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.
Following confirmation by the Senate on Aug. 1, Kara Stein was sworn in August 9 by SEC Chairwoman Mary Jo White as an SEC commissioner; Michael Piwowar, who was also confirmed Aug. 1, was sworn in Thursday. The two new commissioners, both of whom were staffers in Congress, replace Elisse Walter and Troy Paredes, respectively. The full Senate on Aug. 1 also confirmed White to a full term expiring June 5, 2019.
Stein (left), a Yale College graduate who also received her J.D. from Yale Law School, will be one of the designated Democrats on the SEC, along with Commissioner Luis Aguilar. She served as legal counsel and senior policy advisor to Sen. Jack Reed, D-R.I., from 2007 to 2009; as legal counsel to Sen. Reed from 1999 to 2000, and was a legislative assistant to now retired Sen. Chris Dodd, D-Conn., from 1997 to 1998.
Piwowar, who graduated with a B.A. from Penn State University, from which he also received his doctorate, also taught at Iowa State University. He will serve as one of the SEC’s Republicans, along with Daniel Gallagher. He has been chief economist for the Senate banking committee since 2009, and from 2008-2009 was a senior economist on the White House’s Council of Economic Advisers. He was also a Visiting Academic Scholar at the SEC from 2002-2004.
(In his Aug. 9 New York Times column, Floyd Norris argued that the new SEC commissioners were “effectively chosen by senior senators” on the banking committee, specifically, Sen. Michael Crapo, R-Idaho, in the case of Piwowar, and Reed in the case of Stein. Norris suggested that the provenance of putatively independent government agency commissioners result in increased political polarization in those agencies, making it difficult for the chairmen of federal agencies "to accomplish anything.”)
Separately, FINRA announced that at its general meeting on Aug. 6, its small firm and large firm members elected two governors, while a new public governor was named to its Board of Governors. Robert Keenan, CEO of St. Bernard Financial Services, a broker-dealer based in Russellville, Ark., was elected a small firm governor, while James Weddle, managing partner with Edward Jones, was reelected as a large firm governor.
Shelly Lazarus, former chairman and CEO of Ogilvy & Mather, was named to succeed Shirley Ann Jackson as a public governor on FINRA’s Board of Governors.
Four others were reappointed to the FINRA Board: John Brennan of Vanguard as an investment company affiliate, while serving as public governors are William Heyman, from The Travelers Cos, Inc.; John Schmidlin (retired but formerly with JPMorgan Chase), and Gary Stern, former president of the Federal Reserve Bank of Minneapolis.
Check out SEC Pressured by Pols in IRS-Like Controversy: WSJ on ThinkAdvisor.