From the December 2007 issue of Investment Advisor • Subscribe!

Victims & Victors

More On Legal & Compliance

from The Advisor's Professional Library
  • The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
  • Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firm’s policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.

The fallout from the subprime meltdown has affected homeowners, bankers, and investors, and now has settled on some of the top corner offices of Wall Street. On November 14, John Thain, CEO of NYSE Euronext since 2006 and the New York Stock Exchange since 2004, was named chairman and CEO of Merrill Lynch. Thain succeeds Stan O'Neal, who retired October 30 under the cloud of the firm's write-down of $7.9 billion related to its CDO and U.S. subprime mortgage portfolios, and the resulting loss of $2.3 billion for the third quarter. Before going to the NYSE, Thain, 52, was president and COO of Goldman Sachs, which is about the only big bank on Wall Street to have seen the subprime trainwreck coming and got off the tracks in time.

Meanwhile, Citigroup announced November 4 that Chairman and CEO Charles Prince "elected to retire" and that a search group that will include new Chairman Robert Rubin will seek a successor. That same day, the company acknowledged "significant declines since September 30, 2007 in the fair value of the approximately $55 billion in U.S. subprime related direct exposures in its Securities and Banking (S&B) business," and currently is projecting an $8 billion to $11 billion write-down from that exposure.

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