US SEC Chairman Joins Investor Advisory Committee to Expand Investment Advisor Protection Rules

03/03/2023 01:57 • Blockchain Briefs • 80 views

On March 3, Gary Gensler, the chairman of the US SEC, said in an article on the official website of the SEC that he had joined the Investor Advisory Committee. The committee recently submitted a new investment adviser protection rule. According to the provisions of Congress in 2010, this rule extends the custody rule to cover all assets of investors, not just their funds or securities. The proposed rules will also require a written agreement between the consultant and the custodian, increase the requirement for foreign institutions to act as the custodian, and explicitly extend the safeguard rules to discretionary transactions.

The Chairman of the US SEC said that the new rules were being drafted, and the encrypted trading platform might not be a qualified custodian

Analysis based on this information:

The US Securities and Exchange Commission (SEC) has recently introduced new rules aimed at expanding investment advisor protection, and SEC Chairman Gary Gensler has joined the Investor Advisory Committee to further enhance the rules. As per the provisions of Congress passed in 2010, the new rule extends the custody rule to cover all assets of investors, including not just their funds or securities.

Under the proposed new rules, a written agreement between the consultant and the custodian is needed, while foreign institutions acting as custodians have to meet additional requirements. The safeguard rules also extend explicitly to discretionary transactions.

With these measures, the SEC aims to ensure more thorough protection of investors by addressing the risks faced by investment advisers. This comes as a response to the recent rise in investment management fraud and the misuse of customer funds, making the regulation of the industry more necessary than ever.

The new rules have been welcomed by the investment community, with experts lauding the SEC’s decision to extend the custody rule. The requirement for a written agreement between the consultant and the custodian reflects the SEC’s commitment to transparency and accountability in the financial industry. Strengthening the safeguards against fraudulent activities by requiring more foreign institutions to meet additional custodian requirements is also a significant step towards ensuring greater security in the industry.

In conclusion, the SEC’s proposed rule change and the involvement of Chairman Gary Gensler in the Investor Advisory Committee signal the regulator’s commitment to investor protection, particularly in response to challenges in the investment advisory industry. This move is expected to improve investor confidence and potentially reduce the risks of fraud in the financial market.

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