More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- 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.
In an unusual step, SEC Commissioner Luis Aguilar issued a "Statement in Support of Extending a Fiduciary Duty to Broker-Dealers who Provide Investment Advice," on Tuesday, May 11. "I support legislation to protect investors and support extending the fiduciary duty to broker-dealers who provide investment advice," he stated.
"I unequivocally support the extension of a fiduciary duty to broker-dealers who provide investment advice. It has come to my attention that an excerpt from one of my speeches has been taken out of context to indicate otherwise," Aguilar said in the statement.
"I am issuing this statement to be clear as to my position--it is in the best interests of investors and our markets for broker-dealers who provide investment advice to be held to the fiduciary standard that is currently applied to investment advisers. I have consistently advocated this view."
Aguilar has been consistently strong in his support of "extending the fiduciary standard," as well as a self-funded SEC. As has been discussed during this go-round of legislation, SEC receives a Congressional appropriation each year from the revenues the Commission generates from fees. Over the last several years, about one-third of those fees raised went to other federal uses, not to the Commission. It's reasonable to think that a better-funded SEC can do more of what it needs to do to protect investors.
In the statement, Aguilar explained his position further: "Congress passed the Investment Advisers Act of 1940 to protect America's investors from advice-giving intermediaries who have incentives to conceal conflicts and sell investors products that, while suitable, may not be in their best interests. Broker-dealers who provide advisory services to investors should be held to the same fiduciary standard as investment advisers. The fiduciary standard will require them to act in their clients' best interests."
Read the full text of Luis Aguilar's May 11th speech.