More On Legal & Compliancefrom The Advisor's Professional Library
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
- 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.
Starting in January, the Massachusetts Securities Division will require that any person seeking to be registered as an investment advisor in the state must first consent to a background check via the Massachusetts Criminal Offender Record Information (CORI) system.
The Division announced Thursday that the requirement applies to all investment advisor representatives applying for registration in Massachusetts, “irrespective of whether they are associated with state or federally registered investment advisors.” However, the rule does not apply to those making annual renewal applications.
The securities division sought comments in March on whether to require criminal background checks for advisors. Comments were taken until May 15.
The request for comment, issued by Willam Galvin, secretary of the commonwealth of Massachusetts, said the state’s securities division “believes that it is in the public interest and for the protection of investors to conduct criminal background checks of those individuals seeking IAR registration in order to ensure that the applicant is not subject to a statutory disqualification and has truthfully and accurately disclosed any criminal background required on Form U-4.”
Galvin noted at the time that the division’s Registrations, Inspections, Compliance and Examinations Section was recently granted access to utilize the Massachusetts iCORI system, an electronic criminal history database, in order to conduct these reviews.
Check out Are Brokers Greedy Scumbags? by Jon Henschen on ThinkAdvisor.