More On Legal & Compliancefrom The Advisor's Professional Library
- Code of Ethics Rule The Code of Ethics Rule, found in Rule 204A-1, uses severe consequences for violation to help ensure investment advisors will do the right thing.
- 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.
Citing lower risk of inflation and hoping to "help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time," according to its statement, the Federal Open Market Committee on September 18 cut its target rate for Fed Funds by 50 bps, to 4.75%. It is possible that lower Producer Price Index (PPI) numbers, down 1.4% for August, may have been factored into the Fed's decision to cut by 50 bps rather than 25 bps.
The Fed also cut the discount rate by 50 basis points, to 5.25%, the second such move since August 17, when the Fed lowered the discount rate to 5.75%, encouraged borrowing from the Discount window, and liberalized lending terms for collateral and lengthening the time such loans are allowed to exist. The Fed has been trying to remove some of the stigma attached to the Discount window, which has been traditionally the lender of last resort, to "generally sound depository institutions that cannot obtain funding in the market on reasonable terms" according to The Federal Reserve Discount Window & Payments System Risk Web site.