More On Legal & Compliancefrom The Advisor's Professional Library
- Registration Requirements for Investment Advisor Representatives (IARs) When individuals launch an advisory firm, they must avoid marketing themselves or the firm as investment advisors before they are properly approved and registered. Otherwise, they are subject to severe penalties.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
At the behest of Sen. Charles Grassley (R-Iowa), the Government Accountability Office (GAO) is gearing up to perform a broad review of two of the Securities and Exchange Commission's divisions--the Office of Compliance, Inspection, and Examination (OCIE) and the SEC's enforcement unit.
According to published reports, Grassley, chairman of the Senate Banking Committee, asked the GAO to examine these SEC divisions because of the regulator's handling of an insider trading investigation involving Pequot Capital Management, a $7 billion hedge fund run by Arthur J. Samberg.
The GAO's priorities will be to zero in on whether the SEC properly monitors self-regulatory organizations like the New York Stock Exchange and NASD. Grassley also recently pressed the heads of the Treasury Department, SEC, and other federal agencies to tell him what information hedge funds are required to report to them.