Dodd-Frank Creates New Loopholes

Like any fraud prevention methodology, the new Dodd-Frank Wall Street Reform and Consumer Protection Act is going to have loopholes in the beginning which may allow fraudulent behavior in smaller fund management entities to continue. Apparently, some of those loopholes are beginning to come to light as continued analysis of the Act is being done by firms across the country.

The shifting of regulatory oversight of smaller investment firms, from the federal government to state government’s, is currently problematic as state government’s aren’t yet staffed to handle the regulatory oversight of these investment firms and may not have budgets to do so effectively. In essence, continuing to allow the kind of fraudulent behavior that the Act was designed to prevent.