On June 28, 2010, the House and Senate conferees approved the financial regulatory reform conference report (known as the “Dodd-Frank Wall Street Reform and Consumer Protection Act”), and on June 30, 2010, the House approved a bill that has almost was almost identical to the conference report, except for a change in the so-called “pay-for” amendment (as discussed here). The Senate is now poised to vote on the legislation. As expected, the final version of the bill incorporates provisions to increase investors protections (see Title IX, Subtitle A, starting on page 1 of this PDF version of Title IX) and to increase regulatory enforcement and remedies (see Title IX, Subtitle B, starting on page 52 of this PDF version of Title IX).

 Increasing Investor Protection

The regulatory reform bill would establish within the SEC three new “advocates” for investor protection: the Investor Advisory Committee, the Office of the Investor Advocate, and ombudsman.

The Investor Advisory Committee will advise and consult with the SEC regarding a number of issues related to investor protection, including the regulatory priorities of the SEC; issues related to regulating securities products, trading strategies, fee structures, and the effectiveness of existing disclosure requirements; initiatives to protect investors; and initiatives to promote investor confidence and the integrity of the securities marketplace. This Committee’s members will be appointed for four years and will consist of the Investor Advocate (discussed below), a representative of the State securities commission, a representative of the interests of senior citizens, and not fewer than 10 or more than 20 members representing individual equity and debt investors, and institutional investors who are knowledgeable about investment issues and have reputations for integrity. (more…)