More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- 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.
The Public Company Accounting Oversight Board plans to meet on Thursday to consider adopting a series of audit-related standards for broker-dealers that one lawyer says will add yet another layer of compliance on BDs’ plate.
The PCAOB, which was given authority under the Dodd-Frank Act to oversee the audits of BDs registered with the Securities and Exchange Commission, will consider at an open meeting adopting attestation standards for auditors of BDs, an auditing standard for supplemental information, and related amendments to other PCAOB standards.
The Board says it will also consider two attestation standards related to the auditor's examination of compliance reports and review of exemption reports of BDs, as well as consider a new standard on auditing supplemental information that accompanies financial statements audited in accordance with PCAOB standards.
Josh Horn, a partner and co-chairman of the Securities Industry Practice at Fox Rothschild in Philadelphia, told ThinkAdvisor that the standards, if adopted, “will have wide impact” on BDs, adding yet “another layer of compliance.”
On July 30, the SEC amended Rule 17a-5 to require, in part, that audits of broker-dealers’ financial statements and supplemental information, and exams of broker-dealers’ compliance reports, and reviews of broker-dealers' exemption reports be conducted by firms registered with the PCAOB and in accordance with PCAOB standards.
Check out SEC Adopts Stricter BD Custody Rules on ThinkAdvisor.