More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- 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.
Authorities are investigating whether the London Interbank Offered Rate (LIBOR), the benchmark for borrowing costs among banks, was manipulated before and during the financial crisis, in 2007 and 2008. On Thursday an unnamed source said in a Reuters report that the probe is focused on five banks, including U.S. institutions.
Regulators in the U.S., Britain, and Japan are looking into whether Bank of America, Citigroup, Barclays, WestLB andUBS might have made “improper attempts” to manipulate the dollar LIBOR rate.
On Tuesday, UBS, a Swiss bank, said it had received subpoenas from U.S. and Japanese regulators on the matter. Thursday’s Financial Times was reported to say that Bank of America, Citi, and Barclays had also received subpoenas, and that while investigators wanted information from German bank WestLB, the bank had not received a subpoena.
LIBOR prices are set daily by the British Bankers Association (BBA), which said it has a calculation method to determine the benchmark that discards anything not in line with the interest rates used by major world lenders. Banks state the rates at which they expect prime banks to offer funding among themselves at 11:00 GMT. Sixteen banks had input into the dollar rates in 2008; the highest and lowest four are discarded and the remaining ones averaged to determine the rate.
During the financial crisis, when rates spiked, there was criticism that they did not reflect true market prices. The BBA said in December of 2008 that it would increase governance and scrutiny, and earlier this year four more banks were added to those which contribute to the dollar rate.
Reuters reported that, among the banks, only UBS commented; the rest either could not be reached or declined comment. Regulators also declined to comment.