More On Legal & Compliancefrom The Advisor's Professional Library
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
- Books and Records Rule Thorough and complete books and records enable RIAs to demonstrate that they have fulfilled their fiduciary obligations to clients and complied with applicable rules and regulations.
Treasury Secretary Timothy Geithner and Lawrence Summers, director of the National Economic Council, gave a preview June 15 of the Obama Administration's financial services reform proposal in a Op-Ed piece for The Washington Post.
In the OpEd, Geithner and Summers write that the Administration's goal "is to create a more stable regulatory regime that is flexible and effective; that is able to secure the benefits of financial innovation while guarding the system against its own excess."
The Obama plan focuses on five key areas, Geithner and Summers say. The proposal will raise capital and liquidity requirements for all institutions, they say, with "more stringent requirements for the largest and most interconnected firms." Second, the Administration's plan will "impose robust reporting requirements on the issuers of asset-backed securities; reduce investors' and regulators' reliance on credit-rating agencies; and, perhaps most significant, require the originator, sponsor, or broker of a securitization to retain a financial interest in its performance." Harmonizing the regulation of securities and futures will also be sought.
Third, the plan will focus on consumer protection measures, and will put in place "a stronger framework for consumer and investor protection across the board," Geithner and Summers say. Fourth, the Administration will set up a "resolution mechanism that allows for the orderly resolution of any financial holding company whose failure might threaten the stability of the financial system." And fifth, the Administration will lead the charge in improve regulation and supervision around the world.
To read the OpEd in its entirety, please visit the Post's site here.