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From the August 2008 issue of Investment Advisor • Subscribe!
A Friendly Suggestion to Regulators
Please, regulators, stop with the "best practices" discussions as if they are rules. Please make clear the difference between a "best practice" and a rule requirement. What may be prudent for one firm may have absolutely no relevance for another. Take, for example, Anti-Money Laundering/Patriot Act compliance. The Patriot Act is not currently applicable to investment advisors, because it would most likely result in duplicative efforts that serve no purpose (aren't investment advisors subject to enough regulations that have little to no relevance to their practices or their clients!). Custodian firms are subject to the Patriot Act. Moreover, as indicated above, Rule 206(4)-7 indicates that advisors must establish and maintain policies and procedures that are germane to their advisory operations. Thus, if an advisory firm does not have any clients in any of the OFAC countries, or accepts cash from clients, why would it need to establish a formal AML program? A discussion of AML/Patriot Act and its policies and procedures so that employees/representatives can have an understanding thereof? Yes, a formal program? No.
About the Author
Thomas D. Giachetti
Tom Giachetti is Chair of the Securities Practice Group at Stark & Stark. A former investment banker and NASD registered representative, Mr. Giachetti’s legal practice is devoted to investment-related matters, including the representation of investment advisers, financial planners, broker-dealers, public and private investment companies, CPA firms and registered representatives throughout the United States. He also advises claimants and respondents in securities regulatory, arbitration and litigation matters.
The Securities Practice Group of Stark & Stark represents investment advisers, financial planners, broker-dealers, CPA firms, registered representatives, public and private investment companies, and investors throughout the United States. The firm, with over 125 attorneys, and offices in Princeton, Marlton, Philadelphia, Newtown, and New York City serves clients located across the United States and Canada.
Mr. Giachetti holds a J.D. from the Syracuse University School of Law, an M.A. in economics from the Maxwell School of Syracuse University, and a B.A. in public administration and business from the University of Scranton.
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