SEC Chairman Mary Schapiro signaled today that the commission is preparing to take a tougher regulatory stance on retirement products, hedge funds, OTC derivatives and asset-backed securities.
She also reiterated her support of a uniform fiduciary standard for all investment advisors, whether they are brokers or RIAs.
In prepared remarks that she was scheduled to deliver at the annual conference of SIFMA in New York, Schapiro said the SEC's focus in 2010 will be to restore investor confidence in the markets-"back to a place where investors have faith that the markets are working as intended."
Among the specific areas of concern, she said, is the marketing of retirement products to a public that has been forced to become more self-reliant in meeting its retirement funding needs.
"Barraging investors with retirement products that feature the latest financial gimmick or marketable fad will ultimately be a disservice to investors, their financial intermediaries and the economy overall," Schapiro said.
SEC regulators are already looking at target-date funds and securitized life settlements, she noted.
Saying that product descriptions and fees need to be clear and understandable, she added that "issues related to disclosure, product development and marketing for retirement products will be areas of focus in the coming year at the SEC."
In regard to hedge funds, Schapiro says she supports a proposal by the Obama administration to require advisors to register private funds with the SEC. "Without even a comprehensive database about hedge funds and their managers, it is virtually impossible to monitor their activities for systemic risk and investor protection purposes."
She also voiced support for increased regulation of OTC derivatives and asset-backed securities. Legislative action will probably be required to adequately monitor the asset-backed securities market, she added.
Legislation, she said, "could have substantive restrictions or requirements for the trust that issues the securities and for related parties. Such a statute could set minimum requirements for the pooling and servicing agreements, such as requiring strong representations and warranties about the assets being securitized and procedures for ensuring those representations and warranties are followed."
On applying the fiduciary standard to all advisors, Schapiro said, "A high fiduciary standard should apply regardless of whether the professional carries the label 'broker-dealer' or 'investment advisor.' That's because investors don't make a distinction between the two-and neither should we."