More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
The Securities and Exchange Commission proposed rules on Friday stemming from the Dodd-Frank Act. The new rules would require hedge funds and other private funds to register with the commission, increase the threshold for the SEC’s oversight of advisors to $100 million in assets from $25 million (resulting in the switching of 4,100 advisors to state oversight), and create new data warehouses for swaps transactions.
The proposed rules issued on Nov. 19 would also define venture capital funds, SEC Chairman Mary Schapiro said in her opening statements at the Nov. 19 meeting. Early next year, Schapiro said, the SEC will take up a proposed rule to consider the systemic risk of private fund advisors. The Commodities Future Trading Commission (CFTC) issued on the same day its own proposal on swaps data repositories.
The Commission proposed rules on Nov. 19 that would implement new exemptions from the registration requirements of the Investment Advisers Act of 1940 for advisors to venture capital funds and advisors with less than $150 million in private fund assets under management in the United States. A loophole currently exists in Dodd-Frank which exempts private fund firms with from $100 million to $150 million from registering with the SEC.
The SEC is seeking comments on all of the proposed rules.