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.
- 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.
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.