More On Legal & Compliancefrom The Advisor's Professional Library
- The New and Improved Form ADV Whether an RIA is describing its investment strategy in advertisements or in the new Form ADV Part 2, it is important the firm articulates material risks faced by advisory clients and avoids language that might be construed as a guarantee.
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
When Jon Corzine returned to the securities business to run MF Global, he did so without requalifying or registering, as required by FINRA. Apparently FINRA waived the requirements for the former New Jersey governor, who resigned from the now-bankrupt MF Global last week.
According to a story in Forbes, a search on FINRA’s BrokerCheck failed to turn up the former head of Goldman Sachs, who returned to the financial world after he lost his bid for re-elecition as New Jersey governor in 2009. Although MF Global was listed as a FINRA member firm, the Forbes story said Corzine was not registered, as is required for principals according to FINRA’s own website, when he took the helm of MF Global.
The SRO may have granted Corzine a waiver despite the fact that he had been out of the business for approximately 11 years. The ex-governor sat only for a Series 32 exam in 2010, said Singer, despite the fact that his Series 7 and Series 24 credentials had long since expired. Corzine last sat for the former in 1975 and the latter in 1982.
FINRA is generally insistent on the need for registration—the Forbes story summarized the organization’s requirements as, “Anyone actively involved in the member’s investment banking or securities business must be registered”—and recertification, according to Forbes, which referred to other instances in which individuals without Corzine’s standing were unsuccessful in obtaining waivers.
The story, written by Bill Singer, asked whether someone at FINRA did Corzine a favor by granting a double waiver, and concluded, “You tell me if my thesis about one FINRA for the small fry and one FINRA for the big fish isn’t true.”