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.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
The President’s Working Group on Financial Markets (PWG) has released a report detailing options for reforms related to money market funds. The report particularly focuses on the vulnerabilities of money funds and how to avoid another run on money market funds that occurred when Lehman Brothers failed in September 2008.
Following the financial meltdown in 2008, the Treasury Department directed the PWG to develop this report to “assess options for mitigating the systemic risk associated with money market funds and reducing their susceptibility to runs,” which refers to the rapid redeeming of money market fund shares that occurred during the crisis. The PWG states in the report that while it agrees a number of positive reforms have been implemented, more should be done to address money market funds’ susceptibility to runs.
With its report in hand, the PWG is now requesting that the Financial Stability Oversight Council (FSOC), established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, “consider the options discussed in this report and pursue appropriate next steps.” The PWG states that the Securities and Exchange Commission, which regulates money market funds, will assist the FSOC in any analysis and that the SEC will solicit public comments, “including the production of empirical data and other information in support of such comments.” A notice and request for comment will be published in the near future.