More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
Mary Schapiro, chairman of the Securities and Exchange Commission, said Friday that she “still strongly believes” that putting brokers under a fiduciary mandate “is the direction that we need to go in,” and noted that economists and staff at the SEC who are responsible for performing a “more detailed” cost-benefit analysis on the agency’s fiduciary rule will “soon” ask the public to weigh in on a set of questions regarding the agency’s economic analysis.
Schapiro made her comments to reporters after her remarks at the SEC Speaks conference in Washington, held by the Practising Law Institute. Schapiro told reporters that the agency will be seeking “more data” regarding the agency’s economic analysis of its fiduciary rule.
SEC spokesman John Nester said that the request for feedback on the economic analysis on the fiduciary rule will be similar to the one the agency requested in January on financial literacy, "only with more questions and more details." Nester said no time has been set on releasing the request.
While Schapiro has said that release of a proposed fiduciary rule would occur this year, industry officials remain skeptical that such a timeline can be met, as pressure from Capitol Hill on the SEC to conduct a "more rigorous" cost-benefit analysis on its fiduciary rule has turned into a time consuming endeavor.
Schapiro also said Friday that it’s time for the agency to “take the next step” in reforming money market funds. Money market funds, she said, “remain susceptible to runs; we need to move forward in addressing these structural risks.”
While Schapiro acknowledged that it’s “hard to miss the hue and cry being raised by the industry against” the agency’s proposed money market fund reform measures, the agency, she said, is still considering “two serious options for addressing the core structural weakness” in money market funds: float the net asset value and impose capital requirements, combined with limitations or fees on redemptions.