As part of the federal reform of Wall Street oversight, the Securities and Exchange Commission (SEC) is deciding whether it or an outside source should oversee investment advisers. One commissioner, Elisse Walter, wants an industry organization—that has paid her millions of dollars—to get the job.

 

The SEC issued a study this week on the subject of investment advisers oversight. In response to the report, Walter, who was appointed to the SEC by President George W. Bush in July 2008, argued for giving the duty to the Financial Industry Regulatory Authority (FINRA). What she failed to mention is that she used to work as a senior executive at FINRA or that it paid her more than $3.7 million in salary and bonuses in 2008.

 

SEC Chairman Mary Schapiro, another former FINRA executive, recused herself from voting on the study. Walter did not.

 

The Project on Government Oversight (POGO) criticized Walter for not recusing herself from this potential conflict of interest matter. “There is certainly a question whether she should be making recommendations that could affect her former employer and other self-regulatory organizations,” Michael Smallberg wrote on the POGO website.

-Noel Brinkerhoff

 

SEC Commissioner with Ties to Industry Calls for More Industry Self-Regulation (by Michael Smallberg, Project on Government Oversight)

Divided SEC Releases Study on Adviser Oversight (by Jessica Holzer, Dow Jones Newswires)

Statement on Study Enhancing Investment Adviser Examinations (Securities and Exchange Commission) (pdf)

Study on Enhancing Investment Adviser Examinations (Securities and Exchange Commission) (pdf)