A Closer Look: The Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is one of the most complex pieces of legislation ever written. Financial service firms and other impacted organizations are just beginning to understand the Act's many facets and its full impact.

Through this series, recognized leaders in our Regulatory practice will take A Closer Look at how the Act will impact several distinct market segments. Many of the new reforms and implementation issues are currently unclear and are subject to rule-making processes and various statutorily directed studies. PwC will continue to monitor developments and provide additional insight and analysis.

Impact on Advisers to Private Equity Funds

The Dodd-Frank Act will for the first time bring private equity fund advisers under the oversight of the SEC. The SEC recently indicated that private fund advisers—including advisers to private equity funds—will have until the first quarter of 2012 to complete their SEC registration and come into compliance with their new obligations under the Advisers Act. Advisers should use this brief additional time to ensure that they have implemented effective controls and compliance programs and are fully ready for registration. This A Closer Look describes the impact of Dodd-Frank on private equity advisers and looks into some of the particular issues they’ll face.

Impact on Disclosures Related to the Use of “Conflict Minerals"

While Dodd-Frank is predominantly focused on financial regulatory reform, it also includes a number of corporate governance and disclosure requirements that are designed to achieve other public policy objectives. Among these is Section 1502, which requires new procedures and disclosures by all issuers (domestic and foreign) who use so-called “conflict minerals” in their products or manufacturing processes. In this A Closer Look, we focus on the potential impact on all companies that use these types of minerals.

Incentive-Based Compensation Requirements for Certain Firms

The Dodd-Frank Act requires enhanced disclosure of incentive-based compensation arrangements by certain banks, credit unions, investment advisers, brokerage firms, and other financial institutions. It also prohibits any type of incentive-based compensation that, in the regulators determination, encourages inappropriate risks by providing excessive compensation, or has the potential to cause material financial loss to the covered firm. Regulators are directed to jointly adopt rules and guidelines to implement this provision. This A Closer Look provides a description of the incentive-based compensation restrictions and describes the proposed rule and its impacts, should the rule become final in its present form.

Reporting by Private Fund Advisers on Form PF

The SEC and the CFTC recently proposed a new rule that would require registered investment advisers to private funds to file new reports that would help the agencies assess those advisers’ systemic risk. The proposal is intended to implement Section 404 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. If adopted, the rule would impose substantial reporting burdens on affected advisers, particularly those with over $1 billion in assets under management. This A Closer Look describes the proposal and its possible impact on advisers to hedge funds, private equity funds, and liquidity funds.

Impact on Thrifts & Thrift Holding Companies

While many financial and nonfinancial companies will see their businesses change under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank, or “the Act”), perhaps no group faces more substantial challenges to its business model’s long-term viability than thrifts and thrift holding companies. Technically, thrift holding companies are regulated as "savings and loan holding companies." We use instead "thrift holding companies" to reflect the fact that thrift is a more encompassing description of institutions with a savings association charter. This A Closer Look explores the impact of Dodd-Frank on thrifts and thrift holding companies.

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Dan Ryan
Financial Services Advisory Leader
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