From the April 2010 issue of Investment Advisor • Subscribe!

Gaps, the SEC, and CPAs

More On Legal & Compliance

from The Advisor's Professional Library
  • Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
  • Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients’ privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.

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."

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