(Image: Terrance Heath/OurFuture.org, Adapted:SEIU International, Tracy O, and harrykeely)
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President Obama signed the Dodd-Frank Act otherwise known as the financial reform bill into law on July 21st. The bill, characterized by Obama as "the most sweeping financial reform legislation since the Great Depression," supposedly created the "strongest consumer financial protections in history."
The legislation created a Bureau of Consumer Financial Protection, imposed regulations on "risky financial instruments," and put in place regulations on credit and debit card fees.
Skeptical of the legislation, I spoke with Mark Perlow, an investment management advisor who works for an investment management practice in San Francisco. Perlow's practice focuses on fund managers (e.g mutual fund managers, hedge fund managers and other investment advisers) and represents a lot of financial firms.
For those wondering, a hedge fund, as defined by Perlow, is "a pool of capital that under Securities Exchange Commission (SEC) rules can't market itself publicly or to investors below a certain level of personal net worth as a way of essentially making sure that only sophisticated investors that can afford to take a lot of risks can invest them. Hedge funds are essentially vehicles that exist to follow investment strategies that mutual funds are not allowed to follow because of SEC rules."
As the financial reform legislation developed and changed in Congress, Perlow followed the evolution. He tracked the bill on behalf of his clients and read much of the bill so that he would be able to advise his clients on how to comply with the new legislation.
"The bill directly affects most of my clients," said Perlow. "I've spent most of the past month following the legislation closely and helping to prepare a series of summaries of the legislation for our clients that are posted on my firm's websites."