The U.S. Securities and Exchange Commission, still reeling from criticism over its failure to detect Bernard Madoff's $50 billion pyramid scheme, today announced it is creating a new division of Risk, Strategy and Financial Innovation.
The new division will be headed by University of Texas law school professor Henry Hu, who is known as an expert in asset allocation, the regulation of banks, derivatives, hedge funds and mutual funds, and corporate governance. The new division combines the Office of Economic Analysis and the Office of Risk Assessment. It will also handle issues such as identifying new developments and trends in financial markets and systemic risk, and advising the commission on how these might affect its regulatory activities.
"This new division will enhance our capabilities and help identify developing risks and trends in the financial markets," said Chairman Mary Schapiro in a statement. "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."
"The derivatives revolution, the rise of hedge funds and institutional investors, technological change, and other factors have transformed both capital markets and corporate governance,” Hu said in the SEC release announcing the new division. “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."
According to Hu's University of Texas bio, in recognition of a 1995 derivatives/corporate governance article, "an exchange-traded index derivative was introduced with the ticker symbol of 'HUI‚' in 1996. Today, the 'HUI' is one of the world's two key gold equity indices."