More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
The Securities Investor Protection Corp. (SIPC) said it expects its Board of Directors to announce in mid-September, its decision concerning the referral provided by the Securities and Exchange Commission (SEC) with respect to the liquidation of the Stanford Group Co., operated by Robert Allen Stanford.
SIPC, which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, filed an action on Feb. 17, 2009, in the U.S. District Court for the Northern District of Texas alleging that Stanford orchestrated an $8 billion fraud based on false promises of guaranteed returns related to certificates of deposit (CDs) issued by the Antigua-based Stanford International Bank (SIB).
SIPC says the SEC’s Complaint alleged that SIB sold approximately $7.2 billion of CDs to investors by promising returns that were “improbable, if not impossible.” SIPC explained in a release that in response to the SEC’s request for emergency relief, “the Court immediately issued a temporary restraining order, froze the defendants’ assets, and appointed a receiver to marshal those assets.” The SEC filed an amended complaint on June 19, 2009, alleging that Stanford conducted a Ponzi scheme.
SIPC President and CEO Stephen Harbeck said in the release that SIPC “has already started conferring with the SEC and the Stanford receiver regarding the SEC’s referral in the Stanford matter.”
The SEC’s referral on June 15 was the first time the SEC had informed SIPC of the possibility that the Stanford matter was appropriate for a proceeding under the Securities Investor Protection Act (SIPA).