As we approach the end of the decade I thought it appropriate to list the top compliance events of the decade. Purely subjective, these events have, in my opinion, greatly influenced compliance in the investment advisory profession. I did leave out the obvious number one compliance event - the formation of U.S. Compliance Consultants in 2005 - because I did not want the list to seem self-serving. However, as we all know, everything else pales in comparison. So, without further ado, the top compliance events of the past ten years are:

1.  September 2008. Collapse of Lehman Brothers; Seizing-up of the credit markets; Stock market collapse. Auction rate securities frozen. Housing collapse. Mortgage market collapse. Banks collapsing. Recession. Depression (at least among those working in the financial industry). Sweeping regulatory reform. Enough said.

2.  The Compliance Rule.  The passage of the compliance rule in 2003 changed the way every SEC and state registered investment adviser approached compliance.

3.  Madoff.  A watershed event as people will talk about the investment advisory profession as before-Madoff and after-Madoff.  

4.  The Gramm-Leach-Bliley Act. True, this was enacted in late 1999, but the Financial Privacy Rules and the Safeguard Rules all came during this decade and had a huge impact on how investment advisers conduct their advisory business.

5.  Late Trading Scandal.  Although almost quaint by today’s standards, the mutual fund late-trading scandal in 2003 was the impetus behind the enactment of the Code of Ethics Rule as well as the SEC’s interest in having investment advisers retain and archive their electronic communications.

6.  Hedge Fund Registration/Hedge Fund De-Registration. Bringing the “bad boys” of the financial industry under the watchful eye of the SEC and then the bad boy of the hedge fund industry (at least from the SEC’s point of view) challenging the SEC and winning. One wonders if this body blow to the authority of the SEC had any impact on its willingness to stand up to Madoff.

7.  ENRON. How quickly we forget, but the ENRON scandal resulted in the largest bankruptcy in American history up to that time.  It also wiped out Arthur Andersen.

This entry was posted on Friday, December 25th, 2009 at 8:05 am and is filed under General Compliance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.