More On Legal & Compliancefrom The Advisor's Professional Library
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
One of the biggest chores for regulators in the New Year will be continued progress in implementing Dodd-Frank, the massive Wall Street reform bill that was passed into law in July 2010.
The law firm Davis Polk & Wardwell released on Tuesday its latest Dodd-Frank “progress report” on where the various regulators stood on their implementation of the act. Following are some highlights from the report:
- As of the end of 2011, deadlines for half of Dodd-Frank's rulemaking requirements have passed, or 70% of the 286 requirements with specified deadlines. 51 (25.5%) of the passed deadlines have been met with finalized rules.
- Of these 200 passed deadlines, 149 (74.5%) have been missed. 51 (25.5%) have been met with finalized rules. 25 of the 149 missed rules have not yet had proposals released.
- Of the 400 total rulemaking requirements, 86 (21.5%) have been finalized and 155 (38.75%) have been proposed. 159 (39.75%) rulemaking requirements have not yet been proposed.
- Most of the finalized rules in 2011 related to derivatives reform, as most of the CFTC’s and SEC’s derivatives rulemaking requirements fell in July of 2011. The proposed Volcker Rule regulations and the Federal Reserve’s release on prudential standards begin a move toward bank regulator rulemaking, with many rulemaking deadlines falling in 2012.
- Public input on Dodd-Frank rulemakings remains vigorous. In 2011, the CFTC, FDIC, Federal Reserve and SEC held 1,720 reported meetings with the public on Dodd-Frank. The Progress Report includes each regulator's top five topics of discussion at those meetings, which range from the definitions of swaps and security-based swaps to consumer protection to conflict minerals.
The Securities and Exchange Commission should find its progress run a bit more smoothly this year in tackling its duties under Dodd-Frank given that the House Appropriations Committee recently approved $1.3 billion in funding for the agency, a boost of $136 million more than last year’s level but still shy of the $1.5 billion authorized under the Dodd-Frank Act for 2012.
SEC Chairman Mary Schapiro (left) said in December that over the past 16 months, of the more than 90 provisions in Dodd-Frank that require SEC rulemaking, the SEC already has proposed or adopted rules for over three-fourths of those that are required. Additionally, she said, the SEC has finalized 12 of the more than 20 studies and reports that the Act directs the agency to complete.
Dodd-Frank gives the SEC the authority to put brokers under a fiduciary mandate, and Schapiro said in early December that the agency would issue a proposed fiduciary rule in 2012 that would be “business-model neutral.”