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.
- 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.
Two states and one regulatory group took action on Thursday to prevent any restrictions on lawsuits associated with two private-placement sales by Securities America, which was put up for sale by Ameriprise Financial on Monday.
The Massachusetts Securities Division of the Secretary of the Commonwealth, the Commissioner of Securities and Insurance-Montana State Auditor, and the North American Securities Administrators Association filed a letter with the judge in Dallas who is deliberating in the case of Billitteri vs. Securities America, expressing concern that certain provisions in the proposed partial settlement could be read to stop state regulatory proceedings or limit remedies available to investors.
“The states and NASAA object to any provision in any prospective settlement that would limit or impede state securities regulators, in any way, from bringing regulatory enforcement actions for violations of state law,” the parties wrote in the letter. The attorneys that signed the letter are Gina M. Gombar on behalf of Massachusetts, Jameson C. Walker for Montana and Tina G. Stavrou for NASAA.
Massachusetts securities regulators have taken action against Securities America regarding sales of Medical Capital notes to more than 60 investors. Final oral arguments were heard on Wednesday in that case. Montana regulators also have taken action against the IBD concerning Medical Capital notes, and a hearing in the case is set for July 19.
“The language [in the Texas settlement] appears to be an attempt by the settling parties to enjoin the regulatory actions of non-party states. Although the states are not mentioned outright, they are included by implication in the above-referenced provisions,” the letter explained.
“These provisions could be used to argue that state regulatory authorities are prevented from seeking redress for investors under state law, which is inconsistent with the prior ruling of the court in this matter. Indeed, the States and NASAA are concerned that this is presently what SAI will argue by invoking the language described above in connection with ongoing state actions,” the parties said.
The two states and NASAA are requesting that the court in Dallas re-word certain provisions and “exclude state regulatory actions or indicate that these provisions are not meant to limit any action brought by states based on violations of state or federal securities laws.”
They conclude, “The inclusion of the above-referenced provisions is not in the investors’ best interest, and these deficiencies must be addressed before granting the plaintiff’s motion [in the Texas case].”