More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- 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.
Securities and Exchange Commission Chairwoman Mary Jo White told lawmakers Tuesday that the agency was “focused” on completing a fiduciary duty rule proposal and that “it’s important for me to get to wherever we are going on that [rulemaking] as quickly as we can.”
Since the July 5 close of the comment period on the costs and benefits of a fiduciary rulemaking, White (left) told members of the Senate Banking Committee that she has met with senior officials at the Department of Labor regarding collaboration on both agencies’ fiduciary rules and has directed staff “to engage more” with DOL “to make sure they understand [the SEC’s] perspective” on its fiduciary rulemaking, particularly the impact of the DOL’s fiduciary rule proposal on broker-dealers.
However, White stressed at the hearing, titled, “Mitigating Systemic Risk in Financial Markets through Wall Street Reforms,” that while the agencies are collaborating, they will proceed independently.
The DOL’s Employee Benefits Security Administration’s Semiannual Regulatory Agenda, released July 3, states that a reproposal to amend the definition of fiduciary under the Employee Retirement Income Security Act will come in October.
While White said that the SEC is focused on the fiduciary rulemaking--which is not a mandatory rulemaking under Dodd-Frank--she noted the “full plate” of Dodd-Frank and the JOBS Act mandated rules that the agency must wade through and act on.
To ensure completion of both Dodd-Frank and JOBS Act rulemakings, White said that she has created “parallel" teams at the agency to focus on rulemakings under each law. White said that the sheer volume of Dodd-Frank rulemakings as well as the fact that some are more complex than others and need to be worked on jointly with other agencies has delayed action on some. However, she said the agency “is making progress” on various "front burner" issues like derivatives, the Volcker rule, crowdfunding and money market funds.
Action on fiduciary rulemaking, however, could be stymied by the arrival of the two new SEC Commissioners–Kara Stein and Michael Piwowar–who were confirmed by the Senate Banking Committee on July 18. Industry officials say full Senate confirmation of Stein and Piwowar could come this week, before Congress breaks for its August recess.
White noted that the two new SEC Commissioners could hinder completion of the agency’s rules on money market funds, which she said could likely be released in a “month or two.”
The SEC on June 5 proposed two alternative reforms to money-market funds. First, to require that all institutional prime money-market funds operate with a floating net asset value (NAV). Second, to employ a “fees-and-gates” approach in which a nongovernment money fund imposes a 2% liquidity fee if the fund’s weekly liquid assets fall below 15% of its total assets.
White said at the time that the two reforms could be adopted separately or combined into a single reform package. “The two alternative approaches in today’s proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways,” she said.
As to the SEC's equity crowdfunding rules, White said that the agency is working to ensure that the Financial Industry Regulatory Authority's rules governing crowdfunding portals are released simultaneously with the SEC's equity crowdfunding rules.