More On Legal & Compliancefrom The Advisor's Professional Library
- The Custody Rule and its Ramifications When an RIA takes custody of a clients funds or securities, risk to that individual increases dramatically. Rule 206(4)-2 under the Investment Advisers Act (better known as the Custody Rule), was passed to protect clients from unscrupulous investors.
- Books and Records Rule Thorough and complete books and records enable RIAs to demonstrate that they have fulfilled their fiduciary obligations to clients and complied with applicable rules and regulations.
House Financial Services Chairman Barney Frank (D-Massachusetts) voted against the Harkin amendment, stating that dual oversight of equity-indexed annuities by the Securities and Exchange Commission (SEC) and the states was the best way to go.
However, Rep. Spencer Bachus (R-Alabama) ranking minority member on the House Financial Services Committee, said that over the last two years the "states did an excellent job of regulating the insurance industry." Regulating EIAs as securities, Bachus argued, would "lead to other insurance policies being classified as securities," like whole life policies. He questioned whether it was wise to put yet another product under the SEC's oversight when the agency is "struggling."
Rep. Scott Garrett (R-New Jersey) concurred with Bachus, stating that the "record shows that the states have regulated these [EIA] products appropriately."