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.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
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.