You can say that again...
From Fraud made easier: New rules backfire - NYP, by Kaja Whitehouse, 2011 January 18
When the Dodd-Frank financial overhaul act was passed last summer, its supporters promised greater scrutiny of big money managers, such as hedge funds and private-equity firms, that have long been allowed to fly under regulators' radar. Starting in July, huge firms such as SAC Capital and Tudor Investment Management will have to start reporting key information such as assets under management and staffing levels. What's less known is that federal regulators will also start shifting oversight of hundreds and potentially thousands of smaller money managers -- or those with less than $150 million in assets -- to officials in cash-strapped states. The move has legal experts warning of a proliferation of funny business among money managers who handle a lot of mom-and-pop investors. "The states currently have almost no examination staffs other than maybe a few like California and Texas," said Tom Westle, a partner in the New York office of Blank Rome. ..... < snip > ..... Investment advisers, who may manage mutual funds or hedge funds, must now have at least $100 million to register with the Securities and Exchange Commission. This change alone will push some 4,100 registered investment advisers from the SEC's purview on to the states, according to SEC head Mary Schapiro. ..... < snip > In a strange twist, new rules aimed at cleaning up Wall Street may make it easier for some investment managers to commit fraud.
Now the overspent, overburdened states will have additional unfunded mandates to enforce federal / SEC regulation and be in charge of identifying and catching the next Madoffs and Stanfords, which Mary Schapiro herself - then head of the powerful FInRA - failed to catch. Believe it... or not!