From the May 2007 issue of Investment Advisor • Subscribe!

The Original SEC Rule

More On Legal & Compliance

from The Advisor's Professional Library
  • Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices.  Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
  • Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation.  Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.  
Download a copy of the Security and Exchange Commission's original decision on the broker/dealer exemption rule exempting brokers from regulation as an investment advisor even when they were being paid fees for investment advice.
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