More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
Daniel Gallagher, the newest commissioner at the Securities and Exchange Commission, revived the debate over whether a self-regulatory organization is needed to oversee advisors when he questioned in a recent speech whether the Financial Industry Regulatory Authority should be vying for the SRO spot.
“Is FINRA becoming a ‘deputy SEC’?” Gallagher, a Republican, asked during a recent speech at a Securities Industry and Financial Markets Association conference. “With all of the issues facing the broker-dealer industry it was created to oversee, should FINRA be seeking to branch out into entirely new fields of responsibility, such as regulating investment advisors?” he asked. “Is ‘mission creep’ affecting FINRA’s ability to perform its core duties?”
At a recent event held by the Institute for the Fiduciary Standard, David Tittsworth, executive director of the Investment Adviser Association in Washington, D.C., said the debate over whether there should be an SRO for advisors–and if FINRA should be that SRO–is the “biggest issue” advisors will confront next year. While the bill from House Financial Services Committee Chairman Spencer Bachus, R-Ala., calling for an SRO is “dead” this year, the SRO issue will be revived next year, with new players at the SEC, in Congress and possibly in the White House, he said.
Hester Peirce, senior research fellow at the Mercatus Center at George Mason University, agreed, stating that “interest in [the SRO] idea will continue because the SEC is clearly overwhelmed and the complexity of advisors that it is now overseeing [with oversight of hedge fund advisors] will pose challenges” to the agency.