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.
The President's Working Group on Financial Markets (PWG) announced November 14 "initiatives to strengthen oversight and the infrastructure of the over-the-counter derivatives market." The Group's top priority, it said, was to implement central counterparty services for credit default swaps (CDS), which in turn should reduce "the systemic risk associated with counterparty credit exposures."
The Working Group is chaired by the Treasury secretary and includes the leaders of the Federal Reserve, the SEC, and the Commodity Futures Trading Commission. The latter three agencies signed a joint Memorandum of Understanding detailing how they will "cooperate, coordinate, and share information" in regulating the CDS market.
In a release, Treasury said the PWG is currently reviewing design elements of "several potential central counterparty providers," and anticipates that one or more such providers will be operating before the end of 2008.