More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced May 10 that the two agencies have formed a joint committee that will address emerging regulatory issues. The Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues was one of the 20 recommendations included in the agencies' harmonization report issued last year.
The two agencies say that the joint Committee will develop recommendations on emerging and ongoing issues relating to both agencies. The first item on the committee's agenda is conducting a review of the market events of Thursday, May 6, in which the Dow Jones industrial index dropped 1,000 points. The Committee, the agencies say, "will make recommendations related to market structure issues that may have contributed to the volatility, as well as disparate trading conventions and rules across various markets."
The House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises is holding a hearing Tuesday, May 11, on the dramatic stock market drop. Both SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler are scheduled to testify and they will present their joint preliminary findings regarding the market drop to the Committee.
"As last week's events remind us, our markets are increasingly interrelated and interdependent so we need to appreciate how events in one arena can potentially impact investors and markets elsewhere," said SEC Chairman Mary Schapiro, in a statement. "The Joint Committee will serve an essential role in addressing that challenge."
The SEC and CFTC say that the Committee's charter provides for a broad scope of interest, including:
? Identifying of emerging regulatory risks.
? Assessing and quantifying of the impact of such risks and their implications for investors and market participants.
? Furthering the SEC's and CFTC's efforts on regulatory harmonization.
Chairman Schapiro and Chairman Gensler will serve as co-chairs of the Joint Committee.
According to the SEC and CFTC, members of the Joint Committee now include (additional members to join in coming days):
? Brooksley Born, Former Chair of the CFTC
? Jack Brennan, Former Chief Executive Officer and Chairman, Vanguard
? Robert Engle, Michael Armellino Professor of Finance at the NYU Stern School of Business
? Richard Ketchum, Chairman and Chief Executive Officer, FINRA
? Maureen O'Hara, Professor of Management, Professor of Finance, Cornell University
? Susan Phillips, Dean and Professor of Finance, The George Washington University School of Business
? David Ruder, Former Chair of the SEC