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Book part
Publication date: 15 August 2014

John E. McEnroe and Mark Sullivan

The Dodd–Frank Wall Street Reform and Consumer Protection Act calls for substantially increased government regulation. Whether those regulations are, in some sense, appropriate is…

Abstract

The Dodd–Frank Wall Street Reform and Consumer Protection Act calls for substantially increased government regulation. Whether those regulations are, in some sense, appropriate is a function of whether the benefits of the increased regulation exceed the costs. Those costs and benefits, however, are probably impossible to measure, at least at this early stage of the implementation of the Dodd–Frank reforms. On the other hand, financial professionals who regularly deal with governmental regulations probably have a good sense of the costs and benefits based on their own experience with other similar regulations. This chapter reports the result of a survey of high-level auditors and CFOs regarding their perceptions of the costs and benefits of the main parts of the financial regulatory reform incorporated into the Dodd–Frank legislation. It concludes that there is support among these individuals for some aspects of Dodd–Frank, but no consensus.

Details

Managing Reality: Accountability and the Miasma of Private and Public Domains
Type: Book
ISBN: 978-1-78052-618-8

Keywords

Article
Publication date: 1 March 2013

Craig L. Johnson

In response to the financial crisis that began in 2007, United States President Barack Obama signed H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, into…

Abstract

In response to the financial crisis that began in 2007, United States President Barack Obama signed H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act, into law on July 21, 2010. “Dodd-Frank” is intended to correct certain problems in financial markets by federally regulating the activities of independent municipal financial advisors and comprehensively expanding regulatory oversight over credit rating agencies. This article reviews the legislation and its financial management rationale, and discusses its actual and potential impact on the future operations of the municipal securities market and its participants.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 25 no. 2
Type: Research Article
ISSN: 1096-3367

Book part
Publication date: 17 October 2014

Moin A. Yahya

Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules…

Abstract

Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules created by administrative agencies such as the Securities and Exchange Commission (SEC). The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (Dodd-Frank was passed) with an eye to preventing future financial crises. Four years later, many details of Dodd-Frank have yet to be finalized as the SEC is still in the process of developing the regulations that the legislation required them to create. Even once the regulations are finalized by the SEC, the regulations will be challenged by various parties in the courts. The regulations will be either upheld or rejected. Those that are upheld will then face numerous challenges when applied in specific cases, while those rejected will have to be redone all over again. The process of developing these regulations is cumbersome and attracts many of the special interests that were present in the legislative phase of Dodd-Frank and who will also be present in the litigation phases of testing Dodd-Frank in the courts. This paper focuses on the requirement that investment advisors and broker-dealers be deemed as owing fiduciary duties to their clients as a case study for the entangled political economy theory. The paper shows how the development of a simple rule such as whether these fiduciary duties should be owed or not requires years of back and forth between the legislative, executive, administrative, and judicial branches.

Article
Publication date: 2 May 2017

Ernesto Lanza

To describe the status of municipal advisor rulemaking by the US Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB), and regulatory…

Abstract

Purpose

To describe the status of municipal advisor rulemaking by the US Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB), and regulatory compliance approaches, under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

Design/methodology/approach

Examines the posture of the SEC, MSRB and Financial Industry Regulatory Authority (FINRA) upon completion of the MSRB’s core regulatory framework for municipal advisors. Explores threshold issues in determining municipal advisor status, approaches for preparing for and responding to initial regulatory compliance examinations by the SEC and FINRA, and key considerations in reviewing municipal advisor policies, procedures and business practices in light of the evolving regulatory and marketplace landscape.

Findings

SEC and FINRA compliance examiner feedback points to the expectation that municipal advisor policies, procedures, processes and records must be fully consistent with the firm’s business activities and must address each material aspect of all applicable MSRB and SEC rules, as well as the fiduciary duty of municipal advisors to their municipal entity clients under the Securities Exchange Act of 1934.

Originality/value

Practical guidance from experienced securities and public finance attorney that provides a consolidated outline of key municipal advisor regulatory compliance obligations under the Dodd-Frank Act.

Article
Publication date: 23 November 2010

David Bayless and David L. Kornblau

The purpose of the paper is to summarize key provisions in the Dodd‐Frank Wall Street Reform and Consumer Protection Act Affecting SEC and CFTC Enforcement.

140

Abstract

Purpose

The purpose of the paper is to summarize key provisions in the Dodd‐Frank Wall Street Reform and Consumer Protection Act Affecting SEC and CFTC Enforcement.

Design/methodology/approach

The paper summarizes provisions on new SEC causes of action, including greater power to bring aiding‐and‐abetting claims and authorization to bring cases based on “control person” liability; other new SEC powers, including broader monetary penalty authority in administrative proceedings, a collateral bar that bars a person from any part of the securities business, codification of the SEC's extraterritorial enforcement jurisdiction, and expansion of nationwide service of process to federal court cases; monetary incentives and protections for whistleblowers; increased SEC funding; and CFTC enforcement powers, including a fraud liability provision, expanded liability for manipulation or providing false or misleading information, prohibition of various practices, authority to establish business conduct requirements, nationwide subpoena power, and the ability to seek various sanctions.

Findings

Dodd‐Frank has ramped up the enforcement mandates of the SEC and the CFTC more than at any time since the agencies were created. Their jurisdictional reach is broader, the causes of action they can bring have increased, and the remedies have expanded.

Practical implications

Public companies, regulated entities, and hedge funds, as well as their officers, directors, and employees, should brace themselves and prepare for a significant increase in enforcement activity by both the SEC and the CFTC.

