More On Legal & Compliancefrom The Advisor's Professional Library
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
- 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.
Kristina Fausti of Fi360 says that Senator Herb Kohl's amendment calling for a new board to oversee all advice givers, "would create gaps by pulling some investment advisors under the umbrella of a financial planning oversight board while leaving others out. It would also keep current gaps in place with regard to brokers because not all brokers who provide advice will be regulated as financial planning professionals." Also, Fausti says, the proposed amendment "would indirectly bring persons such as CPAs under SEC regulation, creating a gap in the SEC's knowledge and expertise, which is solely focused on investment advice as it relates to securities."