More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
The Securities and Exchange Commission (SEC) on Friday named Sean McKessy as the new head of its Whistleblower Office, which is housed within the agency's Division of Enforcement.
Under the Dodd-Frank Act, the SEC is required to pay rewards to individuals who voluntarily provide the Commission with original information that leads to successful SEC enforcement actions and certain related actions. The SEC says that it’s in the process of developing rules that will guide the whistleblower program.
Harry Markopolos, the securities professional turned full-time fraud investigator who repeatedly warned the SEC that Bernie Madoff was a fraud, is reportedly helping the agency develop its Whistleblower program.
“Sean is uniquely positioned to oversee the Commission’s whistleblower program,” said Robert Khuzami (left), Director of the SEC’s Division of Enforcement, in a statement. “The Enforcement Division and whistleblowers alike will greatly benefit from Sean’s first-hand experience in bringing enforcement cases, handling whistleblower complaints and understanding the workings of internal corporate compliance programs.”
McKessy will lead a program charged with “working with whistleblowers, handling their tips and complaints, and helping the Commission determine the awards for individuals who provide the agency with information that leads to successful enforcement actions,” the SEC said in the release announcing his appointment.
McKessy rejoins the SEC, where he was a senior counsel in the Division of Enforcement from 1997 to 2000. More recently, he served as corporate secretary for both Altria Group, Inc. and AOL Inc., and as securities counsel for Caterpillar, Inc. In these roles, McKessy developed and supervised internal compliance and reporting programs related to the federal securities laws, served as corporate compliance officer, and coordinated the reporting of potential violations to boards of directors.