SEC Commissioner Gallagher Speech on (i) Harmonizing BD and IA Regulation and (ii) Supervisory Liability (Important)

SEC Commissioner Daniel M. Gallagher delivered the keynote address at the National Society of Compliance Professionals National Meeting. The first part of the speech discussed the separate histories of the U.S. regulation of broker-dealers and that of investment advisers. At the conclusion of this section of his talk, he said that Dodd-Frank required the SEC to consider harmonizing the broker-dealer and investment adviser regulatory regime (especially with regard to fiduciary obligations), but it did not mandate such harmonization. Rather, the SEC would have to consider what, if any, rule-making was appropriate.

On the issue of supervision, Commissioner Gallagher said that the Commission should be more concerned with addressing the failure to supervise at all than with second-guessing those who act because "we don't want a world in which legal and compliance personnel are in such fear of being held liable for mistakes that they keep an impeccable record by standing back and doing nothing when the occasion calls for a supervisor to step in and make a tough call."

View speech in full here (links externally to SEC website).The linked memo, which we wrote shortly after Dodd-Frank was adopted, discusses the Dodd-Frank provisions relating to the harmonization of the broker-dealer/investment adviser regulatory regimes that are the subject of the first portion of Commissioner Gallagher's speech.