Magazine article American Banker

Levitt Pushes for SEC Oversight of Fund Sales

Magazine article American Banker

Levitt Pushes for SEC Oversight of Fund Sales

Article excerpt

WASHINGTON -- The chairman of the Securities and Exchange Commission urged a key congressional panel Thursday to give his agency full authority to regulte the sale of securities by banks.

Banking regulators, with whom the SEC now shares oversight, face an inherent conflict of interest between protecting the safety and soundness of banks and safeguarding investors, said Arthur Levitt Jr., the SEC chief.

The issue of how bank mutual fund sales should be regulated has taken on new urgency as thousands of banks have piled into the business, pitching uninsured investments to millions of new, unsophisticated investors, Mr. Levitt said.

"It's a new ball game," he said.

While the SEC focuses on investor protection, bank regulators focus on safety and soundness, Mr. Levitt said. "They're complementary missions, but they're different missions."

The SEC chairman has lined up with two powerful leaders of the Energy and Commerce Committee - Chairman John Dingell, D-Mich., and Rep. Edward Markey, D-Mass.-in support of legislation that would bring bank securites activities under more direct SEC oversight. He made his remarks at a hearing of the committee's telecommunications and finance panel, chaired by Rep. Markey.

Confidence Is Essential

Bank regulators, who wish to retain their supervision of bank securities activities, took exception to Mr. Levitt's description.

"Investor protectionis essential to our mission," said Eugene A. Ludwig, the comptroller of the currency. If investors lose confidence in a bank, that could have implications for the bank's safety and soundness. …

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