More On Legal & Compliance
from The Advisor's Professional Library- 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.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients’ privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
The Financial Industry Regulatory Authority (FINRA) brought more enforcement actions against broker-dealers through April 2011 than in the same period for the past three years, according to a Reuters report.
According to Bradley Bennett, the BD regulator's enforcement chief, FINRA has brought 449 cases through April 30, the highest amount for this four-month period since 2007. FINRA also has levied $14.5 million in fines, an increase from the same period last year, Bennett said during a May 18 Securities Industry and Financial Markets Association luncheon in New York.
By comparison, Reuters notes that, according to Bennett, FINRA brought 1,310 disciplinary actions and levied fines totaling $42.5 million for all of last year, compared with 1,158 actions and $48 million of fines in 2009.
Bennett also noted during the luncheon that the bulk of FINRA’s work, 70% to 80%, involves holding brokers accountable for basic rules, from mailing investment disclosures and vetting customers to protecting the privacy of client information.
In a related note, FINRA on May 15 launched the FINRA Disciplinary Actions Online database, a Web-based searchable system allowing investors to access brokers’ disciplinary actions via FINRA’s website at www.finra.org.
