More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- 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.
? 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."