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Frank-Moore Colloquy Confirms that SEC-Regulated Brokers and Advisers Are Outside of Consumer Protection Bureau's Regime

By Jim Hamilton

A colloquy between House Financial Services Committee Chair Barney Frank and Rep. Dennis Moore on the day the House passed the Dodd-Frank Act confirmed that Congress did not intend to impose the regulatory authority of the new Bureau of Consumer Financial Protection over the activities of broker-dealers and investment advisers otherwise subject to regulation by the SEC and CFTC. According to Chairman Frank, Congress expects the SEC to use the power given to it by the Act to impose greater fiduciary responsibilities on brokers and investment advisers. The consumer protection bureau will be a very powerful one. It will be dealing with financial products in the lending area and elsewhere. But it was not intended to duplicate existing regulation. The Act enhances the regulatory authority of the SEC and CFTC and there is neither intent nor language that would lead to duplicate supervision by the consumer protection bureau.

Rep. Moore started that it was Congress? intent to avoid gaps in oversight, but also to avoid creating duplicative or competing rulemaking and supervisory authorities, one vested in the Consumer Bureau and the other in the SEC or CFTC. As such, the final legislation provides exclusive authority to the SEC and the CFTC over persons they regulate to the extent those persons act in a regulated capacity. If such persons are not acting in a regulated capacity, their activities relating to the offering and provision of consumer financial products or services may be subject to the authority of the Bureau instead of the SEC or CFTC. But to the extent they are acting in a regulated capacity, only their functional regulators, the SEC and the CFTC, have rulemaking, supervisory, examination or enforcement authority over the regulated person or such activities. To that end, the Act specifically states that the Bureau will have no authority to exercise any power to enforce this title with respect to any person regulated by the SEC or the CFTC. Cong Record, June 30, 2010, pp. 5216-5217.

Full post as published by Jim Hamilton's World of Securities Regulation on July 07, 2010 (boomark / email).