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October 18, 2013 at 08:59 AM
Greg Friedman agrees with Tom Giachetti — to a point.
The latter delivered a speech last week in Boston that was “typical Giachetti,” direct, in-your-face and full of the salty language for which the chairman of the securities practice group at the law firm Stark & Stark and contributor for ThinkAdvisor is known. Giachetti divulged five red flags that SEC auditors are zeroing in on during their RIA examinations.
Friedman, CEO of both the wealth management firm Private Ocean and the software provider Junxure, conceded the points were valid, but the bigger issue, he argued, is lawsuits.
“Yes, the SEC is focused on these five red flags at the moment, but they seem to go back and forth,” he countered. “They sometimes get hung up on the little stuff, and if you can’t produce it in a timely and organized fashion, they’ll nail you on it.”
According to Freidman, it’s all about the data and how to get to it fast, specifically these six:
1. Client lists — current clients, ex-clients, wrap-fee clients, related persons, etc.
2. Contact lists — vendors, advisors to firm, etc.
3. Important dates — account inception date, termination date, contract date, etc.
