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United Atlantic Legal Services, a boutique law firm focused exclusively on investment advisers, works with financial professionals in both United States and United Kingdom. We assist these professionals with investment adviser registration and acquisition due diligence services.
In this post we provide an introductory discussion about the regulatory oversight difference experienced by financial professionals in the United State and their counterparts in the United Kingdom.
Securities and Exchange Commission vs. Financial Conduct Authority
The Securities and Exchange Commission (“SEC”) in the United States and the Financial Conduct Authority (“FCA”) in the United Kingdom are two of the most prominent financial regulatory bodies in the world. Although both organizations share similar objectives, there are key differences in the way they operate and regulate financial markets. In this blog, we will compare and contrast the SEC and the FCA.
Jurisdiction
To start, the SEC has jurisdiction over securities markets, investment advisers, and other market participants in the United States. The FCA, on the other hand, has jurisdiction over financial firms and markets in the United Kingdom.
Mandate and Objectives
- The SEC is an independent agency of the United States federal government. Its primary mission is to protect investors, maintain fair and efficient markets, and facilitate capital formation. The SEC oversees the regulation of securities markets, investment advisers, and mutual funds, among other areas.
- The FCA is an independent regulatory body in the United Kingdom. Its primary objective is to ensure that financial markets are fair, transparent, and competitive. The FCA regulates a wide range of financial firms, including banks, investment firms, and insurance companies, among others. Its main focus is to protect consumers and promote competition in financial markets.
Scope of Regulation
- The SEC has a broader scope of regulation than the FCA. In addition to regulating securities markets and investment advisers, the SEC also oversees the regulation of public companies, accounting firms, and credit rating agencies. The SEC also has the authority to bring civil enforcement actions against individuals or entities that violate securities laws.
- The FCA focuses primarily on the regulation of financial firms and products. It is responsible for ensuring that firms are complying with relevant laws and regulations and has the power to take enforcement action against firms that fail to meet these requirements.
Enforcement Powers
- The SEC has extensive enforcement powers, including the ability to bring civil actions against individuals or entities that violate securities laws. The SEC can also conduct investigations and issue subpoenas to obtain information.
- The FCA also has enforcement powers, including the ability to impose fines, revoke licenses, and take legal action against firms or individuals that breach its rules. However, the FCA’s powers are generally more limited than those of the SEC.
Oversight
- The SEC is accountable to Congress, which has the authority to establish the SEC’s mandate, budget, and structure, as well as to conduct oversight of the agency’s activities. Additionally, the SEC is accountable to the President of the United States, who appoints the SEC’s Commissioners and approves the agency’s budget. The SEC also works closely with other federal agencies, such as the Department of Justice and the Commodity Futures Trading Commission, to enforce securities laws and regulations and protect investors.
- The FCA is accountable to the Treasury, which is responsible for appointing the FCA’s Board members and setting its budget. The Treasury also has the power to issue directions to the FCA in certain circumstances. The FCA is also accountable to the Parliament through the House of Commons’ Treasury Select Committee, which scrutinizes the FCA’s policies and operations. Additionally, the FCA works closely with other regulatory bodies in the UK, such as the Bank of England and the Prudential Regulation Authority, to ensure that the financial system is stable and well-regulated.
International Cooperation
Both the SEC and the FCA work closely with other regulatory bodies around the world. The SEC has signed memoranda of understanding with more than 100 regulatory bodies in other countries, while the FCA has established relationships with regulatory bodies in the European Union and other countries.
Conclusion
The SEC and the FCA share similar objectives, but there are significant differences in the way they operate and regulate financial markets. While the SEC has a broader scope of regulation and more extensive enforcement powers, the FCA’s focus is primarily on the regulation of financial firms and products. Both organizations work closely with other regulatory bodies around the world to promote fair and transparent financial markets.
About the Author
Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.
Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include:
- Investment Adviser Compliance Essential for Chief Compliance Officers
- Foundations of Investment Adviser Compliance
- What is a “Security”?
- Investment Adviser Marketing Rule
- Regulation A – Exemption from Registration
- Regulation Crowdfunding – Exemption from Registration
- Regulation D – Exemption from Registration
Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.
Please visit Michael’s website to learn more about Michael and his insights into the investment adviser industry. He can also be found on LinkedIn.