Due Diligence

To Fix The SEC, Give Examiners Real Jobs, Says Bob Veres

SEC examiners should spend less time examining procedural problems, and more time trying to detect fraud, writes Bob Veres in a column today in Advisor Perspectives. He argues that the SEC is not lacking the resources to do its job effectively. It's just allocating those resources poorly.

If current Wall Street reform legislation passes, the SEC will be left with 6,000 advisory firms to check on, he says, and 425 field examiners, which works out to one examiner for every 14 advisory firms. Veres actually suggests reducing the number of general RIA field examiners to 150 at most, so that each examiner is responsible for 50 or more firms and can visit them once or twice annually for a day. Some of the remaining examiners/staff could be charged with detailed examinations of certain kinds of firms, like firms that engage in high-risk activities, or those that "embrace" conflicts of interest, like trading for their own accounts. Still others could be assigned to different kinds of commission-based products.

"Every advisory firm provides endless metrics which are almost totally beside the point of consumer protection, but offer ways to measure the thoroughness of one examiner compared with another," he writes. "The examiners pay a lot of attention to who has received your ADV this year, how good you are documenting your daily activities, the wording of your privacy forms – spending days in every advisor's office when it would take (at most) hours to determine if there are real and present dangers to the investing public."

Read his column here.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.