More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
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.