The Systemic Risk of Private Funds after the Dodd-Frank Act
Mich. Bus. & Entrepreneurial L. Rev. (2015),
29 Pages Posted: 23 Jul 2014 Last revised: 9 Mar 2016
Date Written: 2014
The Financial Stability Oversight Council (FSOC) was created under the Dodd-Frank Act with the primary mandate of guarding against systemic risk and correcting perceived regulatory weaknesses that may have contributed to the financial crisis of 2008-09. The SEC collects data pertaining to private fund advisers in order to facilitate the FSOC’s assessment of non-bank financial institutions’ potential systemic risks. Evidence that the SEC’s data collection encounters accuracy and consistency problems might hamper the FSOC’s ability to evaluate the systemic risk of private funds. The author shows that while the SEC’s data plays a crucial role in all stages of FSOC’s systemic risk assessment of private funds, the FSOC relies most heavily on some of the most problematic disclosure items collected by the SEC.
Keywords: Financial Stability Oversight Council, Dodd-Frank Act, securities law, private funds, systemic risk
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