More On Legal & Compliancefrom The Advisor's Professional Library
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
The Securities and Exchange Commission (SEC) has put a new cop on the investment management beat who is wise to the ways of the Street. Norm Champ, a regulator with deep hedge fund experience, has been appointed director of the SEC’s Division of Investment Management, succeeding retiring division head Eileen Rominger.
Champ (left), who starts his new job in the coming week, will be responsible for oversight of investment companies including mutual funds and investment advisors.
In a statement, SEC Chairman Mary Schapiro said, “Norm has proven himself to be a natural leader and an expert at managing programs that bolster our financial markets and protect investors.”
Champ, whom AdvisorOne was unable to reach Friday, brings broad experience in law, administration and asset management industry experience to bear on his new position.
From 2010, when he joined the SEC until now, he has served as deputy director of the SEC’s Office of Compliance Inspection and Examinations, where he supervised broker-dealer, investment advisor and credit rating agency exam programs.
Prior to that, he served 10 years as general counsel for Chilton Investment Co., an SEC-registered advisor to hedge funds and managed accounts based in Stamford, Conn. Earlier in his career he was a lawyer at Davis Polk & Wardwell and clerked for U.S. District Court judge Charles Haight Jr. in the Southern District of New York.
As financial systems grow in complexity, and with that the potential for sophisticated fraudsters to evade detection, the SEC has sought to bolster its staff with experts savvy to the ways of Wall Street.
Champ’s hedge fund industry experience was a key reason the SEC brought him on in 2010. The new investment management division head has not only taught a course in hedge fund law at Harvard Law School, but to 120 of his SEC colleagues as well.
In an interview he gave to The Washington Post after his move from Chilton to the SEC, Champ said, "When you're in the asset management business, you can see where the temptations and pitfalls may lie and where people may be tempted to cut corners. One of the things I mentioned when I interviewed here was that I know where some of those temptations lie, and I think I can help the exam team find those things."
Outgoing investment management division head Rominger also came to the SEC with a wealth of industry experience, having served as Goldman Sachs’ global chief investment officer for 11 years and before that as a portfolio manager at Oppenheimer Capital.
Read SEC’s Rominger, Director of Investment Management, to Retire in July on AdvisorOne.