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.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The Financial Industry Regulatory Authority is conducting spot checks of firms’ social media communications on Facebook, Twitter, LinkedIn and blogs.
FINRA notes in its June targeted exam letter to firms that Rule 2210(c)(6) states that each FINRA firm’s written (including electronic) communications are subject to a periodic spot check. FINRA’s Advertising Regulation Department is requesting that firms provide the following:
- An explanation of how the firm is currently using each social media platform (e.g., Facebook, Twitter, LinkedIn, blogs) at the corporate level in the conduct of its business.
- The URL for each of the social media sites used by the firm at the corporate level,
- The date the firm began using each of the sites identified above,
- The identity of all individuals who post and/or update content of the sites identified above.
- An explanation of how the firm's registered representatives and associated persons generally use social media in the conduct of the firm's business, including the date(s) the firm began allowing the use of each social media platform and whether such usage continues.
- The portion of the firm's written supervisory procedures concerning the production, approval and distribution of social media communications in effect during the time period Feb. 4 through May 4.
- An explanation of the measures that the firm has adopted to monitor compliance with the firm's social media policies (e.g., training meetings, annual certification, technology).
- A tabular list of the firm's top 20 producing registered representatives (based on commissioned sales) who used social media for business purposes to interact with retail investors as defined in FINRA Rule 2210(a)(6) during the time period Feb. 4 through May 4, identifying the type of social media used by each individual for business purposes during this time period. The individual's full name and CRD number should be included, as well as the dollar amount of sales made and commissions earned during the period.
Check out 4 Things Financial Advisors Shouldn’t Be Doing on LinkedIn on AdvisorOne.