Huge amount of homework for the SEC in reform bill

Jul 2, 2010 @ 1:15 pm

The financial reform bill, which now looks likely to pass the Senate, directs the Securities and Exchange Commission to conduct a long list of detailed studies.

Best known is the study the commission will have to do about the differing standards of care given to investors by broker-dealers and investment advisers.

This study was part of the long debate over establishing a fiduciary duty for financial professionals who give personalized investment advice.

Once public comment is taken and the study is completed, the SEC will have the option of then imposing a fiduciary duty.

The SEC will also be studying:

  • The need for enhanced examinations for investment advisers, including the need for an adviser self-regulatory organization.
  • The financial literacy of investors.
  • Mutual fund advertising practices.
  • Whether investors need better access to disciplinary information about their brokers and investments advisers.
  • Whether private rights of action for fraud should extend to transactions outside of the U.S.
  • How to improve the independence of credit rating agencies.
  • Better methods for credit raters to assign grades to structured products.
  • A review of the SEC's organizational structure by an independent consultant.

In addition, the SEC will have to prepare annual reports evaluating the SEC's enforcement, examination and corporate-filing review processes, and separately, its own internal controls and financial reporting.

All these studies and reports would be submitted to Congress.

In addition, a number of other reports and studies will be performed by the Comptroller General and the Government Accountability Office.

The Comptroller General, for example, will be studying the oversight of financial planners.


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