Following the ponzi scheme of Bernard Madoff, the Securities and Exchange Commission is considering tougher investment advisor rules.
One measure the SEC approved Thursday, by a 5-0 vote, is surprise exams, to ensure that investors money is intact at a broker/dealer, custodian or bank. The plan is open for public comment.
We are taking this action in response to major investment scams, such as Madoff and many other potential Ponzi schemes, said SEC Chairman Mary Schapiro. A surprise exam would provide another set of eyes on clients assets and provide additional protection against theft or misuse.
For those advisors, like Madoff, who hold custody of clients assets directly, the SEC would require a written review by a certified public accountant.
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