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.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
Former SEC Chairman Arthur Levitt told Bloomberg Television on Tuesday morning that if he were running a firm, he would not take SAC Capital’s Steven Cohen as a client.
Levitt joined Bloomberg to discuss yesterday’s guilty plea by SAC to securities and wire fraud and the record $1.8 billion penalty. He went on to say insider trading was a “pervasive” problem and that this situation was “not unique,” predicting that “we will see more of this under the present leadership of this [Securities and Exchange] commission and the U.S. attorney.”
Former SEC Chairman Levitt on the significance of the record SAC penalty:
“This is real theater. This is David vs. Goliath. Little Mary Jo White takes on great big Stevie Cohen and not just for a day or a week or a month, but for years, and her tenacity, her toughness has delivered what a great SEC chairman should deliver. It’s an admission of guilt at long last that she has brought to the SEC, and it hasn’t had that in 30 years. And highly visible Stevie Cohen who has done everything he possibly could to go in her face.”
On whether Steven Cohen has been found to do anything wrong:
“The curtain hasn’t fallen get on Stevie Cohen. The whole notion of failure to supervise is part of the fiber of the securities business. It is inconceivable that Cohen wasn’t aware of some of the goings on and didn’t build the culture of insider trading that permeated that company. This is not the last act, but it is a very important intermission.”
On whether companies like JPMorgan and Goldman Sachs should continue doing business with SAC:
“I think they probably have to continue to do business because I understand there are some firms that haven’t left Cohen yet and cannot leave them in the wilderness. The question is, and I think that should be posed, would they take Stevie Cohen as a customer tomorrow if they weren’t doing business with him? If I was running a firm, I would say “No way.”
On where the win should be attributed to U.S. Preet Bharara over White:
“Yes, of course, but the image the public will have, in my judgment, is less Preet and more Mary Jo. Mary Jo has become almost a rock star by virtue of her personality, of her size, of the way she is handling herself.”
On whether SEC needs a bigger budget to go after more Steven Cohens:
“They do need a bigger budget, but it is how they use the budget, and Mary Jo has shown all her predecessors just by one act, but saying ‘we are no longer going to accept or deny, we are going after them,’ that message resounds outside the halls of government.”
On how pervasive is the issue of insider trading:
“It’s very pervasive, it is not unique and I believe we will see more of this under the present leadership of this commission and the U.S. attorney.”
Check out Should Brokers Be Forced to Disclose Their Bonuses to Clients? on ThinkAdvisor.