Challenges & Opportunities for the Asset Management Industry Following Dodd-Frank

Last evening, I had the pleasure of participating in a panel discussion at the historic New York Stock Exchange. The discussion was part of a speaker series hosted by TAAAPS—The Association for Alternative Asset Professionals—with all proceeds being donated to charity. I was joined on the panel by Joseph Mecane, Executive Vice President at NYSE Euronext; Patrick Tominey, Vice President of FINRA Member Regulation; Harris Bogner, Managing Director of Compliance Consulting Solutions; and Stephen McShea, General Counsel at Larch Lane Advisors. The wide-ranging discussion focused on the trends, challenges and opportunities facing financial services companies in the alternative-asset management industry following the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). My distinguished co-panelists had very interesting thoughts on how these new regulations, enforcement initiatives, and increased scrutiny from governmental authorities and self-regulatory organizations, will impact fundraising, managing investments, and the expectations of investors. I was asked several questions by the panel and audience about the significant whistleblower protections and incentives in Dodd-Frank. I shared my deeply held belief that the SEC Whistleblower Program coupled with the establishment of the Asset Management Unit in the Enforcement Division, creation of the SEC Cooperation Program, and the more aggressive investigative techniques being used by the Department of Justice would revolutionize the ways the federal securities laws are enforced–and that responsible and well-run funds would benefit from these important initiatives. All of the panelists appeared to agree that, going forward, investment managers would be wise to focus more seriously on strengthening their existing compliance programs. In this regard, I emphasized the need for organizations to think beyond the traditional concepts of regulatory compliance and foster a culture of integrity where employees feel comfortable reporting misconduct, their concerns are appropriately addressed, and they are recognized/rewarded for reporting possible violations.

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