The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) is sweeping financial reform legislation enacted in response to the 2008 financial crisis.
Key provisions affecting the securities industry:
- Volcker Rule: Prohibits banks from engaging in proprietary trading or owning/sponsoring hedge funds and private equity funds (with limited exceptions).
- OTC derivatives regulation: Standardized swaps must be cleared through central counterparties and traded on regulated exchanges or swap execution facilities; reported to swap data repositories.
- SEC authority over municipal advisors: Created registration and fiduciary requirements for municipal advisors.
- Whistleblower program (SEC): Individuals who provide original information leading to SEC enforcement actions of $1M+ may receive 10–30% of sanctions. Whistleblowers are protected from retaliation.
- CFPB creation: Consumer Financial Protection Bureau established to oversee consumer financial products.
- Systemic risk oversight: Created the Financial Stability Oversight Council (FSOC) to identify systemically important financial institutions (SIFIs).
- Investment adviser threshold: Raised federal registration threshold; advisers with <$100M AUM must register with states.
> Exam tip: For the Series 65/66 and CFP®, know the whistleblower provisions (10–30% of $1M+ sanctions, protected from retaliation) and that Dodd-Frank increased the SEC IA registration threshold, pushing many advisers to state regulation.