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.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The National Association of Personal Financial Advisors (NAPFA) released a statement late Monday concerning the sudden resignation of Ron Rhoades, the organization's chair-elect for 2012-13.
“It is with regret that Ron Rhoades (left) has resigned from the NAPFA Board and as Chair-Elect. This decision was made after Ron disclosed that he had committed a compliance violation by failing to timely file registration papers with the State of Florida Division of Securities. Ron informed NAPFA of this violation and the National Board has decided to move on in 2012-13 without Ron as the Chair. To fill the vacated Chair position on NAPFA’s National Board, the Board will hold a special election next month. Until that time, Susan John, CFP has agreed to continue on as Chair until the special election is held.”
The statement comes after an earlier release Monday from Rhoades that details the reasons for the decision. The full text of his announcement is as follows:
Over the past several weeks I discerned that I and my firm (of which I serve as Chief Compliance Officer and President) had committed a compliance violation by failing to timely file registration papers with the State of Florida Division of Securities.
My firm was formed in September 2011 as a state-registered firm in New York. At the time of formation, the firm accepted a total of 11 clients from Florida, which exceeds the de minimis threshold for registration in the State of Florida (which is five clients). I had considered in the late summer of 2011 whether to register in Florida, but mistakenly believed that I could wait until the first quarter of 2012 to register with the state.
Registration documents were submitted to the state in February 2012, but in late May 2012 I was made aware of my mistake. Since then I have undertaken candid disclosures of all requested facts to the state, and I await their final determination of this matter.
While my mistake was unintentional, the violation of compliance regulations is nevertheless material in nature. The mistake made was mine, and mine alone. I accept full responsibility for my personal mistake, and all consequences that may flow therefrom, including the decision by NAPFA to move on without me serving as chair in the coming year.
Ron A. Rhoades, JD, CFP®
President, ScholarFi, Inc.