More On Legal & Compliancefrom 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.
- 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.
The Federal Reserve Board cut the Fed Funds rate by 75 basis points to 3 1/2% on January 22 before the U.S. markets opened. The cut came after international markets plunged on January 21 and 22, and amid widespread concerns over a potential recession in the United States and abroad.
In its statement accompanying the move, the Fed says it made the extraordinary cut, outside of its regular Federal Open Market Committee (FOMC) meeting, which is scheduled to be held January 29-30, because of the "weakening of economic outlook and downside risks to growth." On December 11, the FOMC lowered its target for the Fed Funds rate 25 bps to 4.25%.
The Fed Board of Governors announced January 22 that it had also approved a 75 bps decrease in the discount rate to 4%.