More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
The Dodd-Frank bill requires a number of studies by regulators, including a six-month SEC study of whether brokers who provide advice to individual investors should have to put those investors' interests ahead of their own. If the SEC concludes that it is necessary after the study, it can adopt rules mandating that brokers who provide advice to investors do so under the fiduciary standard, as investment advisors do, under the Investment Advisers Act of 1940.
The groups are calling for papers "from scholars, researchers, practitioners, and professionals for 1,250- to 4,000-word paper contributions to an issue slated for publication during the Fall of 2010. This issue focuses on the application of fiduciary duties to the delivery of investment advice as potentially impacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Completed manuscripts are due not later than August 31, 2010."
Fiduciary duty--the duty of loyalty--is not new. Investment advisors, who are regulated under the Investment Advisers Act of 1940, are already required to conduct themselves according to 70 years of settled law regarding their fiduciary duty toward investors. Fiduciary duty, based on 800 years of common law, is the highest duty in law.
"The importance of research-based analysis founded in the law cannot be overstated," Knut A. Rostad, chairman of the Committee for the Fiduciary Standard, told WealthManagerWeb.com. The Committee is a group of more than 800 practitioners and leaders from the investment industry that advocates for the fiduciary standard on behalf of investors. This editor is a member of the Committee.
"The SEC is under huge time and resource pressures to complete numerous studies required by the reform legislation. We believe research-based papers from scholars and practitioners on key issues around the delivery of investment advice in a brokerage setting will be very helpful," Rostad said in the release.
Papers should have, "An emphasis on the purpose, function and parameters of the fiduciary standard of conduct under the Investment Advisers Act of 1940, contrasts with state common law, as well as their application to investment advisers, and its potential application to the investment advisory activities of broker-dealers, is desired. Economic analysis of the issues, including the application of behavioral research, is also requested," according to the call for papers document.
In addition to publication of select papers in the Review, the Committee for the Fiduciary Standard will select papers that "are likely to provide substantial assistance to the SEC (regardless of the point of view expressed) will be assembled by The Committee for the Fiduciary Standard and submitted as a group to the SEC in early September 2010."
In addition, The Committee may hold a Public Policy Conference early this fall. If so, the location and date for the conference will be announced by August 20, 2010. "Select authors will be invited to present their papers and/or participate in panel discussions. This Conference will address current issues in the regulation of investment advice, with an emphasis on understanding fiduciary standards of conduct, for the purpose of providing valued input to policy makers."
Papers should be submitted by August 31. Please e-mail any questions and all papers to: email@example.com
Comments? Please send them to firstname.lastname@example.org. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.