More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
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.”