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.
- 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.
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.]