More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- 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.
There will be no federal regulation of insurance--for now. The House Financial Services Committee voted December 2 to create the Federal Insurance Office (FIO), which is to be housed within the U.S. Treasury Department. The Committee also passed December 2 the Financial Stability Improvement Act (H.R. 3996) by a straight party line 31-27 vote. Both of these bills now go to the full House floor.
As Washington think-tanks note, the Financial Stability Improvement Act is the last major component of House Financial Services Chairman Barney Frank's reform package. It is expected that the full House will start debating on December 9 all financial services reform measures--including the aforementioned bills passed December 2--with final votes possibly taking place December 11.
Frank (D-Massachusetts) made clear on December 2, however, that federal regulation of insurance is still very much on the table, noting that there will be hearings on the bills that seek to achieve federal regulation of insurance come spring.
The original bill (H.R. 2609) introduced last spring by Rep. Paul Kanjorski (D-Pennsylvania), ranking member of the House Financial Services Committee, would have created an Office of Insurance Information, which he said would have given lawmakers the information they need to make policy decisions. As insurance trade groups have noted, changes to Kanjorski's bill were made during the summer to align it with the Office of National Insurance proposed by the Obama Administration.
According to the National Association of Mutual Insurance Companies (NAMIC), the bill passed on December 2 now contains specific language that does not establish a supervisory or regulatory authority over the business of insurance and bars the FIO from pre-empting state insurance laws governing rates, premiums, coverage requirements, antitrust laws, underwriting, or sales practices. FIO can request data from an insurer only after first checking with state regulators and the National Association of Insurance Commissioners (NAIC) that the required information is not already publicly available.
As for what the FIO can do, a House Financial Services Committee spokesperson said the Federal Insurance Office "will monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis and undermine the entire financial system."