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News < Back Sarbanes Oxley : US Treasury : Thought Leader Best Practice Recommendations by PWG Private Sector Committees
In February of 2007, the President's Working Group on Financial Markets, the PWG, released principles and guidelines for private pools of capital to guide market participants and regulators. The PWG principles and guidelines were not at the time, nor are they today, an endorsement of the status quo. When the Treasury Department and key independent financial regulators come together and speak with a unified voice, it sends a strong message that heightened vigilance is necessary and appropriate and that all stakeholders have an important role to play. The PWG principles have already been put into practice, and today's release reinforces our belief that a combination of robust market discipline and regulatory policies best protect investors and mitigate systemic risk. For over a year, regulators have been implementing these principles for public policy objectives. Likewise, lenders, counterparties and creditors are also using them to strengthen their practices. To complement and further improve the effectiveness of these efforts, the PWG called on a diverse set of leaders from both the asset management and investment communities to review and significantly enhance their respective market practices. Last September, experienced industry professionals from some of the most respected institutions agreed to serve on two new committees to address market issues and develop "best practices" for private pools of capital – one from the perspective of investors and one from the perspective of asset managers. The President's Working Group encouraged the committees to use the PWG principles and guidelines as the foundation for their best practices, and they have done so. As we said when announcing these committees --- we want the world's highest investor protection standards; we want to guard against systemic risk and keep the United States the most competitive financial marketplace in the world. As these committees were formed, their Chairmen and the PWG believed that markets benefit when experienced and respected participants develop best practices and new accountability standards. The committees have received input from many others within the financial community, and now present their comprehensive recommendations for public comment. These are important issues, and these recommendations represent tangible steps towards our goals. Both market and regulatory practices will evolve from here, but this is certainly a logical step at this time. All stakeholders, including regulators, must remain on top of these issues. We must implement best practices and continually seek to strengthen our market and regulatory practices. We were fortunate that so many able and experienced industry members agreed to serve, particularly given the capital market challenges of the past seven months. With the two distinct sets of practices released today, we now have a comprehensive approach to implementing the principles and guidelines put forth by the PWG in February, 2007. Also, given the global nature of the asset management industry, I should add that these best practices are consistent with the work recently completed in the United Kingdom by Sir Andrew Large's Hedge Fund Working Group. These best practices are coming at the height of robust discussions about the need for stronger market discipline. While they are aimed at specific market participants, and obviously not intended as a policy response to specifically address current, broader financial market issues, the practices are consistent with the spirit and intent of the PWG's recommendations for enhancing market transparency and risk management that I announced three weeks ago. As those recommendations are implemented and these best practices are adopted by market participants, we are taking further steps to support the process of normalizing our financial markets today and to protect against future systemic risk. The two committees have gone about their work efficiently, effectively and quickly. The process leading to today began over one year ago; after the public comment period ends in 60 days, we will have final recommendations. And these committees will continue to work on raising the bar for industry standards. Again, I want to thank all members for offering their time for this effort. Now, I will turn to the committee chairmen to provide details. Thank you. 
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