More On Legal & Compliancefrom The Advisor's Professional Library
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
The Securities and Exchange Commission on Tuesday announced a rule proposal to help protect investors from identity theft by ensuring that broker-dealers, mutual funds, and other SEC-regulated entities create programs to detect and respond appropriately to red flags.
The SEC issued the proposal jointly with the Commodity Futures Trading Commission. As the SEC notes, Section 1088 of the Dodd-Frank Act transferred authority over certain parts of the Fair Credit Reporting Act from the Federal Trade Commission to the SEC and CFTC for entities they regulate. The proposed rules, the SEC says, are substantially similar to rules adopted in 2007 by the FTC and other federal financial regulatory agencies that were previously required to adopt such rules.
The rule proposal would require SEC-regulated entities to adopt a written identity theft program that would include reasonable policies and procedures to:
- Identify relevant red flags.
- Detect the occurrence of red flags.
- Respond appropriately to the detected red flags.
- Periodically update the program.
The proposed rule would include guidelines and examples of red flags to help firms administer their programs.