More On Legal & Compliancefrom The Advisor's Professional Library
- Using Solicitors to Attract Clients Rule 206(4)-3 under the Investment Advisors Act establishes requirements governing cash payments to solicitors. The rule permits payment of cash referral fees to individuals and companies recommending clients to an RIA, but requires four conditions are first satisfied.
- 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.
The mutual fund scandals of a decade ago are long behind us — but the fallout still resonates.
The discovery in 2003 of late trading and other illegal practices on the part of certain hedge funds and mutual fund companies led to widespread industry reform and a closer look at the internal procedures of the funds, the fund families and governing boards.
Part of the result was a 2004 report released by The Mutual Fund Directors Forum, titled “Best Practices and Practical Guidance for Fund Directors,” which was originally drafted at the request of William Donaldson, then chairman of the SEC. It was a comprehensive best practices document designed to assist mutual fund independent directors as they navigated issues involving management agreements, soft dollars, valuation and pricing, and more.
Now the Forum, an independent membership organization for fund independent directors, founded in 2002, has released its latest report, “Practical Guidance for Fund Boards: Board Governance and Review of Investment Advisory Agreements,” it announced Wednesday.
This latest report updates the sections from the original report on board governance and board review of advisory contracts to reflect the current state of board practices, while retaining much of the original information contained in the 2004 edition.
“Our best practices report has long been one of our most cited and most discussed documents among our members, who consult it regularly,” Susan Ferris Wyderko, president and CEO of The Mutual Fund Directors Forum, said in a statement. “We hope that fund boards will find the updated report equally as helpful as they seek ways to advance their governance practices to best serve fund shareholders.”
“While much of the information from the original report remains valuable, there have been significant legal changes in the fund industry as well as considerable evolution in board practices since 2004,” added Carolyn McPhillips, counsel to the Forum. “We thought an update of the fund governance sections as well as the board review of advisory agreements would be particularly useful at this time.”
Check out SEC Puts Fund Directors in Spotlight on ThinkAdvisor.