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.
- 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.
This is an extended version of the profile that appeared in the May issue of Investment Advisor, part of AdvisorOne's Special Report profiling this year's members of the IA 25, the most influential people in and around the advisor universe. See the complete list and Special Report schedule for extended profiles of all the 2011 members of the IA 25.
Introducing Eileen Rominger to a room full of investment advisor compliance professionals on March 11, David Tittsworth of the Investment Adviser Association coaxed spontaneous laughter from the audience when he said, only partly tongue-in-cheek, “I think it’s fantastic that she’s not an attorney. She’s a real portfolio manager!”
All kidding aside, Rominger has her work cut out for her. She was named the new director of investment management at the SEC on Jan. 18, replacing veteran SEC official Andrew “Buddy” Donohue in a high-profile role at the Commission that has grown even more important since the big banks bailout and the investment scandals that were lowlighted by Bernie Madoff’s Ponzi scheme. Many SEC critics have long charged that SEC staff not only missed the Madoff scandal and Wall Street’s role in the real estate bubble and its subsequent bursting, but that its staffers don’t have the investing acumen that would allow regulators to keep pace with Wall Street’s "ingenuity" in devising sophisticated investment vehicles.
With her background, sophistication should not be a problem for Rominger. Prior to accepting the SEC post, Rominger spent 11 years at Goldman Sachs Asset Management, ending up as Goldman’s global chief investment officer. Before Goldman, she ran money and served on the executive committee at Oppenheimer Capital.
Moreover, Rominger will play a key role in implementing Dodd-Frank, especially the fiduciary standard. As Kristina Fausti of fi360 said at the time of Rominger’s appointment, while the SEC’s Division of Trading and Markets “will have primary responsibility for drafting any rules that affect broker-dealers’ standard of conduct, it will seek guidance from and work closely with the Division of Investment Management on fiduciary issues.”
Rominger certainly seems to have embraced the fundamental value of a fiduciary standard. At the IAA conference, Rominger told the group that “now more than ever it’s important not only to have good compliance,” but to have the compliance department of an advisory firm “build a good corporate culture of ethics.” She said the SEC has “the same goal as you do: to further the fundamental fiduciary relationship you have with clients.”
Carlo di Florio, director of the SEC’s Office of Compliance, Inspections and Examination, cited Rominger as an example of the kind of talent that SEC Chairman Mary Schapiro has been attracting to the Commission. Whether Schapiro will be able to continue to hire such talent is one of the questions that may well be answered as the Congressional dickering over the SEC budget is addressed in the 112th Congress.
Read more about the rest of the IA 25.
Don't see someone on this year's IA 25 that you think belongs there? Submit their name and your justification for why they should be considered among the most influential people in and around the advisor universe in the Comments field below. We promise to consider reader nominations, but please, no ad hominem attacks on those who were named in this or past years.--Ed.