May 29, 2009

House Bill Would Create SEC Ombuds Office

This week the House of Representatives introduced proposed legislation titled Compliance, Examinations, and Inspections Restructuring Act of 2009. Among other provisions, HR 2622 would require the Securities and Exchange Commission to appoint an Ombudsman to “advise and guide such persons through the process of self-reporting, ensuring appropriate and due credit is given to the registrant upon self-reporting.” The bill also specifies a significant exception to the duty of confidentiality: If the SEC Ombuds were to make a formal, written recommendation that the SEC take action against a registered broker, dealer or investment company, the Ombuds would be required to disclose any confidential communications prompting the recommendation. The bill, written by Rep. Kevin McCarthy [R-CA22] with no co-sponsors, has been referred to the House Financial Services Committee. (SEC Actions Blog; GovTrack.)

Related posts: SEC Affirms Role of NASD Ombuds.

1 comment:

  1. While there clearly are problems with this bill (Please also bear in mind this is a Classical model for a regulated community and not an organizational ombuds) there are also several positive elements.

    Amongst these are the simple fact that congress is now more aware of the notion than ever, and we are likely to see more ombuds programs promoted by the legislative process than ever. Due to lack of outreach efforts on the part of associations for organizational ombuds, it is far more likely classical, rather than organizational, will be recommended as this is what the legislature is most familiar with.

    Also positive in HR 2622 is subsection five of the Ombudsman provision which states:

    REPORT.—Each year, the Ombudsman shall submit a report to the Commission for inclusion in the annual report that describes the activities, and EVALUATES the EFFECTIVENESS of the Ombudsman during the preceding year. In that report, the Ombudsman shall include solicited comments and evaluations from registrants in regards to the effectiveness of the Ombudsman.’’

    In short the legislature is requiring ombuds through surveying and other evaluative efforts to demonstrate program effectiveness.