More On Legal & Compliancefrom The Advisor's Professional Library
- Scope of the Fiduciary Duty Owed by Investment Advisors A fiduciary obligation goes beyond the suitability standard typically owed by registered representatives of broker-dealer firms to clients. The relationship is built on the premise that the advisor will always do the right thing for the person or entity receiving advice.
- 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 Financial Industry Regulatory Authority (FINRA) brought more enforcement actions against broker-dealers through April 2011 than in the same period for the past three years, according to a Reuters report.
According to Bradley Bennett, the BD regulator's enforcement chief, FINRA has brought 449 cases through April 30, the highest amount for this four-month period since 2007. FINRA also has levied $14.5 million in fines, an increase from the same period last year, Bennett said during a May 18 Securities Industry and Financial Markets Association luncheon in New York.
By comparison, Reuters notes that, according to Bennett, FINRA brought 1,310 disciplinary actions and levied fines totaling $42.5 million for all of last year, compared with 1,158 actions and $48 million of fines in 2009.
Bennett also noted during the luncheon that the bulk of FINRA’s work, 70% to 80%, involves holding brokers accountable for basic rules, from mailing investment disclosures and vetting customers to protecting the privacy of client information.
In a related note, FINRA on May 15 launched the FINRA Disciplinary Actions Online database, a Web-based searchable system allowing investors to access brokers’ disciplinary actions via FINRA’s website at www.finra.org.