More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
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.
Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, has a big fight on his hands: He’s not only beating back attempts by House Republicans to water down Dodd-Frank and stall putting brokers under a fiduciary mandate, but he’s also trying to ensure that the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) are adequately funded.
In an email message to Investment Advisor in early April, Johnson said that Republicans’ efforts “to tear down” the Dodd-Frank reform “are attempts to go back to the days of too-big-to-fail banks, backroom derivatives deals and risky subprime mortgages.” The American people, Johnson continued, “want Congress to focus on the future and on creating new jobs, rather than trying to dismantle this historic reform.”
Indeed, it was “regulatory shortfalls in the marketplace” Johnson said in his email, that “were a major contributing factor to the 2008 economic crisis.” Dodd-Frank “strengthened regulators’ ability to police the financial system to help protect consumers and prevent another such crisis.” The SEC and CFTC, he said, “serve on the front lines investigating fraud and abuse, [but] Republicans don’t want to provide them with the necessary resources to do their jobs and effectively protect American taxpayers and investors.”
While the tussle to implement Dodd-Frank will continue, Republicans’ attempts to rein in Dodd-Frank will likely have minimal affect as Democrats still control the Senate and President Obama holds the veto pen.
Johnson’s committee has yet to announce when, or if, a specific hearing would be held on the SEC’s study regarding putting brokers under a fiduciary mandate or the self regulatory organization (SRO) study. However, Johnson noted in his email message that the SEC’s report under Section 914 of Dodd-Frank regarding an SRO for advisors “raised a number of important concerns.” While admitting that “conclusions either way at this point would be premature” as to whether an SRO is needed for advisors, the Senator promised that “I will be monitoring this issue carefully.”
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.