SEC posts timeline for investor-protection reform work

Introduction

The Securities and Exchange Commission has helpfully posted a timeline of its planned work to carry out new investor-protection regulations ordered by the Dodd-Frank reform law. The agency’s lengthy checklist is here, and it gives both consumers and industry lobbyists a general idea of what will be happening.

Worthy of particular note is the SEC’s plan to create an Investor Advocate office in the final months of this year and to appoint an ombudsman within the office in the first quarter of 2011. Both the advocate and the ombudsman will submit a report to Congress on their priorities by July 1, 2011.

The agency also promises that it will issue by July 1 rules “as may be appropriate” based on its study of whether consumers understand the different fiduciary obligations of stockbrokers, investment advisers, and dealers. The SEC probably doesn’t need to invest too much of its own time in that study, judging by a survey we reported on last week by several pro-consumer groups. The poll found the overwhelming majority of 1,319 respondents didn’t understand which investment professionals are legally required to put a client’s financial interests ahead of their own.

In the fourth quarter, the SEC timeline says the agency will:

• Create an Investor Advocate Office
• Create a Credit Ratings Office
• Create a Municipal Securities Office
• Create an “Office of Women and Minority Inclusion”
• Create a Whistleblower Office and propose incentives for whistleblowers to report suspected fraud within their companies
• Propose rules for investment advisers related to the assessment of systemic financial risk
• Propose rules barring certain felons from offering securities for sale
• Propose rules for the real-time reporting of security-based swaps and rules for clearing agencies
• Propose rules for the disclosure of certain kinds of executive pay arrangements
• Propose rules requiring securitizers to keep some of the risk of their products (a.k.a. skin in the game)
• Propose rules for the disclosure of energy companies’ payments to foreign governments for drilling or production rights
• Propose rules for shareholder voting on executive pay and golden parachutes
• Award contract to an independent consultant to study how the SEC is organized.

In the first quarter of 2011, the SEC timeline includes:

• Report to Congress its findings from a study of whether consumers understand the different obligations of stockbrokers, investment advisers and dealers
• Complete a study on how to improve investor access to information about advisers and broker-dealers
• Appoint an ombudsman within the Office of Investor Advocate
• Propose rules for major credit ratings firms’ internal controls and transparency of their ratings performance
• Adopt conflict-of-interest rules for clearing agencies of swaps
• Adopt final rules for whistleblower incentives
• Report to Congress an independent consultant’s findings on how the SEC is organized

Consumers should also take note of a separate website created by the SEC a few weeks ago for the public to offer suggestions and comments on various agency issues mandated by the reform law. So far, there’s no deadline for submitting comments. And if you want to see what lobbyists and others have already told the agency, the same site has a link to comments that have already been received by the SEC.