More On Legal & Compliancefrom The Advisor's Professional Library
- Trading Practices and Errors When SEC-registered investment advisors conduct annual audits of firm policies and procedures, they should pay close attention to trading practices. Though usually not required to, state-registered advisors should look at their trading practices and revise policies that do not fully protect clients.
- Dealings With Qualified Clients and Accredited Investors Depending upon an RIAs business model and investment strategies, it may be important to identify “qualified clients” and “accredited investors.” The Dodd-Frank Act authorized the SEC to change which clients are defined by those terms.
Prudential Financial Inc. and MetLife Inc. rallied after the Senate approved a bill that gives Federal Reserve regulators more flexibility in how they apply capital rules to the biggest U.S. life insurers.
Prudential climbed 2.4% to $88.09 at 4:01 p.m. Wednesday in New York. It was up 0.16% in afternoon trading Thursday. MetLife jumped 3%, the biggest gain in the 83- company Standard and Poor’s 500 Financials Index, but was down 0.64% Thursday afternoon.
The bill eases a Dodd-Frank Act provision that imposes bank-like capital standards on insurers that are deemed systemically important. Prudential was named systemically important last year and MetLife is in the final stage of a government review to determine whether it gets the same designation.
“It is becoming increasingly clear that the Fed will be given the flexibility to tailor its regulation of insurance companies,” Ed Mills, an analyst at FBR Capital Markets, wrote in a research note today. “This should be a strong positive for the insurance firms deemed systemically important.”
MetLife has said regulatory uncertainty poses the biggest challenge to meetings its profitability target. The New York- based insurer hasn’t authorized a share repurchase since 2008.
Prudential Vice Chairman Mark Grier said today that he’s encouraged by the Senate’s action, and that the Newark, New Jersey-based insurer can meet any reasonable capital standard.
The Dodd-Frank section that’s being modified was written by Susan Collins, a Maine Republican and required the Fed to set minimum capital and leverage standards for non-bank firms, including the insurance industry. Collins has said her provision wasn’t meant to subject insurance companies to the same standards as banks, and the proposed revision was broadly supported by senators from both parties.
To become law, the bill, S. 2270, would need to be approved by the House of Representatives and signed by President Barack Obama.
--With assistance from Craig Giammona in New York.
Check out Funds as SIFIs Would Be ‘Too Burdened to Succeed’: ICI Chief on ThinkAdvisor.