From the April 2010 issue of Investment Advisor • Subscribe!

Gaps, the SEC, and CPAs

More On Legal & Compliance

from The Advisor's Professional Library
  • Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
  • Anti-Fraud Provisions of the Investment Advisers Act RIAs and IARs should view themselves as fiduciaries at all times, whether they meet the legal definition or not.  Deviating from the fiduciary standard of full disclosure while courting clients may cause the advisor significant problems.

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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