SEC and CFTC Harmonization Report Recommends More Regulation and Cooperation

The SEC and the CFTC issued a report on regulatory harmonization, as directed by the Obama Administration. The Report lists 20 specific recommendations in four areas: markets, financial intermediaries, enforcement, and operational coordination. With respect to intermediaries, the Report recommends applying a fiduciary standard to CTAs, FCMs, and introducing brokers. It also recommends the adoption of a point-of-sale disclosure document, similar to the Options Disclosure Document, for all securities products. The Report also recommends harmonization of rules applicable to fund sponsor in areas including use of performance track records, investor reporting, and recordkeeping.

OUR TAKE: The recommendations, if adopted, would significantly expand both agencies’ regulatory and enforcement powers.

http://www.sec.gov/news/press/2009/cftcjointreport101609.pdf