More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- 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.
Chief among state securities regulators’ “aggressive” legislative agenda this year will be giving the Securities and Exchange Commission the authority to collect user fees to fund advisor exams, as FINRA is still pushing to have an SRO bill introduced, Heath Abshure, president of the North American Securities Administrators Association, said Tuesday.
Speaking at NASAA’s legislative agenda press briefing at the National Press Club in Washington, Abshure, the Arkansas securities commissioner, said that the Financial Industry Regulatory Authority had not abandoned its efforts to become the self-regulatory organization for advisors, despite comments made recently by Richard Ketchum, FINRA’s CEO.
Rather than pushing an SRO bill within the House Financial Services Committee, FINRA “is changing its strategy,” Abshure (right) said. “We are going to stay on guard” for FINRA to push the SRO issue this year.
In a separate conversation with AdvisorOne after the briefing, both Abshure and Steve Irwin, the Pennsylvania Banking and Securities commissioner, said that while FINRA did indeed “revise” its SRO plan to focus on Senate SRO backers, Senate Banking Committee members are waiting to see how the incoming SEC chairwoman, Mary Jo White, takes to the SRO idea before agreeing to sponsor such legislation.
The Senate Banking Committee will hold a hearing to consider White's nomination next Tuesday.
Indeed, sources told AdvisorOne in early February that FINRA has now set its sights on the Senate to push an SRO bill, as Jeb Hensarling, the new chairman of the House Financial Services Committee, has other priorities and is unlikely to pursue such a bill this year.
Abshure said during the briefing that while NASAA “remains hopeful” that Rep. Maxine Waters, D-Calif., reintroduces this year her bill allowing the SEC to collect user fees to fund advisor exams, Waters’ legislation likely has “less support” now that FINRA has abandoned its House SRO efforts.
Indeed, NASAA, along with the Financial Planning Coalition, are seeking to have a user fees bill introduced in the Senate. Karen Nystrom, head of public policy and advocacy for the National Association of Personal Financial Advisors, told AdvisorOne in early February that the coalition—comprised of the Financial Planning Association, CFP Board and NAPFA—“is not backing off its position” to increase the frequencey of advisor exams.
Both Abshure and Irwin outlined other areas where NASAA will also seek legislation this year. They include:
- Permitting reasonable civil recovery for fraud associated with crowdfunding and other small offerings.
- Strengthening investor protection provisions weakened by the JOBS Act to minimize the Act’s enormous potential for abuse; and
- Empowering state regulators to curtail the use of mandatory pre-dispute arbitration clauses in contracts between state-registered investment advisors and their clients.