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.
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
Phyllis Borzi, the new assistant secretary of labor and head of the Department of Labor's Employee Benefits Security Administration (EBSA) gave her first press interview since being confirmed during the summer.
Borzi made no mention of the HR 2989 bill pending in Congress that is specific in the fee disclosure requirements, according to Dalbar, a leading financial-services market research firm, and instead expressed goals that were identical to those underlying the bill.
By making no mention of HR 2989 in discussing participant advice, Borzi reinforced the presumption that passage of this bill is not expected, according to Dalbar.
"We're taking very seriously the comments that people made about the regulations going well beyond the scope of the statute," Borzi said.
As for target-date funds, given the sensitivity of Borzi as well as the Congress to "conflicts of interest on Wall Street," they are unlikely to escape without changes. And revisions to target-date fund regulations should be expected in early 2010, but failing that it will be 2011-- after the mid-term elections.
The new regulations will most likely affect fund naming, advertising and "fund of fund" restrictions. The restrictions are likely to be a "level fee" requirement that prohibits fee differences between automatically assigned (QDIA) investments, Dalbar notes.
The research group, which is based in Boston and led by Lou Harvey, also concludes that automatic IRAs will be part of the next pension legislation to pass Congress in early 2010 or, if not, in 2011.