More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
Mary Schapiro, Securities and Exchange Commission chairwoman, is worried about the complexities of the financial markets yet proud of the SEC’s accomplishments, and perhaps most importantly, she is confident that a fiduciary standard will be proposed by next year.
“I very much believe there should be a uniform fiduciary standard of care” for registered investment advisors (RIAs) and broker-dealers, Schapiro said during a Q&A session at the Securities Industry and Financial Market Association’s (SIFMA) annual meeting in New York on Tuesday.
“My hope is that by sometime next year we can go through a proposal,” Schapiro said. “It’s very important, and the passage of time has not discouraged me at all. There’s strong interest even from nontraditional voices. The devil is in the details, but I’m more confident that we will get it done, not less.”
Asked about her future at the SEC if President Obama wins re-election, Schapiro said she hasn’t given it much thought because she is focused on the day-to-day demands of her job.
“I love what I do, but I haven’t thought about what I would do after 2014 when my term ends,” she said. “I don’t have a date in my head.”
In addition to creating more of a level playing field for advisors, Schapiro said she is proudest of her efforts involving the hedge fund regulatory regime, the whistle-blowing program and the lasting effect she will have on steering the SEC through its toughest time in history.
“I’m incredibly proud about the enforcement program,” she said. “We don’t have criminal authority, but we aggressively use the civil authority we have,” including 110 major suits against individuals, 57 of which have been against top leaders such as chief executives.
Just last Friday, the SEC reported that 1,504 advisors to hedge funds and other private funds have registered with the agency since the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated such registration.
Yet worries remain. Looking at the global nature of the capital markets, Schapiro admitted that she is concerned about complex issues such as derivative regulation and the fragmentation around cross-border compliance. In a series of three recent meetings in London, Toronto and the U.S. with international regulators, Schapiro has been meeting with derivatives rules writers to go through them line by line.
Read Breach of Fiduciary Duty No. 1 Complaint in FINRA Arbitration Cases at AdvisorOne.