Compliance April 27, 2012

Bipartisan Bill Seeks Expanded Oversight of Advisers

The House Financial Services Committee  introduced legislation that would authorize one or more self-regulatory organizations (SROs) for advisers.

 

 

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Chairman Spencer Bachus (R-Ala.) and Rep. Carolyn McCarthy (D-N.Y.) are co-authors of the Investment Adviser Oversight Act of 2012.

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Investment advisers and broker/dealers often provide indistinguishable services to retail customers, yet only 8% of investment advisers were examined by the Securities and Exchange Commission (SEC) in 2011 compared with 58% of broker/dealers, the Committee noted.

“The average SEC-registered investment adviser can expect to be examined less than once every 11 years. That lack of oversight, particularly in the aftermath of the Madoff scandal, is unacceptable,” Bachus said. “Bad actors will naturally flow to the place where they are least likely to be examined.  Therefore, it is essential that we augment and supplement the SEC’s oversight to dramatically increase the examination rate for investment advisers with retail customers.”

The Financial Industry Regulatory Authority (FINRA) is in favor of the bill and said in a statement, “…. the current level of IA exams is unacceptable, and SROs can help fill this untenable gap in the protection of investment advisory clients.”

But advisers may not be in favor of FINRA as a regulator. “A recent investment adviser survey found that 80% of advisers would prefer SEC oversight to handing it over to FINRA,”  said Karen Nystrom, NAPFA’s director of public policy and advocacy at the National Association of Personal Financial Advisors.

The legislation would amend the Investment Advisers Act of 1940 to provide for the creation of National Investment Adviser Associations (NIAAs), registered with and overseen by the SEC. Advisers who conduct business with retail customers would have to become members of a registered NIAA. The SEC would have the authority to approve the registration of any NIAA.

 

The Markets April 27, 2012

Ford Offers Lump Sums to De-Risk Pension

 

Ford Motor Company announced it will offer approximately 90,000 eligible U.S. salaried retirees and former employees the option to receive a voluntary lump-sum pension payment. 

 

 

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In its first-quarter earnings statement, Ford said the voluntary payout is part of the company’s long-term strategy to de-risk its global funded pension plans. If an individual elects to receive the lump-sum payment, the company’s pension obligation to the individual will be settled.

Payouts will start later this year and will be funded from existing pension plan assets. This is in addition to the lump-sum pension payout option available to U.S. salaried future retirees as of July 1, 2012.

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“Continuing to improve the underlying strength of our balance sheet remains a fundamental part of financing the One Ford plan,” said Bob Shanks, Ford executive vice president and chief financial officer. “Providing the option of a lump-sum payment to current salaried U.S. retirees and former employees will reduce our pension obligations and balance sheet volatility.”

 

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