More On Legal & Compliancefrom The Advisor's Professional Library
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
- 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.
When Hurricane Sandy blew into town, in addition to all the storm damage, it brought a whole lot of potential problems, as well as nastiness that had nothing to do with the weather and everything to do with man's baser instincts. FINRA and the Securities and Exchange Commission have issued warnings and bulletins to help both advisors and the public better cope.
For financial professionals, FINRA issued a notice regarding regulatory and compliance relief for those directly affected by the storm.
Regulatory Notice 12-45 deals with a number of issues, "including emergency office relocations, continuing education requirements for registered personnel, registered personnel engaged in active military duty, regulatory filings and inquiries, membership applications and customer communications."
The body also pointed out that there are additional Sandy advisories on its website at a dedicated page.
For the public, the SEC issued an investor alert regarding investment and other scams, such as Ponzi schemes, that surface in the wake of the storm and other such calamities. A particularly popular form of such disaster scams that it warned of was the cleanup scam, in which "promoters [tout] companies purportedly involved in cleanup efforts…"
In particular, the agency warned, "We also heard about fraudsters targeting individuals receiving compensation from insurance companies. Individuals, including those receiving lump-sum insurance payouts, should be extremely wary of potential investment scams related to Hurricane Sandy." [Emphasis theirs.]