More On Legal & Compliancefrom The Advisor's Professional Library
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
The Securities and Exchange Commission (SEC) is moving at a rapid pace to repair its sullied reputation after being lambasted by Congress for failing to stop the Bernie Madoff Ponzi scheme. During a recent speech before the New York City Bar Association in Manhattan, Robert Khuzami, the new director of the SEC's enforcement division, said that the SEC is giving his division authority to issue more subpoenas and provide people with more incentives to cooperate with investigations. Under the changes, SEC staff could get approval from their supervisors to issue subpoenas, and forego having to get permission from the full Commission.
Comparing the period from late January 2009 to the present to roughly the same period in 2008, Khuzami said the enforcement division has opened 10% more investigations (approximately 525, compared to 475); has been granted 118% more formal orders (which grants the enforcement division subpoena powers--275, compared to 126); has filed 147% more TROs (52, compared to 21); and has filed nearly 30% more actions (397, compared to 306).
Khuzami's comments come at the same time that SEC Chairman Mary Schapiro told the Financial Times in a recent interview that she'd like the SEC to become a self-funded agency like other regulators. The Investment Adviser Association (IAA) said in a statement that it "is in strong agreement with Chairman Schapiro that the SEC would be better able to fulfill its investor protection mission if it was able to operate as a self-funded agency like other financial regulators." Being self-funded would mean the SEC would no longer be dependent upon legislative appropriations.