6.26.2009 SEC Commissioner Luis Aguilar spoke in Washington, D.C., before the International Institute for the Regulation and Inspection of Investment Advisers on “The Globalization of Investment Advisers—How Will Regulators Respond?” With respect to foreign advisers, he stated that there are very few barriers applicable to investment advisers wishing to register in the United States—and foreign advisers find that it is relatively simple to register under the Investment Advisers Act of 1940.
He next discussed an SEC-registered adviser’s fiduciary duty to its clients. He stated that the biggest difference between these concepts in the respective countries isn’t so much whether the concept of a fiduciary duty exists, but what types of enforcement mechanisms are in place, and what ability the judiciary has to interpret the law, that determine how effectively the concept protects interests of investors.
Next, he spoke about broker-dealers providing investment advice. As a result of this movement toward asset-based fees by broker-dealers, here in the United States there has been a great deal of discourse about whether broker-dealers who provide investment advice and investment advisers should be held to the same standard and what that standard should be.
He concluded by noting that with the growth in the number of truly global money managers, the SEC is also looking to how best to protect investors when issues arise across borders. As a result, the SEC has entered into a number of arrangements with foreign regulators to coordinate information sharing regarding these firms. For example, the SEC has entered into several bilateral Memoranda of Understanding (MOUs) that cover supervisory cooperation with respect to investment advisers. These include supervisory MOUs entered into with the UK Financial Services Authority (March 2006), the German Bundesanstalt für Finanzdiestleistungsaufsicht (BaFin) (April 2007) and the Australian Securities and Investments Commission (2008), as well as the 1995 MOU with the Hong Kong Securities and Futures Commission.
Click http://www.sec.gov/news/speech/2009/spch062309laa.htm to access Commissioner Aguilar’s full remarks.