More On Legal & Compliancefrom The Advisor's Professional Library
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- 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.
A new draft of Rep. Spencer Bachus’ bill calling for a self-regulatory organization for advisors is expected out “very soon,” David Tittsworth, executive director of the Investment Adviser Association in Washington, D.C., told AdvisorOne Wednesday.
After the revised discussion draft is released—which probably won’t be this week as the House is in recess—it’s likely that Bachus (left), R-Ala., chairman of the House Financial Services Committee, and Rep. Scott Garrett, R-N.J., chairman of the House Financial Services Capital Markets Subcommittee, “will mark up the bill in the Capital Markets Subcommittee followed by the full Financial Services Committee soon thereafter,” Tittsworth says.
While it’s hard to speculate what revisions the draft legislation will include, Bachus’ office has been deluged with visits from members of the advisor and broker-dealer industries airing their concerns about the original draft bill, which was released on Sept. 8. As Tittsworth (left) points out, state regulators oppose the requirement in Bachus’ first draft that state-registered advisors would have to join an advisor SRO. Industry groups have been lobbying for other changes as well.
The Securities and Exchange Commission can’t move forward with an SRO until Congress enacts legislation telling it to do so. The idea of an SRO for advisors has raised much controversy among RIAs, broker-dealers, and industry groups as to which organization, if any, should be charged with that duty.
Bachus' proposed bill would shift regulation and oversight of investment advisors to the Financial Industry Regulatory Authority (FINRA) or another private regulator, except for certain advisors whose assets under management are concentrated in mutual funds, private funds, or large clients.
While an SRO bill may get through the House, the SRO bill looks to be a tough sell in the Senate. A Senate Banking Committee spokesperson told AdvisorOne that Senate Banking Committee Chairman Tim Johnson, D-S.D., believes the SRO issue “deserves further exploration before moving forward with any legislative proposals.”