More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Proxy Voting RIAs are not required to vote proxies on behalf of their clients. However, when an RIA does assume responsibility for voting proxies, the firm’s policies and procedures should help to ensure that votes are cast in the best interest of clients.
Senator Chuck Grassley (R-Iowa), the ranking Republican on the Senate Finance Committee, introduced the Hedge Fund Registration Act on May 15, legislation that would require hedge funds to register with the SEC. Grassley's bill comes on the heels of a D.C. Circuit Court of Appeals ruling last year that overturned the SEC's rule requiring such registration.
The Act "would enable the Securities and Exchange Commission to do what it was already trying to do," Grassley said in introducing the bill, and "gives members of Congress the opportunity to say there should be greater transparency with hedge funds."
Grassley surveyed federal agencies about hedge fund transparency last October. Earlier this year, he joined in requesting a review by the Government Accountability Office of the scope of public and private pension plan investments in hedge funds and what returns and risks are likely for worker retirement funds. In March, Grassley filed legislation similar to the legislation introduced today as an amendment to S.4, the 9-11 homeland security legislation.