Securities and Exchange Commission ("SEC") Chairman Mary Schapiro discussed in a speech on Monday, April 27 new efforts taken by the SEC with respect to enforcement and policy reform. Schapiro emphasized that the SEC must push an agenda of reform and restore investor confidence in financial markets. She has made enforcement a top priority since becoming chairman, having hired former federal prosecutor Robert Khuzami to lead the SEC's much-maligned enforcement division. As part of her efforts to improve enforcement, Schapiro plans to speed up investigations, streamline the procedures necessary to launch and to settle investigations and improve the SEC's review of tips and complaints. The SEC currently has underway about 150 hedge fund investigations, at least some of which are focused on possible Ponzi schemes.
Schapiro reiterated the SEC's focus on instituting enhanced regulation of investment advisers with custody of client assets, an area of weakness exposed by the Madoff scandal. Schapiro anticipates that the SEC will consider a proposal to strengthen the controls applicable to investment advisers with custody of client assets by subjecting these investment advisers to "surprise" examinations from certified public accounts and external compliance audits. Also, she has requested that the SEC staff draft a requirement that a senior officer of each investment adviser certify that controls are in place to protect investor assets under control. Schapiro noted that the two proposals mentioned in her speech would be considered as part of the SEC's package of initiatives designed to better assure the safekeeping of investor assets.
Schapiro Speech: available here (HTML)
Story: SEC has about 150 Hedge Fund Probes, Reuters (April 27, 2009)