More On Legal & Compliancefrom The Advisor's Professional Library
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
- 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 SEC and the North American Securities Administrators Association (NASAA) announced they will waive the initial setup and annual system fees paid by investment advisor firms to maintain the Investment Adviser Registration Depository (IARD) system. Separately, NASAA announced that for next year it will also waive those system fees paid by investment advisor representatives.
? The Financial Planning Association ran a full-page advertisement in USA Today on November 3, the day before the Presidential election, directing readers to the FPA's public Web site, sending a message on how the "financial planning community through FPA can be a helpful catalyst for positive change in turbulent times." The largest group of financial planners has also created a page on Facebook (facebook.com/pages/Financial-Planning-Association/47328037813), with a link from FPA's consumer site, where consumers may ask questions of FPA member volunteers or participate in a discussion on the political impact on the economy or financial planning in an economic downturn.
? The SEC also announced in late October that it had brought 671 enforcement actions during the fiscal year, the second highest number of enforcement actions in agency history. For the second year in a row, the SEC also returned more than $1 billion to harmed investors through Fair Fund distributions. The commission also noticed that it has more than 50 ongoing investigations relating to the subprime market, and that it had reached preliminary settlements in principle with six of the largest firms in the auction rate securities market.