News, Vision & Voice for the Advisory Community!
Audits on hiatus; fraudsters get more of a lead; most of the SEC on skeleton staff
April 8, 2011 — 10:31 PM UTC by Elizabeth MacBride
Advisory-business lawyers say that if the government shuts down at midnight Friday they expect that advisors in the midst of exams will get a hiatus, and that the rest of business at the SEC will slow to a crawl.
“I anticipate that (examinations) will be postponed and continued once government re-opens,” said Brian Hamburger, the founder of the Hamburger Law firm and MarketCounsel. “Perhaps the impending shutdown will allow the SEC staff to take some time to re-prioritize their agenda and return with a renewed motivation to get things back on track. Unfortunately, I suspect that the shutdown will give the staff additional reason for their inaction and lack of productivity.”
Bad to worse
Peter Mafteiu, principal of Sound Compliance Services Gig Harbor, Wash, noted, too, that the SEC is always behind when it comes to ferreting out fraud in financial services. “A government shutdown just make it worse.”
The SEC has put some guidance on its web site as to what to expect if a shutdown happens at midnight Friday – a strong possibility as the minutes tick away with no budget accord amid a poisonous political atmosphere in Washington, D.C.
The government has been operating on various interim funding measures for weeks. The last time the government shut down was 15 years ago. It’s expected, based on what happened then, that workers will eventually be paid for the time that they were laid off – but during the shutdown period, many government services will cease and others be cut back.
The SEC has posted on its site, www.sec.gov, in the upper right corner, information on which services will be staffed. Generally, the online resources, like EDGAR and the IARD, will function, though registrations will not continue. The enforcement division and the division of compliance and inspections will both be reduced to a skeleton staff as the SEC’s staff of nearly 10,000 will be reduced to only about 330 deemed essential.
The SEC’s contingency plan calls for all SEC staff on official travel to return to their offices (and go home), and cancels all pending travel.
That provision would seem to put an end to any audits under way.
An SEC spokeswoman refused to comment further on what would happen to advisors in the midst of exams, or to say how many might be affected.
Advisory industry observers share what seems to be the likely sentiment of many Americans: a sense of irritation-bordering-on-contempt for the inability of politicians to reach a sensible agreement.
“A government shut down just makes it worse.”
Mentioned in this article:
Regulatory Attorney, Consulting Firm, Specialized Breakaway Service, Mergers and Acquisition Firm, Compliance Expert, RIA Set-up Firm, Outsourcer, Regulatory Consultant, Business Broker, Tech: Other, Conference, Data and ratings for RIAs
Top Executive: Brian Hamburger
Sound Compliance Services
Consulting Firm, Specialized Breakaway Service, Compliance Expert, RIA Set-up Firm, Regulatory Consultant
Top Executive: Peter Mafteiu
Share your thoughts and opinions with the author or other readers.