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Investment Advisor – Taking further steps toward financial services regulatory reform, the House Financial Services Committee held a hearing October 6 to discuss three legislative discussion drafts put forth by Rep. Paul Kanjorski (D-Pennsylvania) on investor protection, registration of advisors to private funds, and creating a national office of insurance.
Kanjorski, ranking member on the Committee and chairman of the committee’s subcommittee on capital markets, said during his opening statement that his three bills “work to reverse” the trend of excessive deregulation that has existed and caused the financial crisis “by closing loopholes and fixing problems in our broken regulatory structure, especially in our securities and insurance markets.” As Congress works through these drafts and other pieces of financial services reform, Kanjorski said, “We should listen to common-sense ideas and seek out consensus where it exists. I am therefore open to making changes to these draft bills.” However, he said, “We must ensure that special interests do not weaken particular solutions to the point of becoming toothless.”
The first draft bill, the Investor Protection Act, would expand the SEC’s powers and require broker/dealers to adhere to the same fiduciary standard of care as advisors; would increase the SEC’s ability to reward whistleblowers whose tips lead to successful enforcement actions; would allow the Commission to adopt rules to bar the inclusion of mandatory arbitration clauses in securities contracts; would expand on the proposals put forth by the Administration by closing loopholes identified by the Madoff and Stanford Financial frauds; and would double the Commission’s funding over the next five years.
The Independent – Grimly aware that a European Commission crackdown on regulation of hedge funds and private equity spells disaster for the EU’s predominantly London-based industry, Treasury ministers have been desperately lobbying their counterparts in Brussels for months, but their pleas have fallen on deaf ears.
Now, however, the Americans have woken up to the fact that many of their hedge funds would find it impossible to do business in the EU under proposals for regulatory reform. In recent weeks, US Treasury officials have thus been touring the EU, letting their displeasure be known.
It appears that the Americans’ involvement is already paying dividends. Sweden, which holds the EU presidency, was quietly letting it be known yesterday that it will ensure some sort of compromise is brokered. The Alternative Investment Management Association, which represents the sector’s interests, now thinks disaster may be averted.
HedgeCo.net (West Palm Beach) – ”One of the focal points of the Obama Administration’s Financial System Regulatory Reform Plan is to seek the passage of legislation that would require hedge fund managers (as well as other private fund managers) to become registered as investment advisors with the SEC and be in compliance with the applicable requirements under the Investment Advisers Act,” HedgeOp Compliance said, announcing the launch of a new service to help managers deal with current registration issues.
There are presently three bills pending in Congress and a recent proposal from the Treasury that would achieve that goal if passed. ”We are seeing a lot of activity as hedge fund managers look to get ahead of the curve on these requirements and starting the process sooner rather than later,” Bill Mulligan, the CEO of HedgeOp said, ”In addition to allowing for key thoughtful planning, addressing the registration issue early will provide a great deal of comfort to investors and prospective investors.”
The newly launched ADVassist is designed to provide focused registration and compliance guidance, the hedge fund consulting firm said, to not only complete the registration process, but also to create a foundation for development of a compliance culture and infrastructure.
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Barron – President Obama took credit Wednesday for the recovery in the financial markets while at the same time decrying Wall Street’s profits and the big bonuses that will be paid out as a result.
In his prime-time news conference, Obama said that if shaming those on Wall Street who take home multi-billion-dollar bonuses doesn’t work, he vowed to make sure shareholders of those companies were made aware of the compensation being doled out.
In the absence of "remorse" of Wall Streeters for raking in big paychecks once again, the president said financial regulatory reform would be necessary to prevent banks from taking risks that he said caused the financial crisis necessitating government bailouts.
CNN Money – They are finally getting more serious on regulation. But success will hinge on delivery, not just detail.
The G20 summit in London will adopt a more detailed approach to overhauling the world’s financial rules in a bid to avert a rerun of the credit crunch that has floored economies.
Last November the G20 couched regulatory reform in general terms and Thursday’s summit will inject some much-needed detail in a bid to quell criticism from Germany and France.
Forbes – EU leaders meeting in Brussels on Thursday and Friday will discuss action on the financial crisis, with concern expressed that some eastern European countries may need more help.
Earlier this month G20 finance ministers laid out a broad framework for regulatory reform and repairing the financial system at meetings this weekend.