Originality/value

The paper provides expert guidance from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 11 no. 4
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 14 June 2011

James Weidner, Christopher Lane and Sean Peterson

The purpose of this paper is to assess the effects of several lower court decisions, the enactment of the Dodd‐Frank Wall Street Reform & Consumer Protection Act of July 2010, and

103

Abstract

Purpose

The purpose of this paper is to assess the effects of several lower court decisions, the enactment of the Dodd‐Frank Wall Street Reform & Consumer Protection Act of July 2010, and subsequent Securities and Exchange Commission statements on the extraterritorial application of Section 10 (b) of the Securities and Exchange Act of 1934, following the June 2010 US Supreme Court decision in Morrison v. National Australia Bank Ltd.

Design/methodology/approach

The paper discusses the Morrison decision, three lower court decisions following Morrison, Section 929P(b) of the Dodd‐Frank Act, an October 2011 SEC release supporting the Second Circuit's long‐standing “conduct and effects” test, and other expert commentary, and draws interim conclusions, subject to further legal, regulatory and legislative proceedings, concerning the full impact of Morrison on US securities law.

Findings

The full impact of Morrison on US securities law has yet to be seen and will be subject to regulations, legislation and court cases. The interim effect of the decisions issued by lower courts following Morrison is to provide foreign defendants with substantial immunity from private suit under US securities law over securities transactions that occur outside the USA.

Originality/value

This paper provides a useful summary and practical guidance from experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 12 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Expert briefing
Publication date: 11 April 2018

The Senate’s bill would dilute the 2010 Dodd-Frank Act, which tightened US financial and banking regulations in response to the 2007-08 financial crisis and subsequent recession.

Details

DOI: 10.1108/OXAN-DB232029

ISSN: 2633-304X

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Geographic
Topical
Article
Publication date: 3 May 2013

James F. Gilsinan, Neil Seitz, James Fisher, Muhammad Q. Islam and James Millar

The purpose of this paper is to examine the legislative process, in order to determine the likely effectiveness of financial reform efforts in the USA.

335

Abstract

Purpose

The purpose of this paper is to examine the legislative process, in order to determine the likely effectiveness of financial reform efforts in the USA.

Design/methodology/approach

Case study of the legislative process, particularly the less visible parts such as rule making, that shaped the passage and implementation of the Dodd‐Frank Act and the failed Financial Accounting Standards Board (FASB) reform.

Findings

It is found that the process of financial reform legislation is structured in such a way as to thwart major reform, at least in the short run.

Practical implications

The passage of a particular piece of legislation may be the least important element in the process of reform. Rule making and the decisions as to how a law will be implemented, can advance or significantly defeat the quest for change.

Social implications

Much of what occurs in the legislative process is invisible, or appears arcane, to the ordinary citizen but can have major impact on their lives.

Originality/value

The paper provides a road map to understanding the least visible parts of financial reform efforts and suggests ways of achieving reform outcomes.

Details

Journal of Financial Regulation and Compliance, vol. 21 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 23 November 2010

Anne Marie Godfrey, Thomas John Holton, Paul B. Raymond and Curtis Stefanak

The purpose of this paper is to to summarize Advisers Act registration implications for non‐US advisers that now rely on the “private adviser” exemption from Advisers Act

256

Abstract

Purpose

The purpose of this paper is to to summarize Advisers Act registration implications for non‐US advisers that now rely on the “private adviser” exemption from Advisers Act registration and to summarize the principal changes affecting investors in funds managed by non‐US advisers contained in the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010.

Design/methodology/approach

The paper explains the elimination of the “private adviser” exemption and the creation of the narrower “foreign private adviser” and other exemptions from Adviser Act registration, reporting and recordkeeping requirements relating to private funds; the Dodd‐Frank Act's provisions for information sharing by the SEC and the confidentiality of private fund information; the “Volcker Rule's” limitation of investment by banking entities and non‐bank financial companies in hedge funds and private equity funds; changes in the definition of “accredited investor”; and the future adjustment of the “qualified client” test for inflation.

Findings

The Dodd‐Frank Act will require many investment advisers and fund managers with their principal offices and places of business outside the USA to register with the SEC and to observe, with respect to US clients, the full spectrum of SEC regulations that apply to registered investment advisers. The Act will also impose new disclosure and recordkeeping requirements on many non‐US advisers.

Originality/value

The paper provides expert guidance from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 11 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 March 2015

Ann M. Johnson

In 2010 the Dodd-Frank Law was passed in response to the 2008 recession. However, questions arose regarding the federal agenciesʼ ability to regulate the economy in general and

Abstract

In 2010 the Dodd-Frank Law was passed in response to the 2008 recession. However, questions arose regarding the federal agenciesʼ ability to regulate the economy in general and the utility of financial regulations in particular. This work examines and discusses the challenges associated with the uncertainty of the administrative environment in which agencies have been drafting regulations in response to Dodd-Frank. A lack of administrative clarity as a result of Congressional politics led to regulatory capture and operational paralysis on the part of federal agencies tasked with implementing the Act. In this type of environment it becomes very difficult for regulatory agencies to be effective and competent when regulations have not all been drafted yet and legislation is continuously changing. This article critically examines the recent proposed changes to the Dodd-Frank Law. Specifically, it delineates the manner in which the legislative instability has impacted the Federal Reserve Bankʼs capacity to effectively implement the necessary rules for mitigating economic risks.

Details

International Journal of Organization Theory & Behavior, vol. 18 no. 4
Type: Research Article
ISSN: 1093-4537

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