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.
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
Euro zone finance ministers agreed on October 12 to guarantee interbank loans for up to five years in a bid to thaw the credit squeeze on the continent, and pledged to inject additional capital into their banks following a meeting in Paris brokered by French President Nicolas Sarkozy. Further details for each country are expected to be announced simultaneously on Monday, October 13. U.S. Treasury Secretary Henry Paulson, after saying October 10 that the United States would consider acquiring equity stakes in ailing U.S. banks, was reported to be considering a similar guarantee for banks.
Meanwhile, Mitsubishi UFJ Financial was in talks with Morgan Stanley and U.S. and Japanese government officials on its previous $9 billion investment in the investment bank. On September 22, Mitsubishi agreed to invest the $9 billion to acquire about 21% of Morgan Stanley common and preferred stock at prices varying from $25/share to $31/share; Morgan Stanley stock has dropped 82% this year, and closed at $9.68 on October 10.