While many new registrants are "doing a pretty good job," she continued, there are also "many instances of really poor controls, and worse than that, potential misconduct, especially around fees and expenses." Problems include advisers who miscalculate fees, collect fees to which they are not entitled, or use fund assets to cover personal expenses.
Walter also discussed the agency's new whistle-blower program, which in fiscal year 2012 received 3,001 tips—about eight a day. The program provides cash awards in certain circumstances to those who report wrongdoing. "The early returns are good," she said, describing the tips as "of higher quality, higher credibility . . . than tips and complaints that come in through other forms." The program paid out its first award in August—$50,000 to a whistle-blower who stopped a multimillion-dollar fraud—and Walter said the SEC is reviewing other potential awards.
While Walter painted a picture of a vigorous agency, firm managers on an earlier panel at the summit agreed that regulatory practices are likely to continue to buoy Washington law offices. R. Bruce McLean, the chairman of Akin Gump Strauss Hauer & Feld, said his firm saw increases in 2012. "I think 2013 is going to be an active year from a regulatory standpoint," he added.
Bobby Burchfield, cohead of McDermott Will & Emery's Washington office, predicted that Obama would ramp up regulation in the second term because he doesn't have a filibuster-proof Senate. "We think the administration will use regulation rather than Congress to handle its business," he said. "We expect quite a bit of administrative litigation to challenge the validity" of the new rules.
Matthew Huisman, Andrew Ramonas, and Don Tartaglione contributed to this report.
A version of this story appeared in The National Law Journal, a sibling publication of Corporate Counsel.
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