More On Legal & Compliancefrom The Advisor's Professional Library
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
- 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.
It's time for the Senate to stop talking and start voting on Sen. Chris Dodd's financial services reform bill, following a report last week on what the bill would cost from the Congressional Budget Office, a speech at Cooper Union in New York by President Obama calling for reform, and a Republican filibuster attempt. Democrats will seek to break that logjam with a procedural vote on Monday, April 26, expected some time after that body convenes at 2:00 PM Eastern.
A number of interest groups are conducting last-minute campaigns to have their needs met in the legislation, including the Financial Planning Coalition, which gave an update on its lobbying efforts during the FPA Retreat on April 23, and some insurance companies, such as the USAA, which is urging its (mainly U.S. military-associated) members to lobby Congress against the so-called "Volcker rule" that would limit a bank or insurance company's investment options. The FPA leadership, by the way, presented its priorities during last week's FPA Retreat.
Perhaps the biggest market-moving news of the week will come Friday, April 30, when the Commerce Department releases the preliminary GDP estimates for the first quarter;
The Federal Reserve's Open Market Committee begins a two-day meeting on Tuesday, April 27, making its announcement on April 28. On the same day comes the State Street Investor Confidence Index and the Conference Board Consumer Confidence report, along with the Case/Shiller S&P home price index; the last business day of the week and the month brings the Reuters/University of Michigan consumer sentiment report, and last but not least comes the first report on first quarter GDP.
As for first quarter earnings reports, 167 of the companies in the S&P 500 report this week. Companies reporting that advisors would find of particular interest include, on the 26th, BlackRock ; on the 27th, OptionsXpress and Waddell and Reed; on the 29th, Symetra Financial; and on the 30th, Genworth, and The Hartford.
Back in Washington, Lloyd Blankfein of Goldman Sachs is scheduled to testify on the 27th, along with other Goldman present and past players, as part of the continuing inquiry by the Subcommittee on Investigations of the Senate Homeland Security and Governmental Affairs committee into the financial crisis; it released internal Goldman e-mails on April 24 showing, in the words of Subcommittee Chairman Carl Levin, that "investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis."
On the 28th, the Senate Health, Education, Labor, and Pensions (HELP) committee meets on the nomination of Joshua Gotbaum to be director of the Pension Benefit Guaranty Corporation, while a subcommittee of the Senate Appropriations Committee holds a hearing on the FY 2011 budget for the Commodity Futures Trading Commission and for the SEC--Gary Gensler and Mary Schapiro are scheduled to testify. On the 29th come two more hearings: the House Financial Services Subcommittee on Capital Markets holds a hearing on the implications of the Greek debt crisis for the U.S. government, while the Subcommittee on Economic Policy of the Senate Banking, Housing, and Urban Affairs Committee considers "short-termism in financial markets."