More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- 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.
The European Union will consider whether to impose absolute caps on banker bonuses and restrict them to between three and five times salary, including stock options, though the U.K. is not expected to support such a measure.
Reuters reported Sunday that an EU official said the measure was to be discussed on Monday at a meeting of EU diplomats and lawmakers, as well as a proposal to limit only the cash bonus bankers receive to no more than their salary.
Britain’s Finance Minister George Osborne, who has been outspoken in his efforts to preserve the London’s financial primacy in Europe, is expected to oppose the measure and has already said he would fight any bonus caps proposed by Brussels.
Substantial progress on limiting the pay of bankers has not been made despite the fallout from the financial meltdown of 2008-2009. Despite the crisis and a wave of subsequent financial misdeeds, from LIBOR rigging to massive losses in risky trades, opposition from banks has alleged that such limits would cost them their most talented staff.
The proposal to be discussed Monday would apply an automatic cap of three times salary to bonuses, although an official was quoted saying, "Shareholders could decide to go for five times." Another official said in the report, "There should be a final push so that there is a political agreement at the meeting of finance ministers on December 4." He added that changes to any cap were still possible.
While present EU rules already compel banks to defer up to half the bonus for at least three years, and the EU’s restrictions on bank pay are already tighter than the guidelines from the G20, some countries, such as Germany, want to tighten them still more. The European Parliament is in favor of restricting all the elements of a bonus to total no more than a banker’s basic salary.