Financial and Accounting Insights

US Treasury Dept drafts “Investor Protection Act of 2009″

July 12th, 2009

The US Treasury Department has introduced a bill designed to strengthen the SEC’s authority to protect investors.

Key provisions would allow the SEC to do the following:

Regulate the quality and timing of disclosures. For example, the SEC might require a concise summary prospectus and a simple disclosure showing the costs of a fund prior to the completion of a sale. (Currently these disclosures are typically not made until after a transaction is complete).
Establish funding and procedures to pay whistleblowers for information about more types of securities law violations, (provided the information leads to enforcement actions that result in significant financial awards). Currently, these incentives apply only to cases involving insider trading.
Pursue more cases involving aiding and abetting of securities fraud.
Bar individuals from all aspects of the securities industry, (meaning a person could be barred from becoming either an investment adviser or a broker-dealer because of serious misconduct).
Make permanent the recently established Investor Advisory Committee.

The Treasury Department’s press release is available at http://www.ustreas.gov/press/releases/tg205.htm.