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.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
Industry officials were unfazed by the Securities and Exchange Commission’s 2014 regulatory agenda citing a fiduciary duty rule for brokers as a “long-term” action item for the agency.
The SEC and Department of Labor filed their semiannual regulatory agendas with the Office of Management and Budget. The SEC filed its list of proposed and final rulemakings along with its list of long-term actions, which included its personalized investment advice standard of conduct (fiduciary) rule, with the “next action” on the fiduciary rule “undetermined.”
DOL told OMB in its filing that a redraft of its rule to amend the definition of fiduciary under the Employee Retirement Income Security Act would be released in August 2014.
However, the Regulatory Flexibility Act specifically provides that publication of the agenda does not preclude an agency from acting on any matter not included.
“I wouldn’t read too much into the published agendas,” Duane Thompson, senior policy analyst at the fiduciary advocate fi360, told ThinkAdvisor. “If anything, I think it indicates a later than earlier date for public release” of a fiduciary rule proposal by the SEC.
Indeed, Barbara Roper, director of investor protection for the Consumer Federation of America, told ThinkAdvisor that the important point to note is that such a fiduciary rulemaking “is on the [SEC’s] agenda….That suggests to me that the [SEC] chair views it as a priority and that we are moving closer to rulemaking.”
The SEC Investor Advisory Committee subcommittee that Roper chairs just recently got the full committee to approve its recommendation on how the agency should move forward on crafting a fiduciary rule for brokers.
Skip Schweiss, managing director of Advisor Advocacy & Industry Affairs for TD Ameritrade Institutional, noted in a recent blog post that committee approval of Roper's Investor as Purchaser subcommittee plan will serve as the "impetus to move this long-simmering [fiduciary] issue forward."
SEC Chairwoman Mary Jo White noted before the committee vote that the recommendation was “very important,” and she has noted that movement by the SEC on a uniform fiduciary standard is a “major focus” for the agency.
While not commenting on the published agendas, Dale Brown, president and CEO of the Financial Services Institute — a staunch opponent of the DOL’s fiduciary rulemaking — told ThinkAdvisor in a Monday phone interview that FSI believes DOL “is on track” to send its fiduciary redraft to OMB by the end of this year.
Noting that such timing “could obviously change,” Brown said the proposal will go to OMB for at least a 90-day review “before it goes to the next step, which will essentially be a repeat of the public comment process that happened in 2010.”
The reproposal will likely be released in the second quarter of 2014, Brown said. “Once it’s out, we’re prepared to act: first to read and understand it, and analyze it; then we’ll be ready to take action.”
Check out Ken Fisher’s Backhanded Call to Arms on ThinkAdvisor.