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employs someone who worked for an entity being rated within one year of rating, it must conduct a review of conflict of interest and take action to change rating if appropriate. SEC to review code of ethics and conflict of interest policy of each NRSRO at least annually and whenever policies are materially amended. NRSRO is required to report to SEC if it knows that someone previous employed by it becomes employed within 5 years by obligor, issuer, sponsor or underwriter of obligation it had rated during the previous 12 months if the employee served in certain designated capacities. Each NRSRO must designate a compliance officer. Subtitle C – Investor Protection Act Part 1 -- Disclosure 7102 Clarification of Commission Authority to engage in consumer testing 7103 Establishment of fiduciary duty for brokers, dealers, investment advisers, and harmonization of regulation 1934 Act amended to provide that SEC to promulgate rules to provide that broker dealer when providing personalized investment advice about securities to a retail customer, standard of conduct shall be the same as applicable to an investment adviser under the IAA of 1940. This does not require a broker or dealer or registered rep to have a continuing duty of care or loyalty after providing the personalized investment advice. Where broker or dealer sells only proprietary or a limited range of products, SEC must by rule require it to provide notice to each retail customer and obtain consent or acknowledgment. 7107 Study on enhancing investment adviser exams 7108 GAO study of financial planning Part 2 -- Enforcement Solari Report - Notes on Wall Street Reform and Consumer Protection Act of 2009 (HR 4173) 7208 Penalties for aiding and abetting violations of Investment Advisers Act of 1940 Makes it a violation of the IAA to knowingly or recklessly aid, abet, counsel, command, induce or procure any violation of any provision of IAA to the same extent as if the investment adviser committed the violation. © 2010 Solari, Inc. Page 22
7213 Sharing privileged information with other authorities 7214 Expanded access to grand jury information Purports to expand SEC jurisdiction over offshore trades that would involve antifraud violations if conduct within US constitutes significant steps in furtherance of the violation or for conduct outside US that has a foreseeable substantial effect within the US. Also includes suits in equity and actions at law. 7215 Fidelity bonding Solari Report - Notes on Wall Street Reform and Consumer Protection Act of 2009 (HR 4173) Authorizes the SEC to require an investment company to maintain fidelity bond against loss as to any officer or employee who has access to securities or funds, directly or indirectly 7218 Enhanced SEC authority to conduct surveillance and risk assessment Exchange Act, Advisers Act and Investment Company Act sections on authority of SEC to examine records are amended to provide SEC with authority to conduct reasonable periodic, special or other information and document requests as SEC deems necessary or appropriate to conduct surveillance or risk assessments of the securities markets, persons registered with the SEC or otherwise in furtherance of the purposes of the title. [Note: it doesn’t appear that the examinations have to be in connection with any suspected illegal activity of the entity being examined] 7218 Investment company examinations Subjects investment companies and underwriters, brokers, dealers or investment advisers that are majority-owned subsidiaries, to reasonable periodic, special or other examinations by SEC as it deems necessary or appropriate in the public interest or for protection of investors. 7220 Control person liability under 1934 Act Subjects control persons to investigation by the SEC in an action brought under 21 (d)(1) or (3) (which allows the SEC to assess monetary penalties or bring an injunction against anyone it believes is violating SEC rules, clearing agency rules, exchange rules, PCAOB rules or MSRB rules and to turn over evidence it gathers to the SEC for criminal action). © 2010 Solari, Inc. Page 23
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Page 3 and 4: Council may require periodic report
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Page 7 and 8: diligence, including unique identif
Page 9 and 10: 1961 Securities holding companies S
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Page 13 and 14: service on the Board. 4105 Executiv
Page 15 and 16: 4701 Collection of deposit account
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Page 29 and 30: 7703 Grants to states for enhanced
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Page 35 and 36: No high cost mortgage may allow a c
Page 37 and 38: 9403 RESPA amendments Deals with fo
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Page 41: Two years after enactment, state ma

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