More On Legal & Compliancefrom The Advisor's Professional Library
- Client Commission Practices and Soft Dollars RIAs should always evaluate whether the products and services they receive from broker-dealers are appropriate. The SEC suggested that an RIAs failure to stay within the scope of the Section 28(e) safe harbor may violate the advisors fiduciary duty to clients, so RIAs must evaluate their soft dollar relationships on a regular basis to ensure they are disclosed properly and that they do not negatively impact the best execution of clients transactions.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
Regulators in Massachusetts and Illinois are polling investment advisors registered in the states on their cybersecurity policies and practices.
Massachusetts securities regulator William Galvin said Tuesday that advisors’ responses could prompt changes in the state’s current regulations.
The survey includes 23 questions and covers firms' policies and procedures on cybersecurity, including types of authentication, encryption software, types of hardware, electronic backup and arrangements with third-party providers, as well as costs and insurance coverage.
Advisors in both states must complete the survey by June 24.
Tanya Solov, director of the Illinois Securities Department, told ThinkAdvisor that Illinois' survey includes "very slight revisions [from Massachusetts'] to account for Illinois law."
“With the almost universal reliance on computer trading and communication, it is essential that investors can be confident that their financial data is secure from unauthorized intrusion from whatever source,” Galvin said in a statement. “This survey will assist the Securities Division in deciding if changes are necessary in its regulations and policies for state-registered investment advisors.”
One of the 23 questions asks advisors to gauge the financial impact any new regulations or procedures implemented by the Massachusetts Securities Division would have on their firm.
The questionnaire comes on the heels of cybersecurity exam sweeps of broker-dealers and advisors that are now being conducted by the Securities and Exchange Commission and the Financial Industry Regulatory Authority. Both regulators have listed cybersecurity as one of their top priorities this year.
Check out Cybersecurity Crackdown: Where SEC, FINRA Will Strike on ThinkAdvisor.