More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- 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.
This is Mary Jo White's first appearance on the IA 25. Click here to view the complete list and Special Report schedule for extended profiles for each of the 2013 IA 25 honorees.
All eyes will be on new Securities and Exchange Commission Chairwoman Mary Jo White as she takes the helm and decides which rulemakings to tackle first—of course, advisors believe a rule to put brokers under a fiduciary mandate should be at the top of her list.
While White told members of the Senate Banking Committee during her confirmation hearing in March that she would “absolutely” make a priority of reviewing the public feedback the agency has been getting since March 1 regarding costs and benefits of a fiduciary rulemaking, she said that finishing rulemaking mandates under the Dodd-Frank and JOBS Acts “in as timely and smart a way as possible” will be her top priority at the agency.
One of her “focus” areas while chairwoman, White said during her confirmation hearing, will be regulating the conduct of broker-dealers and investment advisors when giving retail investment advice.
White told lawmakers that the Dodd-Frank and JOBS Acts have both placed a “daunting” task on the agency, but that she intends “to personally take charge in assessing” which rules will be priorities.
But the fact that two SEC Commissioners, Democrat Elisse Walter and Republican Troy Paredes, are likely leaving the agency soon throws further doubt on whether the SEC will release a fiduciary proposal this year. At press time, President Barack Obama was expected to name, within a matter of weeks, replacements for both commissioners. Walter’s term expired last June, while Paredes’ term ends this June.
White served for 10 years as a U.S. attorney in the Southern District of New York and became well-known for her prosecutions of organized crime figures and suspected terrorists.
She told lawmakers that bolstering the agency’s enforcement will also be a priority, noting that while enforcement “must be fair, it also must be bold and unrelenting.”
Investors and all market participants, she said, “need to know that the playing field of our markets is level and that all wrongdoers—individual and institutional, of whatever position or size—will be aggressively and successfully pursued by the SEC.”
While not knowing where White stands on various policy issues, including whether a self-regulatory organization like FINRA should oversee advisors, former SEC Chairman Harvey Pitt has said that he believes White will “seek input” from her fellow commissioners and SEC staff as she gets up to speed.
White told lawmakers that among her list of priorities as she takes on her new job will also be to 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 to focus on money market funds, private fund advisors, credit rating agencies and clearing agencies.
Despite the fact that the Financial Stability Oversight Council (FSOC) voted unanimously in November to advance proposed changes to money market funds and seek public comment, White told lawmakers that money market funds are “investment products and the SEC should take the lead” in writing further rules to reform them.