Should Index Providers be Regulated as Investment Advisers Under the US Investment Advisers Act of 1940

2021 ◽  
pp. jii.2021.1.104
Author(s):  
Kathleen H. Moriarty
Keyword(s):  
The Us ◽  
Investment Advisers

OCIE issues risk alert on the most frequently identified advisory fee and expense compliance issues

2018 ◽  
Vol 19 (4) ◽  
pp. 1-3
Author(s):  
Robert Van Grover
Keyword(s):  
Design Methodology ◽  
Best Practice ◽  
Investment Management ◽  
Content Type ◽  
Informed Decisions ◽  
Policies And Procedures ◽  
The Us ◽  
Investment Advisers ◽  
Practical Implications

Purpose To summarize and interpret a Risk Alert issued on April 12, 2018 by the US SEC’s Office of Compliance Inspections and Examinations (OCIE) on the most frequent advisory fee and expense compliance issues identified in recent examinations of investment advisers. Design/methodology/approach Summarizes deficiencies identified by the OCIE staff pertaining to advisory fees and expenses in the following categories: fee billing based on incorrect account valuations, billing fees in advance or with improper frequency, applying incorrect fee rates, omitting rebates and applying discounts incorrectly, disclosure issues involving advisory fees, and adviser expense misallocations. Findings In the Risk Alert, OCIE staff emphasized the importance of disclosures regarding advisory fees and expenses to the ability of clients to make informed decisions, including whether or not to engage or retain an adviser. Practical implications In light of the issues identified in the Risk Alert, advisers should assess the accuracy of disclosures and adequacy of policies and procedures regarding advisory fee billing and expenses. As a matter of best practice, advisers should implement periodic forensic reviews of billing practices to identify and correct issues relating to fee billing and expenses. Originality/value Expert guidance from experienced investment management lawyer.

Better ‘Best Execution’

2018 ◽  
pp. 165-196
Author(s):  
Christopher Nagy ◽  
Tyler Gellasch
Keyword(s):  
Securities And Exchange Commission ◽  
Client Expectations ◽  
The Us ◽  
Best Execution ◽  
Public Disclosures ◽  
Investment Advisers ◽  
The Impact ◽  
Disclosure Obligations

This chapter reviews best execution and new disclosure obligations in relation to investment advisers as well as brokers; it also provides an overview of the strategies they use to meet their rapidly changing obligations. Investment advisers and brokers are confronted with increasingly stringent regulatory and client expectations to fulfil their duty of best execution. Regulators in Europe have become active in developing formal best execution obligations, but the US Securities and Exchange Commission (SEC) is lagging behind in providing a clear framework for best execution. This chapter first outlines the analogous best execution obligation for broker-dealers and explores the contours of the SEC’s expectations for investment advisers. It then assesses the impact of new European best execution obligations and the role of public disclosures in aiding the fulfilment of best execution duties. It concludes by examining various strategies used by investment advisers to fulfil their evolving duties.

SEC adopts rules and interpretive guidance designed to enhance and clarify the obligations of financial professionals

2019 ◽  
Vol 20 (4) ◽  
pp. 35-44
Author(s):  
Michael R. Rosella ◽  
Vadim Avdeychik ◽  
Justin R. Capozzi
Keyword(s):  
Historical Context ◽  
Legal Counsel ◽  
Legal Analysis ◽  
Best Interest ◽  
Extensive Experience ◽  
Content Type ◽  
The Us ◽  
Investment Advisers ◽  
Definition Of ◽  
Practical Implications

Purpose This article provides an overview of the US Securities and Exchange Commission’s (SEC) recent approval of a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers. Design/Methodology/Approach The article provides legal analysis for and historical context of the requirements of the SEC’s adopted rules, Regulation Best Interest and Form CRS in addition to the two separate interpretations under the Investment Advisers Act of 1940, the Standard of Conduct for Investment Advisers; and the Broker-Dealer Exclusion from the Definition of Investment Adviser. Findings The SEC’s adopted regulatory package does not adopt a uniform fiduciary standard for broker-dealers and investment advisers but instead promulgates legal requirements and mandated disclosures in order to conform to the SEC’s perceived expectations for reasonable investors. Practical implications Investment advisers and broker-dealers should consult with their legal counsel in assessing how and to what extent the new regulatory package is applicable to them. Originality/Value This article provides practical guidance from lawyers who have extensive experience with the Investment Company Act, Investment Advisers Act, and the Securities Acts.

