09 July 2010

Schapiro outlines SEC implementation work of Wall Street reforms

During the next 18 months much of our focus could be implementing the important legislation pending before the Senate, SEC chair Mary Shapiro said. This includes all areas of financial services including OTC derivates, capital requirements, mandatory clearing, hedge funds,  reporting requirements, and investors protection.

First—to highlight just a few—passage of the legislation would bring essential oversight to the over-the-counter derivatives market. Working with the CFTC, we would be writing rules that address, among other issues, capital and margin requirements; mandatory clearing; the operation of execution facilities and data repositories; and reporting and recordkeeping obligations.

Second, the bill calls on the SEC to study the effectiveness of existing standards of care for broker-dealers and investment advisers. We would be seeking public input and identifying legal and regulatory gaps, shortcomings or overlaps in these standards. The legislation also gives the SEC authority to promulgate rules that would impose a harmonized fiduciary standard on broker-dealers and investment advisers who provide personalized investment advice to retail or other customers. I have long advocated such a uniform fiduciary standard and I am pleased the legislation would provide us with the rulemaking authority necessary to implement it.

Third, the legislation would require many advisers to hedge funds and other private funds to register with the SEC. We would be adopting rules governing recordkeeping and reporting, and following these up with a newly-designed examination program.

Fourth, the legislation contains many provisions that would strengthen the ability of our enforcement program to protect investors, including the authority to issue subpoenas on a nationwide basis in civil actions and clarifying an important component of our "aiding and abetting" authority.

Finally, among other things, the bill would require us to adopt many rules enhancing corporate disclosures, particularly with respect to executive compensation. These are areas that we recognize are quite complex, and we expect to be well-served by public comments, so I hope you will be generous in offering your insights.

Full speech

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