SEC Grows Its Risk Oversight Division

The Securities and Exchange Commission announced on Thursday (10/05/09) the appointment of a new senior policy maker and two counsels to the new Division of Risk, Strategy and Financial Innovation. The senior policy advisor to the division will be Richard Bookstaber, a published author on risk management and finance, who has a Ph.D. in Economics from MIT and has previously held senior positions in risk management at Salomon Brothers and Morgan Stanley. Joining him in counsel roles are Adam Glass, formerly head of structured finance at the law firm of Linklater LLP, and Bruce Kraus from Willkie Farr & Gallagher LLP.


The division was established to perform all of the functions previously performed by Office of Economic Analysis and the Office of Risk Assessment, along with other functions to “provide the Commission with sophisticated analysis that integrates economic, financial and legal disciplines. The division's responsibilities cover three broad areas: risk and economic analysis; strategic research; and financial innovation.” This means that the division will be responsible for: (1) providing strategic and long-term analysis; (2) identifying new developments and trends in financial markets and systemic risk; (3) making recommendations as to how these new developments and trends affect the Commission's regulatory activities; (4) conducting research and analysis in furtherance and support of the functions of the Commission and its divisions and offices; and (5) providing training on new developments and trends and other matters.

The Risk, Strategy and Financial Innovation division is currently headed up by director Henry Hu, a University of Texas School of Law Professor who was appointed in September of this year. Professor Hu holds the Allan Shivers Chair in the Law of Banking and Finance at the University of Texas School of Law and has written on bank, derivatives, hedge fund, and mutual fund regulation, corporate governance, global competitiveness of U.S. derivatives markets, model risk, risk management, and swaps and other financial innovations. More recently, Professor Hu was the lead author on a series of pioneering articles on the "decoupling" of debt and equity, its impact on corporate and debt governance and world systemic risk, and possible disclosure and substantive responses, as stated in the SEC press release of Mr. Hu’s appointment.