More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
Even the SEC is hopping on the “customization” bandwagon—tailoring sanctions just for you.
Responding to criticism that it’s too lax in its enforcement and its bans are too broad, the commission is “experimenting with punishments that more closely fit the wrongdoing at issue in a bid to give its enforcement cases more bite,” according to Reuters.
Giving advice to pension funds or profiting from presenting investment seminars are examples of the type of behaviors it’s looking at.
As the news service notes, critics of the SEC's typical broad prohibitions say they are ineffective and not well enforced. Customized injunctions could also be a more precise tool than the “blunt instrument” of barring an individual from being a company officer or director.
“In the past year SEC lawyers have slowly started seeking injunctions that bar defendants from specific types of conduct, even if that conduct is itself legal,” Reuters reports. “They are relying on authority derived from the 2002 Sarbanes-Oxley investor protection law that makes explicit courts' authority to follow through on the SEC's recommended injunctions.”
The news comes as Mary Jo White, President Barack Obama’s pick to be the next chairwoman of the SEC, testified before the Senate Banking Committee in her confirmation hearing.
In her testimony, White said that one of her “focus” areas as chairwoman would be regulating the conduct of broker-dealers and investment advisors when giving retail investment advice.
Stating that the Dodd-Frank and JOBS Acts have both placed a “daunting” task on the agency, White told lawmakers that once at the agency she intended “to personally take charge in assessing” which rules would be priorities.