More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
The SEC voted unanimously Wednesday to seek public comment on a wide range of issues raised by the use of derivatives by mutual funds and other investment companies regulated under the Investment Company Act—including exchange-traded funds (ETFs) and closed-end funds.
The SEC says it is seeking public input through a concept release, and that it will use the comments it receives to help determine whether "regulatory initiatives or guidance is needed that would continue to protect investors and fulfill the purposes underlying the Investment Company Act." Among the issues the SEC said it is concerned about are the potential implications for fund leverage, diversification, exposure to certain securities-related issuers, portfolio concentration and valuation.
“The derivatives markets have undergone significant changes in recent years, and the Commission is taking this opportunity to seek public comment and ensure that our regulatory approach and interpretations under the Investment Company Act remain current, relevant, and consistent with investor protection,” said SEC Chairman Mary Schapiro in announcing the call for comments.
At the end of 2010, registered investment companies held more than $13.1 trillion in assets and more than 40% of all U.S. households owned their shares, the SEC says.
The concept release is a continuation of the SEC’s ongoing review of mutual funds’ use of derivatives announced last year. The concept release requests public input on the issues that the SEC staff has been examining for potential ways to improve the regulation of mutual funds’ use of derivatives.