SEC targets investment adviser community

2014 ◽  
Vol 15 (1) ◽  
pp. 45-47
Author(s):  
Robert P. Bramnik ◽  
Mauro M. Wolfe
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Content Type ◽  
Practical Advice ◽  
Compliance Programs ◽  
The Us ◽  
Investment Advisers

Purpose – To draw attention to the US Securities and Exchange Commission's (SEC) disciplinary focus on the investment adviser community Design/methodology/approach – Describes six recent enforcement cases for disclosure, custody, supervisory, procedural, and other rule violations and compliance failures; explains changes in registered investment adviser (RIA) exemptions following enactment of the Dodd-Frank Act; discusses recent SEC announcements concerning inspections and examinations of RIAs. Findings – The SEC's recent announcements and enforcement actions signal that all advisers (both registered investment advisers and exempt reporting advisers) may want to pay particular attention to their compliance programs and supervisory procedures. Originality/value – Practical advice from experienced financial services lawyers.

A review of the SEC Participating Affiliate No-Action Letters’ relief from Investment Advisers Act of 1940 registration for foreign investment advisers

2017 ◽  
Vol 18 (4) ◽  
pp. 22-28 ◽  
Author(s):  
Wendy E. Cohen ◽  
David Y. Dickstein ◽  
Christian B. Hennion ◽  
Richard D. Marshall ◽  
Allison C. Yacker ◽  
...  
Keyword(s):  
Foreign Investment ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Information Update ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the US Securities and Exchange Commission (the “SEC”) staff’s (the “Staff”) participating affiliate exemption from investment adviser registration for foreign advisers set forth in a line of Staff no-action letters issued between 1992 and 2005 (the “Participating Affiliate Letters”) and to discuss recent guidance issued by the Staff in an information update published in March 2017 (the “Information Update”) with respect to complying with requirements of the Participating Affiliate Letters. Design/methodology/approach Reviews the development of the Staff’s approach regarding the non-registration of foreign advisers that rely on the Participating Affiliate Letters from prior to the issuance of those letters through the Information Update and sets forth recommendations for registered investment advisers and their participating affiliates. Findings While there are arguments that the Information Update goes beyond restating established standards and does not clearly explain whether submission of all listed documentation is required, the Information Update will likely standardize the information submitted to the SEC. Originality/value Practical guidance for advisers relying on the Participating Affiliate Letters from experienced securities and financial services lawyers.

Brokers or Investment Advisers? The US Public Perception

2019 ◽  
Vol 75 (3) ◽  
pp. 125-131
Author(s):  
Patrick A. Lach ◽  
Leisa Reinecke Flynn ◽  
G. Wayne Kelly
Keyword(s):  
Public Perception ◽  
The Us ◽  
Investment Advisers

SEC requires hedge funds to prevent insider trading despite unsettled legal definition

2017 ◽  
Vol 18 (1) ◽  
pp. 63-64
Author(s):  
Nicolas Morgan ◽  
Art Zwickel ◽  
Thomas A. Zaccaro ◽  
Jenifer Q. Doan
Keyword(s):  
Supreme Court ◽  
Insider Trading ◽  
Legal Concept ◽  
Content Type ◽  
Legal Definition ◽  
Enforcement Action ◽  
The Us ◽  
Us Supreme Court ◽  
Investment Advisers ◽  
Definition Of

Purpose To explain the import of a recent enforcement action by the US Securities and Exchange Commission (SEC) against an investment adviser for failing to prevent insider trading against the context of an unsettled legal definition of “insider trading” as evidenced by the issue presented in a recent case before the US Supreme Court. Design/methodology/approach Reviews the principal issues raised by the SEC in its enforcement action, legal requirements imposed on investment advisers, and the insider trading issues presented by the US Supreme Court case. Findings Because the legal concept of insider trading has developed through case law and is not defined by statute, it remains uncertain, and therefore the practice of insider trading will be difficult to prevent without restricting activities that could ultimately be determined to be legal. Practical implications In light of the SEC’s high threshold for investment advisers to prevent insider trading and the uncertain legal definition of that concept, investment advisers should review their insider trading policies and err on the side of caution. Originality/value Practical guidance from an experienced former SEC counsel and SEC practitioners offers new insights into the steps investment advisers should take in response to SEC enforcement activities and nebulous legal definitions.

