More On Legal & Compliancefrom The Advisor's Professional Library
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
The Securities and Exchange Commission's inspector general, David Kotz, gave SEC Chairman Mary Schapiro and Robert Khuzami, director of the SEC's Division of Enforcement, a list of 21 improvements the enforcement division should make in the wake of the Commission's failure to detect and prevent the Bernie Madoff Ponzi scheme.
The enforcement division concurred with Kotz's recommendations--which focused on establishing formal guidance for evaluating tips and complaints as well as properly training staff--and Kotz told the enforcement division that he'd like to see, within the next 45 days, a "written corrective action plan" that includes responsible officials or points of contact, timelines for completing required actions, and milestone dates addressing how the division will address recommendations cited in Kotz's report.
A copy of Kotz's 21 recommendations can be viewed here.