More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
The Financial Industry Regulatory Authority announced Tuesday that it will not collect sensitive personally identifying information from the data the self-regulator is to receive from its new Comprehensive Automated Risk Data System (CARDS).
FINRA stated that after considering the written comments on the CARDS concept proposal and the views expressed discussions with industry participants regarding investor privacy, the regulator “has concluded that the CARDS proposal will not require the submission of information that would identify to FINRA the individual account owner, particularly account name, account address or tax identification number.”
Dale Brown, president and CEO of the Financial Services Institute (FSI), said that while he applauded FINRA’s decision to not collect sensitive data, FSI still has some concerns about the CARDS plan. “Today, FINRA took an important step forward in their CARDS proposal, by announcing they will not collect sensitive personally identifying information from the data they plan to receive,” Brown said. “While we still have concerns with data security, costs and other unintended consequences of the proposal, we applaud FINRA’s response to industry concerns. We will continue to work with them as this proposal is considered.”
In December, FINRA requested comments on the concept of a new Comprehensive Automated Risk Data System. FINRA is taking comments on the CARDS proposal until March 21.
CARDS is a rule-based program that would allow FINRA to collect on a standardized, automated and regular basis, account information, as well as account activity and security identification information that a firm maintains as part of its books and records.