More On Legal & Compliancefrom The Advisor's Professional Library
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
Well, the Obama Administration has come out with its sweeping recommendations "to restore confidence in the of integrity of our financial system" in a massive 85-page white paper. In it the President's team proposes a five-part initiative to increase regulation of virtually every corner of American finance from banks to brokerage firms to insurance, expanding the power of the Federal Reserve, the FDIC, and the SEC, and creating too many new councils and agencies for me to tally up. (You probably don't recall that Herbert Hoover tried the same thing in 1929: It didn't work out so well.)
For the independent advisory world, the most direct impact of the White Paper appears in a single sentence (which is not even in the Summary, you have to read the whole thing to find it), under the third initiative entitled "Protect Consumers and Investors from Financial Abuse." The second point of the third section (on page 14 for those of you who are following along) reads: "The SEC should be given new tools to increase fairness for investors by establishing a fiduciary duty for broker-dealers offering investment advice and harmonizing the regulation of investment advisors and broker-dealers."
To read the rest of Bob's blog, please click here.