More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- 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.
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.