More On Legal & Compliancefrom The Advisor's Professional Library
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
- 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.
Barbara Roper, director of investor protection for the Consumer Federation of America, is calling a Wall Street Journal opinion piece claiming she bullied SEC Chairwoman Mary Schapiro into torpedoing an agency rule to lift the ban on general solicitation and advertising of private securities offerings “absurd.”
The The Journal op-ed, which appeared Wednesday, was titled “Schapiro’s Boss,” and claims that Schapiro was “quaking in fear of liberal lobbyist Barbara Roper,” because Roper sent her an Aug. 7 email threatening to be “quite aggressive in voicing our concerns” if the SEC made it easier to advertise hedge funds and other private placement investing vehicles.
Roper told AdvisorOne in an email message on Thursday that “it’s clearly absurd to suggest that I wield this kind of power. If I did, the SEC would have finalized a fiduciary rule for brokers by now, the derivatives and credit rating agency rule proposals would be much stronger than they are, and the rule proposal they put out on the general solicitation rule would look vastly different than it did.”
Those in support of lifting the ban, Roper (right) said, “needed a boogey man to use in putting pressure on Chairman Schapiro, and I happened to be convenient to hand.”
The Journal wrote that Schapiro told her staff in an email that she was “very worried” about Roper's note. And in another email Schapiro fretted about being “tagged with an Anti-Investor legacy,” especially “given how high emotions run on anything related to the JOBS Act.”
After repeated complaints, Schapiro decided to back away from issuing the general solicitation rule under Rule 506 and instead put the rule out for public comment. The agency was barraged with complaints from groups like the North American Securities Administrators Association (NASAA) and Americans for Financial Reform (AFR), as well as CFA for circumventing its traditional practice of putting rules out for comment before issuing them.
Roper, who also chairs the Investor Issues task force of Americans for Financial Reform, told reporters in a mid-October call that that while the Commission is required by the JOBS Act to lift the solicitation ban, the agency “also has an obligation to adopt rules that protect investors and promote market integrity and the authority to do so. A number of reasonable, concrete proposals have been suggested that, if adopted, would significantly improve safeguards for investors in private offerings. Its rule proposal completely ignores those suggestions.”
J. Robert Brown of the TheRacetotheBottom.org, noted in a recent blog posting that the “criticism” the SEC received from Roper and “investor groups indicated the need for a comment period,” and that Schapiro “recognized this and appropriately issued a proposed rule that provided an opportunity for comments.” Indeed, he added, the proposal has “generated a considerable amount of comments.”