SEC publishes important guidance on the Custody Rule, participating affiliate arrangements, robo-advisers, Form PF and certain compliance topics

2017 ◽  
Vol 18 (3) ◽  
pp. 34-40
Author(s):  
Joyce E. Larson ◽  
Kara J. Brown ◽  
Ivet A. Bell
Keyword(s):  
Institutional Investors ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
The Us ◽  
Practical Guidance ◽  
Investment Advisers ◽  
Regulatory Filing

Purpose To highlight guidance issued by the US Securities and Exchange Commission (SEC) for the benefit of investment advisers regarding certain obligations under the Investment Advisers Act of 1940 (Advisers Act) and the rules thereunder. Design/methodology/approach Summarizes recent guidance regarding issues related to several challenging Advisers Act requirements, including inadvertent custody and client account transfers under Advisers Act Rule 206(4)-2, the use of participating affiliate arrangements pursuant to the “Unibanco” no-action letters, unique considerations affecting automated advisers (i.e., “robo-advisers”), the top five most frequently identified compliance topics identified in examinations conducted by the SEC’s Office of Compliance Inspections and Examinations (OCIE), and recent guidance regarding the private fund regulatory filing Form PF. Findings This guidance may assist advisers in preparing for regulatory examinations and questions from institutional investors. While the recent guidance addresses important topics, the guidance also raises some practical questions. Originality/value Practical guidance from experienced securities and financial services lawyers.

Decoding the SEC rulemaking package on standards of conduct for investment professionals

2018 ◽  
Vol 19 (4) ◽  
pp. 6-12
Author(s):  
Mark M. Attar ◽  
Marguerite Bateman ◽  
Jack P. Drogin ◽  
Domenick Pugliese ◽  
Rachael Leah Schwartz ◽  
...  
Keyword(s):  
Best Interest ◽  
Current Form ◽  
Content Type ◽  
Doing Business ◽  
The Us ◽  
Retail Investors ◽  
Retail Investor ◽  
Standards Of Conduct ◽  
Investment Advisers ◽  
Proposed Regulation

Purpose To provide an overview of the US Securities and Exchange Commission’s (SEC’s) recently proposed rulemaking package relating to standards of conduct for investment professionals. The three proposals included: interpretation regarding the standard of conduct of investment advisers under the Investment Advisers Act of 1940; Form CRS which both registered investment advisers and registered broker-dealers would have to provide to retail investors; and proposed regulation best interest. Design/methodology/approach Reviews and summarizes the three individual proposals. Findings The SEC has proposed this rulemaking package in order to meet three goals: enhance retail investor protection and decision making, preserve investor choice and cost, and raise retail investor awareness of whether they are doing business with a registered financial professional. The SEC is looking for feedback, particularly from retail investors, on whether these proposals would achieve the SEC’s goals. Originality/value Summarizes the three proposals in a manner that provides insight into how investment advisers and broker-dealers would be required to conduct business with retail investors if the proposals are adopted in the current form.

Selling structured products to retail investors in the US

2017 ◽  
Vol 18 (3) ◽  
pp. 59-63
Author(s):  
Margaret Sheehan
Keyword(s):  
Financial Services ◽  
Regulatory Agencies ◽  
Content Type ◽  
Structured Products ◽  
The Us ◽  
Retail Investors ◽  
Investment Advisers ◽  
And Control ◽  
Practical Implications ◽  
Do So

Purpose To explain the inherent risks, draw attention to SEC and FINRA guidance, and suggest ways to limit and control the sale of structured securities to retail investors. Design/methodology/approach Explains potential problems with the sale of structured securities to retail investors; recommends marketing, disclosure, training, suitability, and supervision guidelines; summarizes the results of an SEC sweep examination; draws conclusions. Findings Both the SEC and FINRA have stopped short of saying that retail sales of structured products is unsuitable per se, but both have demonstrated unease about this activity and clearly indicated that firms who engage in it have heightened and specific disclosure, training, suitability and supervisory obligations. Practical implications Although firms certainly can sell these products in the retail market in a responsible and compliant manner, they should do so with thought, preparation and caution, because the regulatory agencies are watching. Originality/value Practical guidance from experienced financial services and securities lawyer concentrating on investment advisers and broker-dealers.

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