S.E.C. ESTABLISHES NEW DIVISION OF RISK, STRATEGY AND FINANCIAL INNOVATION

Posted September 17, 2009

WASHINGTON, D.C. – The US Securities and Exchange Commission (SEC) has established a new division, the Division of Risk, Strategy and Financial Innovation, and named as its director Henry T.C. Hu, who was previously a law professor at the University of Texas.

The new division combines the Office of Economic Analysis (OEA), the Office of Risk Assessment (ORA), and 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 new division will enhance our capabilities and help identify developing risks and trends in the financial markets,” says Mary Schapiro, Chairman of the SEC. “By combining economic, financial, and legal analysis in a single group, this new unit will foster a fresh approach to exchanging ideas and upgrading agency expertise. [Hu’s] vast understanding of the complexities of the markets will be put to good use on behalf of investors as he leads this new division. I welcome Henry to the SEC, and look forward to benefitting from his insightful counsel.”

The new division will perform all of the functions previously performed by OEA and ORA, along with strategic and long-term analysis; identifying new developments and trends in financial markets and systemic risk; making recommendations as to how these new developments and trends affect SEC regulatory activities; conducting research and analysis in furtherance and support of the functions of the SEC and its divisions and offices; and providing training on new developments and trends and other matters.

“The derivatives revolution, the rise of hedge funds and institutional investors, technological change, and other factors have transformed both capital markets and corporate governance,” says Hu. “I look forward to working with the Commission and to using an interdisciplinary approach that is informed by law and modern finance and economics, as well as developments in real world products and practices on Wall Street and Main Street.”

With the creation of the Division of Risk, Strategy, and Financial Innovation, the SEC now has five divisions. The others are, the Division of Corporation Finance, the Division of Enforcement, the Division of Investment Management, and the Division of Trading and Markets.