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July 28, 2014 at 08:00 PM
Investment advisor representatives (IARs) widely appreciate that they work in a highly regulated industry. As a result, even new IARs are rarely concerned when they are required to periodically report their personal securities holdings and transactions under SEC Rule 204A-1 (the “reporting requirement”).
This reporting requirement, however, may cause conflict when IARs learn they are also required to submit reports for family members who share the same household. More often than not, the conflict arises when an IAR’s spouse refuses to provide this critical information. In the event of a stalemate, the IAR may lose his or her employment.
The issue is compounded by a spouse’s inability to trace the source of the reporting requirement. The process is essentially an exercise in “connecting the dots.” Here is how those dots are connected.
Under Rule 204A-1(b)(1)(i)(A) and Rule 204A-1(b)(2)(i), “access persons” must submit holdings and transaction reports for “reportable securities” in which the access person has “beneficial ownership.”
An “access person” is any “supervised person” who is involved in making securities recommendations to clients, or who has access to nonpublic information about clients’ purchase or sale of securities, portfolio holdings of any reportable fund or securities recommendations made to clients.
A “supervised person” is any partner, officer, director or employee of a firm, or another person who provides investment advice on behalf of the firm and is subject to its supervision.
