More On Legal & Compliance
from The Advisor's Professional Library- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
It is ideal to have a new employee sign a restrictive covenant when he begins his employment. But what if you don't do so at that time? Is it too late? The short answer is no. However, you should not present the agreement to an existing employee without first ascertaining whether the state in which the employee is located is a "consideration" state. If you do (or you already have), you may unfortunately have an agreement that is unenforceable against the employee. In a "consideration" state, the employer must provide adequate consideration to the existing employee in order for the employee's non-solicitation covenant to be enforceable. In these states, the employee's "continued employment" is not adequate consideration. Depending upon the state, adequate consideration could be a raise, bonus, or promotion. I generally prefer a one-time execution bonus so that the employee cannot later attempt to assert an insufficient consideration defense to enforcement of the agreement, claiming that he was due the raise or promotion in the ordinary course of his employment. Even in "continued employment" states, I recommend that the firm consider providing the existing employee with some type of consideration.
