Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

January 23, 2013

Commissioners Paredes and Gallagher Disavow IOSCO Investor Suitability Report

By Amanda Maine, J.D.

SEC Commissioners Troy A. Paredes and Daniel M. Gallagher issued a statement objecting to the publication of a report by the International Organization of Securities Commissions (IOSCO) that outlined principles relating to distribution by intermediaries of complex financial products to retail and non-retail customers. IOSCO's report, which cited issues about the extent of intermediaries' responsibility for assessing the suitability of customers for risky and complex structured investment products as a factor in the global financial crisis, sets out nine principles that intermediaries should take into account when assessing whether complex instruments are suitable investment vehicles for certain customers.

In their statement, Paredes and Gallagher, the Commission's two Republican commissioners, stated for the record that they objected to the publication of IOSCO's report and that it was therefore not approved by the Commission. Paredes and Gallagher advised that the report does not accurately reflect the relevant law in the U.S. and that regulators in the U.S. should not conform to the report's recommendations. Paredes and Gallagher stated that they disagreed with the report in key respects, including what they characterized as the report's failure to properly respect the distinction between retail and institutional investors when determining the suitability requirements that should apply.

Paredes and Gallagher, together with fellow Commissioner Luis Aguilar, objected last year to an IOSCO report on possible risks money market funds may pose to systemic stability.

RegulatoryActivity: SECNewsSpeeches

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.