More On Legal & Compliancefrom 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.
- 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.
The house Financial Services Committee released proposed language for discussion by the House-Senate Committee that is finalizing Wall Street reforms legislation. It is expected that a final bill will be presented to President Obama by July 4.
The House recommends that the language in the final bill include the requirement of the fiduciary standard of conduct for brokers who provide investment advice to retail investors. The Senate's version calls for a "study" of whether brokers "should have to put investor's interests first."
The House released this recommendation to ammend the language for the final bill, replacing the Senate's text "with the House provision requiring the SEC to impose the fiduciary duty on broker-dealers providing investment advice to retail customers. (House ? 7103, p. 1276)."
The House also proposes that the Conference Committee, "Add the House provision requiring the SEC to study the need for enhanced examination and enforcement resources for investment advisers. (House ? 7107, p. 1289) "
The Conference Committee will debate these proposals Wednesday, June 16 starting at 11 am.