot line’

SEC Probe of Money Managers Should Also Include FINRA

Posted by Larry Doyle on September 13th, 2010 10:11 AM |

In reading a Bloomberg commentary this morning, I could not help but think that policy implementations the SEC would like to impose upon money managers also need to be imposed in retrospect upon its regulatory kin at the Financial Industry Regulatory Authority (FINRA).  Let’s navigate. Bloomberg writes, SEC Probes Money Managers for Conflicts in Choosing Hedge Funds:

The U.S. Securities and Exchange Commission, stepping up its oversight of investment advisers, is examining whether asset managers that channel money to hedge funds are acting in investors’ best interest.

The agency asked money managers for information about their “due diligence” in selecting alternative investments such as hedge funds, private equity and venture-capital funds, according to a letter from the SEC’s Office of Compliance Inspections and Examinations obtained by Bloomberg News.

Longtime readers of Sense on Cents are well aware that in my reading and review of FINRA’s 2007 Annual Report (embedded in this link), I asked for information and disclosures regarding FINRA’s own internal investment portfolio. (more…)

SEC Advisor Highlights Wall Street-Washington Incest

Posted by Larry Doyle on September 22nd, 2009 12:19 PM |

I have always held Bloomberg reporter Jonathan Weil in very high regard. I now regularly look for commentary by Bloomberg’s Susan Antilla, as well. Why? Ms. Antilla pursues truth and transparency in her writing and pulls no punches in the process.

This morning, Ms. Antilla calls for the SEC’s enforcement division to be rolled into the Department of Justice. She writes What the SEC Might Look Like If It Did Its Job:

Some things get so hopelessly broken they can’t be fixed. I’ve been wondering if the U.S. Securities and Exchange Commission is one of them.

Make no mistake, the ineffectiveness of the SEC is not merely reflected in its dismal performance on the Madoff fiasco. For a long time, the money from Wall Street has purchased cover in the halls of Washington. That cover is primarily in Congress with the resulting pressure applied on those within the SEC. Antilla engaged Barbara Roper for further details and highlights:

Considering the blinding evidence of dysfunction, it occurs to me that enough is enough. Why not just shut the place down? I asked Barbara Roper, director of investor protection at Consumer Federation of America and a member of the SEC’s Investor Advisory Committee, formed in June.

Roper says the Kotz report “calls into question the agency’s ability to fulfill its basic functions,” which sounds to me like a pretty good reason to put it out of its misery. Roper argues, though, that replacing it with something new would only result in more of the same.

“There is a reason it is the way it is,” she says, “and it’s because of the deference that Congress and various administrations have to the financial services industry.” Thus, we’d just get another impotent agency if we started from scratch, she says. (LD’s highlight)

Ms. Roper’s use of the term “deference” is translated in financial layman’s terms as “incest.”

What does one do in any incestuous relationship? Keep the perpetrators as far away from the victims as possible. How would that be accomplished? Move the enforcement of financial rules and regulations outside of the purview of the SEC. Antilla nails it and writes:

If all we can do is try to overhaul the agency we’ve got, lawmakers could start by considering making the SEC spin off its enforcement division, says Peter Henning, professor of law at Wayne State University Law School in Detroit.

Some financial regulators — rulemakers, for instance — need to interact with the brokerage industry. But Henning says enforcement needs independence and would be better off as part of the U.S. Department of Justice.

That way, after people in the division of market regulation “notify the pit bulls” in enforcement about suspicious activity, the SEC has no further role in the investigation and can’t be pressured by the target firm to go easy.

Antilla further highlights the disparate treatment accorded the Wall Street power brokers relative to the ordinary American investor. Antilla writes:

And the industry clearly has clout. In 2006, the SEC’s Office of Compliance Inspections and Examinations actually set up a hotline for firms that were feeling put out about being investigated. Amazingly, the hotline offers regulated firms “senior-level attorneys” to help resolve complaints.

The investing public, in the meantime, is relegated to filling out an online form when it has a complaint. An improved SEC might consider giving investors access to the top people and letting the brokerage firms sit there and fume if they don’t like the way they’re being treated.

Susan Antilla is to be commended for exposing the Wall Street-Washington incest at its core. I salute her. Where are the rest of her media colleagues? The interests of the American public will only be prioritized when our elected officials in Washington crawl out of the pockets of those on Wall Street.

LD

Related Sense on Cents Commentary:
   Future Financial Regulation: Not a Question of Sufficiency but of Transparency and Integrity (May 18, 2009)






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