More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- 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.
? At the 2010 Investment Management Consultants Association (IMCA) New York Consultants Conference on January 10, IMCA introduced its new president, John Granzow, who began a two-year term on January 1. He is managing director of investments at Wells Fargo Advisors, LLC, in Charlotte, North Carolina. In addition, IMCA announced that Sean Walters will be its new executive director, when Edythe (Dede) Pahl retires on March 1. Pahl announced her plan to retire last summer. Walters has been IMCA's deputy executive director since June 2007.
? The Securities and Exchange Commission (SEC) has appointed Carlo V. di Florio as director of the agency's embattled Office of Compliance Inspections and Examinations (OCIE). OCIE, formerly headed by Lori Richards, received a lot of scrutiny from Congress and the industry for failing to detect the Bernie Madoff Ponzi scheme. As head of OCIE, di Florio will oversee the SEC's nationwide examination programs for investment advisors, broker/dealers, mutual funds, credit rating agencies, and self-regulatory organizations among other entities.
? The SEC also adopted December 16 custody rules that would require advisors who have custody of clients' assets to submit to annual surprise examinations by outside auditors. The new rules, the SEC says, "provide safeguards where there is a heightened potential for fraud or theft of client assets." According to the SEC, the rules "promote independent custody and require the use of independent public accountants as third-party monitors. Depending on the investment adviser's custody arrangement, the rules would require the adviser to be subject to a surprise exam and custody controls review that are generally not required under existing rules."