More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- How to Avoid Sabotaging Your Compliance Exam There is much more to compliance examination survival than knowing all of the rules. It helps to understand why the rules were put in placeand to recognize that examiners are not the enemy.
The House and Senate conferees will resume their conference on Tuesday, June 22. Senator Christopher Dodd (D-Connecticut) has said that Senator Tim Johnson (D-South Dakota) is working on a compromise to the House's language calling for a fiduciary duty for brokers. Johnson drafted the original language calling for an SEC study of gaps in regulation for advisors and brokers, instead of imposing a fiduciary duty on brokers, as set out in the House bill.
Rep. Barney Frank (D-Massachusetts), chairman of the House Financial Services Committee, who is chair of the conference committee, is reported as saying Wedneday during the conference process that he was optimistic a compromise position would emerge giving the SEC rulemaking authority on the fiduciary issue. One possibility is to use the Senate language calling for an SEC study, but at the end of the study to give the SEC the rulemaking authority to put brokers under a fiduciary standard. This is what SEC Chairman Mary Schapiro has been pressing for.
Frank said Wednesday during the conference debate that the House language specifically stated that "If there was no personalized advice, there's no [fiduciary] duty. If so, it ends the day that the advice was given." Frank added, "I cannot foresee [the House] giving in on fiduciary responsibility for individual investors."
House conferees also on Wednesday agreed to the language in the Senate bill that would approve self-funding for the SEC. But in a strange turn, Dodd and Senator Richard Durbin (D-Illinois), said they had serious concerns about the language. Frank, who was surprised by the Senators' position, was reported to have said that, "It was in their bill, now all of a sudden it's an open question." Dodd told the conference committee members on June 17 that "we've got some work to do before we can present a counter offer" on SEC funding.