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Regulation and Compliance > State Regulation

SEC's Future Focus: Conflicts of Interest

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As an associate regional director in charge of examinations with the SEC, John Mattimore oversees nearly 1,000 RIAs from his Miami office, and he is forthright on SEC examiners’ priorities looking ahead. “Our primary concern is conflicts of interest,” he told an audience on Dec. 2 at the Investment Advisor Wealth Advisor Summit in Palm Beach Gardens, Florida, with a particular emphasis on gifts and gratuities. “We’re not talking about a fruit cake,” he said to nervous laughter from the many advisors in attendance, “but lavish items like ski trips.” Mattimore sat on a panel with Rick White, a state regulator with the Florida office of Financial Regulation, who presented the results of a coordinated examinations sweep conducted by state regulators around the country in 2005. The most common deficiency regarding investment activities was suitability, but White sent a clear warning that was echoed by moderator Tom Giachetti, head of the securities practice at Stark & Stark in Princeton, New Jersey: beware canned compliance manuals. Giachetti told advisors that they must “read your documents,” since examiners will hold you to everything that the document contains, whether or not it actually pertains to your practice. White wryly suggested that when it came to “canned” supervisory procedures manuals, that you “at least take it out of the plastic wrap and fill in your name in the box where it says “Insert name here.’”