More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Mary Jo White (left), President Barack Obama’s pick to be the next chairwoman of the Securities and Exchange Commission, will tell the Senate Banking Committee on Tuesday that regulating the conduct of broker-dealers and investment advisors when giving retail investment advice is “an important” area within the SEC’s jurisdiction, and that she plans to “focus” on the issue during her chairmanship.
In her prepared testimony, which AdvisorOne previewed Monday, White says that other priorities for her as she assumes the role of SEC chief will be to:
- First, finish, "in as timely and smart a way as possible," the rulemaking mandates contained in the Dodd-Frank Act and JOBS Act.
- Continue “rigorous economic analysis” to inform and guide commission rules;
- Strengthen the enforcement function of the SEC, so that it is “fair, but it also must be bold and unrelenting.”
- Fully understand “all aspects of today’s high-speed, high-tech and dispersed marketplace so that it can be wisely and optimally regulated, which means without undue cost and without undermining its vitality”; and
- Focus on money-market funds, private fund advisers, credit rating agencies and clearing agencies.
David Tittsworth, executive director of the Investment Adviser Association, says that while White's comments in her prepared testimony are "a sign that she does intend to look carefully" at the fiduciary issue, "I think it would be premature to believe that she has a firm policy view on the details of any such rulemaking."
Barbara Roper, director of investor protection at the Consumer Federation of America, adds that White, in her testimony, "clearly recognizes the broad range of issues she will have to grapple with" as chairwoman. "With such a crowded agenda facing the agency, it is encouraging that the fiduciary rulemaking made the list of issues on which she plans to focus."
White's pledge to focus on the fiduciary issue is timely, as the Financial Planning Coalition released Monday results of a survey it conducted showing that 80% of American investors do not believe the federal government is doing enough to protect “consumers from being taken advantage of” by financial advisors.
The online survey of 1,030 indivuduals over age 18, conducted by KRC Research on behalf of the Coalition--comprised of the Financial Planning Association, CFP Board and National Association of Personal Financial Advisors--also found that 84% of American investors agree that “financial advisors should be regulated by the federal government to protect investors and build confidence in financial services."
Chris Paulitz, spokesperson for the Financial Services Institute, says that "as chair of the SEC there will be many issues" requiring White's attention, "including a fiduciary standard proposal. FSI has long supported a uniform fiduciary standard." FSI, he added, "looks forward to working with her and the SEC to create an effective and efficient fiduciary standard, as well as on other initiatives, that increase protection for investors without limiting their access to financial advice and service.”
Tittsworth says he expected White to be confirmed by "a strong vote of the Senate Banking Committee and full Senate," and that she could be sworn in as chairwoman in April.
On March 1, the SEC published its request for public comment on its rule to put brokers under a fiduciary mandate. Specifically, the SEC says it is requesting data and other information from the public and interested parties about the “benefits and costs” of the current standards of conduct for broker-dealers and investment advisors when providing advice to retail customers, as well as alternative approaches to the standards of conduct.