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.
- How to Avoid Sabotaging Your Compliance Exam There is much more to compliance examination survival than knowing all of the rules. It helps to understand why the rules were put in placeand to recognize that examiners are not the enemy.
Allen Stanford and Jon Corzine: two names that have come to occupy the same sullied space as Bernie Madoff. While the calamities that both Stanford and Corzine, head of the now-defunct MF Global, oversaw didn’t reach quite the staggering proportions as the fraud perpetrated by Madoff, all three men’s action have not only forced regulators to police the financial services industry with more zeal, but has lawmakers scrutinizing regulators’ lax oversight of the industry.
Stanford, (left), was convicted in early March of running a $7 billion Ponzi scheme. He was found guilty on 13 counts of a 14-count criminal indictment, including fraud, conspiracy and obstructing an investigation by the Securities and Exchange Commission. He was found not guilty on one count of wire fraud.
At the urging of lawmakers, the Securities and Exchange Commission is suing the Securities Investor Protection Corp. to regain funds for Stanford victims. But SIPC’s president and CEO Stephen Harbeck told lawmakers in March that SIPC is not responsible for reimbursing Stanford investors. “SIPC protects the ‘custody’ function that brokerage firms perform,” which means “customers are protected against the loss of the cash and securities held for them by their broker-dealer” when the BD fails, Harbeck said. Stanford victims, however, “knowingly sent their money away from the brokerage” and bought certificates of deposit (CDs) issued by a bank in Antigua, he said.
No formal charges have been levied against Corzine, (left), but he’s apologized to congressional committees about MF Global’s failure and for the nearly $1.2 billion in client funds that went missing. “I simply do not know where the money is,” Corzine has told lawmakers. During one of his subpoenaed appearances before lawmakers he blamed the missing money on the “chaos” that surrounded the commodities broker-dealer in its final days as it tried to unwind its European sovereign debt holdings following a bad quarterly earnings report.
Find out who was named on the 2012 IA 25 in Investment Advisor's May issue.
Check out more extended interviews of the 2012 IA 25 at AdvisorOne.