Regulators Step-Up Game to Nab Stanford

Doesn't it always seem like it happens this way? In many areas of life we have rules and oversight in place to avoid a cataclysmic outcome, but what it really takes is for someone to get away with something. Something BIG. So, here we are again being reactive. Bernie Madoff got away with a huge scam for years, before finally being exposed in December. Today in the WSJ we learn that it took fallout from the Madoff case to have the SEC increase its scrutiny of R. Allen Stanford and his own $8B fraud. Madoff. Cosmo. Forte. Nadel. Stanford. How many more of these fraudsters will be exposed as the new harsher regulatory spotlight shines in the darkest corners of the financial markets?

A watchful eye over Fannie, Freddie, et. al.

Bloomberg News is reporting that the Federal Housing Finance Agency plans to propose new requirements next week for Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. The Agency may place new restrictions on Fannie and Freddie's investments and revamp capital requirements for the home loan banks. The new minimum capital requirements would be just the latest example of a tightening regulatory environment for banks and financial services firms.

Here Come the Regulators!

At GlobalRiskJobs we have long anticipated that the ultimate response to the global financial crisis is going to be much more intense regulation. Once the dust settles, the banks have been stabilized, the new administration gets its legs, etc. count on the rules of the game starting to change. Remember how Sarbanes-Oxley came about - it was a response to inadequate corporate audit procedures in the aftermath of Enron, Worldcom, Tyco, et. al. Expect something similar this time as it concerns Risk and Compliance.

Investment banks which are now partly owned by the U.S. Government must brace for regulation and risk reporting way beyond what they have experienced. And now, thanks partially to Bernie Madoff, hedge funds can likely expect similar treatment. A very good recent article in the Financial Times entitled, "Crackdown on hedge funds after Madoff affair" says funds should brace for more stringent requirements by investors and increasing regulatory scrutiny after the massive $50B Madoff fraud.

Lawsuits are being filed, due diligence procedures at funds-of-funds are being put under the microscope and Congress is on the case as well. Third party administrators and more regulation are all but a given in the new normal of high dollar asset management.

What does this mean for the risk or compliance professional? Logically, one would anticipate a slew of new opportunities as banks, I-banks and funds wake up to the new reality. In looking at SOX for precedent, think about the consulting teams that were assemble to assist in sorting out all of the new requirements. Consider the in-house teams at banks and I-banks that will be implemented to deal with the reporting they will likely face. And think of a more transparent - and more regulated - hedge fund world which will need to face scrutiny like never before, and consequently will have to appoint employees dedicated to facing that spotlight.

Massive change appears to be on the way. The only question is when it arrives. stay tuned to GlobalRiskJobs for all the opportunities and news as things progress.