More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- 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.
Lori Richards, the director of the Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE), is leaving the agency.
In a press release announcing her departure from the SEC, Richards stated that "After 14 years leading the SEC's exam corps and more than two decades at the SEC, I've decided to take on new challenges." Richards has been director of OCIE since it was created in May 1995 by former SEC Chairman Arthur Levitt. SEC Chairman Mary Schapiro stated in the release that she's "had the honor and privilege of knowing and working with Lori for many years, and have always appreciated her dedication, leadership and integrity. I respect her decision to leave the SEC and am grateful for her many years of public service."
The news of Richards' departure comes less than a week before the House Financial Services Capital Markets Subcommittee's June 14 hearing to discuss the SEC's current state and agenda; Schapiro is slated to testify.
Richards' departure is also likely a sign that changes are afoot for OCIE. Talk has been swirling for some time that OCIE was at fault for not stopping the Bernie Madoff Ponzi scheme. There have also been recommendations that OCIE either be done away with entirely or that its duties should be folded back into other SEC divisions, namely Trading and Markets and Investment Management, notes Brian Rubin, a partner with the law firm Sutherland in Washington, D.C.
OCIE Associate Director and Chief Counsel John Walsh will serve as Acting Director of OCIE when Richards steps down on August 7.
In the release the SEC noted a number of Richards' achievements as head of OCIE.
Richards managed the SEC's nationwide examination oversight programs for investment advisors, hedge fund managers, mutual funds, broker/dealers, clearing agencies, transfer agents, trading markets, self-regulatory organizations and credit rating agencies. She spearheaded numerous examination initiatives, including targeted examination sweeps focused on emerging compliance risks, as well as routine, cause, and other examination reviews of industry firms for compliance with the law.
Richards created a risk assessment function and program in OCIE, the SEC noted, and led efforts to enhance the surveillance and oversight of SEC-registered firms. To foster stronger compliance in the securities industry, under her leadership OCIE created the CCOutreach program and issued ComplianceAlerts and numerous public reports describing compliance practices in the securities industry.