Financial Regulatory Reform Resource Center

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Financial Regulatory Reform Resource Center

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act). The Act will significantly reshape financial regulation in the United States, create new regulators, regulate new markets, bring new firms under regulatory oversight, and provide new rulemaking and enforcement powers to regulators.

The new laws are meant to protect investors and consumers and apply to banks, mortgage banks, broker-dealers, hedge funds, private equity funds and government-sponsored entities. Although central elements of the Act focus on regulating the financial services sector, it also includes provisions affecting every public company, including enhanced SEC enforcement authority and additional corporate governance requirements.

Regardless of its specific sector, each financial services firm will potentially face a different set of implications based on its unique business mix and organizational structure. The new regulations may mean significant changes in legal entity structures and business lines, corporate governance and organization, operations and IT systems, risk management and internal control frameworks, tax planning, regulatory and public disclosures, and legal and compliance demands.

Ensure that your organization is properly preparing for the impact of reform and address the following questions:

What is the process for registering funds and how are they preparing for SEC examinations?
Is the fund industry ready for mandatory registration and new SEC requirements?
Will you be ready for new OTC derivative trading methods and requirements?
Will you be ready for financial reform restrictions on derivative and proprietary trading?
How will this new legislation affect the banking, securities, insurance and asset management industries?
What scope of information will be collected from hedge funds, private equity funds and venture capital funds?
What steps can firms take now to prepare, adapt and successfully navigate through this evolving regulatory landscape?
What impact will the new regulation have on capital and liquidity?
What cost-effective compliance strategies should be developed?
How will financial services firms’ legal structures change? And what will be the implications of those changes?
How will the legislation affect the way a board functions?

To learn more about how financial reform will affect your firm, contact:

Jack Katz
National Managing Partner
Financial Services
E Jack.Katz@gt.com

Financial reform: How the Dodd-Frank Act affects securitization and mortgage lending

The Dodd-Frank Wall Street Reform and Consumer Protection Act will significantly affect securitization and mortgage lending businesses. The new rules are intended to more closely align the economic interests of securitizers and their investors and to improve underwriting standards of financial assets when a securitizer issues asset-backed securities (ABSs). Mortgage lenders must abide by new minimum standards, including addressing borrowers’ ability to pay. In addition, the perceived credit rating agency failings have led to a focus on strengthening the accountability of these agencies and reducing potential conflicts of interest that may compromise the integrity of their ratings.This document outlines the new rules — from credit risk retention requirements to enhanced disclosures for NRSROs — and the required actions.

Financial reform: What private fund advisers need to know about the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act will place investment advisers, hedge funds and private equity funds under increased regulation and scrutiny — namely, registration and examination by the SEC. Advisers and funds should be prepared for the enhanced disclosure and reporting requirements that come with the new regulations. Financial reform: What private fund advisers need to know about the Dodd-Frank Act outlines the new rules that funds and their advisers should understand and actions they can take.

Financial reform: What public companies and their audit committees need to know about the Dodd-Frank Act

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) will change the landscape for financial services firms and financial institutions. Although central elements of the Act focus on regulating the financial services sector, the legislation also includes provisions affecting every public company, including enhanced SEC enforcement authority and additional corporate governance requirements. Audit committees may not want to mire themselves in the minutiae of this complex legislation, but they need to ensure the important details are being addressed by their management teams. This document outlines key financial reform issues that public companies and their audit committees should understand and actions they can take.

New whistleblower provisions under the Dodd-Frank Act

New whistleblower provisions have been created under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Of particular particular importance is Section 922, which amends the Securities Exchange Act, establishing a new whistleblower incentive program that provides monetary rewards to those individuals who report securities violations leading to the successful recovery of sanctions exceeding $1 million in criminal and civil proceedings. With increased monetary motivation and expanded protection in place, this legislation will likely spur whistleblower reporting. As a result, it is imperative that firms develop and implement a thorough Foreign Corrupt Practices Act (FCPA) compliance program. Learn more about these new provisions and how Grant Thornton's Forensic Accounting, Fraud and Investigation Services can help your firm address these requirements.

Troubled bank opportunities: What you need to know about FDIC-assisted transactions

The economic downturn and banking crisis have spurred a significant increase in the number of bank failures. Many of these troubled banks are being acquired by healthy banks through FDIC-facilitated acquisitions. For qualified banks, acquisitions of these failed banks present opportunities to grow aggressively. Updated March 8, 2010, this white paper, Troubled bank opportunities:What you need to know about FDIC-assisted transactions, explores the accounting, tax, operational, legal, regulatory and other implications of these complex transactions.

Accounting for FDIC-assisted transactions: Acquisition of loans, application of ASC 310-30 and other issues

For qualified institutions, FDIC-assisted acquisitions of failed banks present opportunities to grow aggressively. However, accounting for these transactions can be quite complex. Grant Thornton LLP’s new white paper, released on June 1, tackles the challenges in applying GAAP purchase accounting to the acquisition of loans, including troubled loans, as well as pitfalls for acquirers to avoid and best practices for a smooth acquisition.

What health care legislation means for financial institutions

The latest developments in health care legislation don’t just affect hospitals. Financial institutions that provide certain services to health care organizations must also comply with changes to the Health Insurance Portability and Accountability Act (HIPAA). HIPAA compliance requirements continue to expand substantially in breadth and scope through various pieces of legislation enacted in recent weeks and months. Learn how banks and other financial institutions can take a number of critical, affordable steps to help ensure compliance.

Private market for mortgage-backed securities shows signs of life

Over the past few years, private investors have lost their collective appetite for most mortgage-backed securities, particularly those in the nonconforming or “jumbo” category (those too large to be guaranteed or secured by a government entity, such as Fannie Mae or Freddie Mac). In April 2010, Redwood Trust, a California-based REIT, sponsored a $238 million residential prime jumbo mortgage securitization — the first deal of its kind since August 2008 — and breathed new life into a dormant market. Learn more about this transaction and how it may shape future securitizations.

SEC updates Custody Rule requirements

The SEC adopted the Final Rule, Custody of Funds or Securities of Clients by Investment Advisers, on Dec. 16, 2009. Effective March 12, 2010, investment advisers must comply with amendments made related to Form ADV and new instructions to Item 9 of that form, as well as undergo surprise examinations. This Financial Bulletin explains these requirements and what investment advisers can expect.

Executive compensation provisions for TARP recipients under the American Recovery and Reinvestment Act of 2009

Executive compensation is an increasingly hot-button issue in the current environment. New legislative developments address the public's concern that Troubled Asset Relief Program (TARP) recipients should be prevented from using rescue funds for excessive executive pay. The American Recovery and Reinvestment Act of 2009 (ARRA) places additional rules on executive compensation that apply both prospectively and retroactively. Learn how to navigate these challenging rules.

Illiquid assets: Improving transparency for investors

Many hedge fund investors suffered significant losses in the downturn and consequently want a closer view of portfolio assets and valuation process when it comes to illiquid assets. Because of the lack of observable transaction prices, illiquid assets are often valued using models that may include significant management judgment. This issue explores how funds that invest in illiquid assets can demonstrate transparency and a commitment to clear valuation policies to investors.

Regulatory scorecard: Game-changing issues for broker-dealers

A number of pending regulations, such as Sen. Chris Dodd’s financial reform bill, have been proposed to tighten the reins on Wall Street and as a result, broker-dealers face a changing playing field. Navigating these numerous new rules can be challenging. From cost-basis reporting requirements to potential regulatory reform, this issue explores the major issues that will affect broker-dealers, and what they can expect in the months ahead.