More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- 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.
At the House-Senate conference to reconcile respective Wall Street reforms bills, House Financial Services Chairman Barney Frank called for the final bill to include fiduciary standard for brokers who provide investment advice to retail investors and for the SEC to keep the funds it raises through current fees. These two reforms are "essential to protecting investors," says Frank at reconciliation conference for Wall Street reforms bills. These were contained in the House bill but stripped from the Senate version.
Frank noted a long list of letters from industry groups that support the fiduciary standard, including the "National Association of Financial Planners, AARP and National Governors' Association," and said he was particularly "impressed with" the support of the Texas Securities Commissioner, Denise Voigt Crawford.
Rep. Paul Kanjorski (D-Pennsylvania) called the fiduciary requirement "long overdue." He also admonished members that "during the worst financial disaster in the country we were grossly underfunding the SEC." SEC self-funding is much misunderstood; currently the SEC only receives a portion of the fees it raises. Congress makes an appropriation to the SEC and has for the past several years kept about one-third of the fees that the SEC collects each year. The difference has hovered near $400 million. Self-funding would also allow the SEC to budget certain items over multiple years instead of year-by-year, which can make a difference in spending on items like technology.
The hearing is being broadcast live on C-Span.
Comments? Please send them to email@example.com. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.