More On Legal & Compliancefrom The Advisor's Professional Library
- The Custody Rule and its Ramifications When an RIA takes custody of a clients funds or securities, risk to that individual increases dramatically. Rule 206(4)-2 under the Investment Advisers Act (better known as the Custody Rule), was passed to protect clients from unscrupulous investors.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
Securities Act of 1933: Regulated the issuance of securities by requiring the registration of new offerings and the full disclosure of financial information.
Securities and Exchange Act of 1934: Established the Securities and Exchange Commission with broad authority to regulate the securities industry, markets, and trading.
Public Utility Holding Company Act of 1935: Enacted to address fraud, stock manipulation, and other abuses that had led to the collapse of major utility companies.
Maloney Act of 1938: Authorized self-regulatory organizations to police the securities industry under the direction of the SEC. Led to 1939 designation of the National Association of Securities Dealers as a self-regulatory organization for the securities industry.
Investment Company Act of 1940: Established regulatory framework for mutual funds, also known as investment companies or investment trusts. Required registration with the SEC and full disclosure of relevant information.
Investment Advisers Act of 1940: Required registration of investment advisers with the SEC and imposed antifraud provisions on their activities.