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- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
- 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.
Banks involved in the LIBOR process are looking for a “scientific” method of setting the interbank rate that will lower their risk, according to the top markets regulator in the U.K. They are trying to limit their liability even as London-based Barclays, hit with a record fine over its role in manipulating the London interbank offered rate (LIBOR), named a new chairman to replace the one felled by the scandal.
Bloomberg reported Friday that Martin Wheatley, managing director of the Financial Services Authority (FSA), said in the report that banks on the LIBOR panel want the rate to be set “on a very clean basis that takes their risk down.” One method under consideration is a “trade reporting mechanism” that will calculate the rate based on actual data. Several proposals to revamp LIBOR were to be released later in the day.
At least a dozen banks are currently being investigated for their parts in the scandal, in which banks are alleged to have colluded to tilt the rate one way or another to favor transactions in which they were engaged.
Wheatley, who is to become the CEO of the Financial Conduct Authority next year when the FSA is divided into two separate agencies, is engaged in a review of the oversight and setting of LIBOR and will issue a report that is due to be presented by the end of September. He has already begun to meet with banks on the panel and will also be soliciting input from the financial industry.
The report is expected to become the basis for amendments to parliamentary legislation, according to Britain’s chancellor of the Exchequer, George Osborne. Among the possibilities Wheatley has already addressed in a discussion paper are strengthening sanctions for manipulating the rate, introducing a code of conduct for banks involved in the process, and mandating that the process itself be overseen by a regulator instead of by the British Bankers’ Association (BBA).
“This discussion paper demonstrates that we will give regulators the powers they need to prevent the manipulation of key benchmark rates in the future,” said Mark Hoban in the report. Hoban, financial secretary to the Treasury, added, “The government is also working with its international partners to inform the international work in this area and work towards a globally consistent solution.”
Wheatley said in the report that the banks “are very clearly apprehensive because of the record fine that was pinned on Barclays.” He added, “They want as quickly as possible to have a LIBOR that works and doesn’t expose them” to regulatory and legal risks.
Walker, a senior advisor to Morgan Stanley who also oversaw a review of the banking industry for former Prime Minister Gordon Brown, said that his first job would be to replace former CEO Robert Diamond, who was compelled to step down after the bank’s role in LIBOR manipulation became public.
Christopher Wheeler, a banking analyst at Mediobanca in London, said of Walker’s new post, “He’s very well-connected. But it feels you are going back a long way in your address book to find someone. He’s had a great career. He’s a bit of a veteran, and this is going to be a 24/7 job.”
Wheeler added that Walker’s appointment could tip the scales in favor of Antony Jenkins, Barclays’s head of consumer banking, being named CEO. He added that Jenkins had a background as an insider with consumer banking experience that would act as a complement to Walker’s investment banking career outside Barclays.