Some Wall Street executives have been breathing a sigh of relief that New York Attorney General Eliot Spitzer is going to run for governor. But if he does move on, will that mean a more relaxed stance at the SEC?
One indication already of this is the SEC and NASDs joint investigation into gifts by two dozen brokerage firms to fund execs, which they launched independently of the attorney general. The SEC is also looking into revenue-sharing and is going to re-examine the use of 12b-1 fees. Further, the SECs newly created office of risk assessment has been set up to detect new ways criminals might corrupt the system.
"We want our efforts and oversight to be more anticipatory and preventative in nature," SEC Chairman William Donaldson recently said. As one industry veteran sees it, this mandate already seems to be working: "Ive been involved in this industry since 1969, and Ive never seen a Commission as aggressive," said Geoff Bobroff, president of Bobroff Consulting. "The SEC is examining and re-examining every aspect of the mutual fund industry, and to some extent, reinterpreting old positions."
Roy Weitz, industry critic and publisher of fundalarm.com, commented: "The SEC was definitely goosed by Spitzer beating them to the punch. It looks like the SEC wants to identify conflicts and jump on them before anyone else does."