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.
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
BlackRock Inc. executives met with Federal Reserve officials this month to explain why the world’s largest money manager doesn’t pose enough risk to the financial system to merit central bank supervision.
Bloomberg reports Wednesday that Robert Connolly, BlackRock’s general counsel, and vice chairman Barbara Novick, head lobbyist and one of the New York-based firm’s co-founders, met Nov. 4 with seven Fed officials to discuss the newly formed Financial Stability Oversight Council's authority to designate a firm “systemically important” and liable to tougher oversight, according to a posting on the Fed’s website.
Bloomberg says the oversight council, created by the Dodd-Frank financial overhaul law passed in response to the global economic crisis of 2008, can recommend that the Fed strengthen rules to reduce risk at banks and other financial companies. The group will decide next year which, if any, money managers, mutual funds, hedge funds, private-equity firms, insurers and other companies deserve more monitoring because they pose a potential risk to financial stability.
Connolly and Novick told Fed officials that “unlike a bank, an asset-management company acts as an agent for its clients and does not hold investment assets on its own balance sheet,” according to the Fed website. “They also noted that clients can and do replace asset managers, with minimal switching costs, which could reduce the systemic-risk consequences arising from an asset manager falling into financial distress.”
Bloomberg notes BlackRock, which manages $3.45 trillion in assets, is among a group of financial firms and industry lobbyists who are appealing to Fed officials about the Dodd-Frank requirements, according to meeting summaries on the Fed website.
“If a bank fails, there are a whole lot of issues that are systemically relevant in the economy,” Novick said in an interview yesterday. “If an asset manager fails, there are a line of people who are competitors to that asset manager in one product or multiple products who can step into their shoes.”