More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- 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.
New York Attorney General Eric Schneiderman began sending out subpoenas to banks over LIBOR rigging in August and coordinating with Connecticut Attorney General George Jepsen on the investigation. Now the list of subpoenaed banks has expanded to a total of 16, including Société Générale and Royal Bank of Canada (RBC), and more attorneys general are coming in on the investigation.
Bloomberg reported Friday that a person familiar with the issue said that the joint probe by New York and Connecticut has resulted in subpoenas not just for SocGen and RBC and the seven banks originally subpoenaed in August, but also for Bank of America, Credit Suisse Group, Bank of Tokyo Mitsubishi UFJ, Norinchukin Bank, Rabobank, Lloyd’s Banking Group and West LB, a German lender that no longer operates.
Schneiderman and Jepsen are jointly conducting an investigation into the rigging of LIBOR. The Financial Times had reported in August that the two had joined forces to determine whether collusion on the interbank rate had harmed investors and borrowers in the two states.
Schneiderman can rely on the 1921 Martin Act to allow him to cross state lines in investigations and to bring cases without having to demonstrate an intent to commit fraud on the part of the defendant. The law was used to notable effect by Eliot Spitzer during his prosecutorial days when he took on Wall Street firms.
According to the report, Susan Kinsman, a spokeswoman for the Connecticut attorney general, said in September that the states are coordinating with “a much larger group of attorneys general.” It was also reported that Florida Attorney General Pam Bondi has issued subpoenas to over a dozen financial institutions, including UBS, Deutsche Bank and HSBC Holdings.
This is not the first time that New York has taken point on a financial investigation. In August, as previously reported by AdvisorOne, Benjamin Lawsky, head of the New York State Department of Financial Services, surprised other regulators and investigators by ordering Standard Chartered to appear over money-laundering allegations involving Iranian transactions and explain why its charter to operate in the state should not be revoked. The order quoted an e-mail that implied the bank’s London superior had no regard for U.S. money-laundering regulations.