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.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The SEC announced August 17 that it is seeking public comment on an alternative approach to short selling price test restrictions that the Commission says "may be more effective and easier to implement than previously proposed price test restrictions currently under consideration."
The alternative uptick rule would allow short selling only at an increment above the national best bid. As a result, the Commission has reopened the comment period for 30 days--the original comment period for the proposals issued in April ended June 19--in order to receive input specifically on this alternative.
The SEC says it "particularly seeks comments on the alternative uptick rule as a permanent market-wide approach, as well as whether the alternative uptick rule should be combined with a circuit breaker approach."