Advisers

FYI: It’s Soup! SEC Proposes “Fiduciary” Rule (or Not)

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FYI: Late today, the SEC voted (4 to 1, with Commissioner Stein voting ‘no’) to propose new rules and requirements that would apply to investment advisers and broker-dealers when serving retail investors. This proposal comes after nearly two decades of considering this issue, close to 8 years after the Dodd-Frank Act specifically authorized the SEC to adopt a fiduciary rule and some 2 years after the DOL beat the SEC to the punch and adopted its own DOL Fiduciary Rule applicable to retirement advice. (Note that the DOL rule is in limbo now, having been vacated by a U.S. Court […]

Advisers

FYI: SEC National Compliance Outreach for IA/IC

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FYI: Yesterday the SEC held its 2018 Compliance Outreach Program National Seminar for investment advisers and investment company senior officers. Among the many interesting points discussed by program panelists were the following, which I had not heard before (or at least not in this way): • Adviser Advertising. In the near or mid-term, the SEC staff is “looking at” a number of items, including the adviser advertising rule (Rule 206(4)-1) (in particular the “anti-testimonial” provision) and the “cash solicitation” rule (Rule 206(4)-3). Of course, this does not mean that changes will be made regarding these rules. These items are reportedly […]

Advisers

FYI: Adviser Fee Risk Alert

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FYI: The SEC’s OCIE has issued a Risk Alert addressing the most frequent advisory fee and expense compliance issues identified in examinations of advisers, specifically highlighting the following problems: • Incorrect valuations basing fee calculations, such as using a different valuation method or process than disclosed or required by agreement. • Billing in advance or with improper frequency, inconsistent with disclosures or agreements. • Applying incorrect fee rate, including wrong rate, double-billing or charging a performance fee in improper situations. • Omitting rebates and applying discounts incorrectly, such as not aggregating accounts when required for discount purposes, not reducing the […]

Advisers

FYI: Here We Go Again – SEC Fiduciary Rule?

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FYI: The SEC has scheduled an open meeting for Wednesday, April 18, 2018, to consider the following: • whether to propose new and amended rules and forms to require registered investment advisers and registered broker-dealers to provide a brief relationship summary to retail investors. • whether to propose a rule to establish a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. • whether to propose a Commission interpretation of the standard of conduct for investment advisers. […]

Advisers

FYI: 3 New Share Class Selection Cases, 1 Including ADV Item 2 “Material Change” Violation

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FYI: The SEC has brought and settled 3 more cases against investment advisers for fiduciary, disclosure and compliance violations resulting from their mutual fund share class selection practices. Although the circumstances varied somewhat among the cases, the adviser in all 3 was charged for having invested clients in various fund share classes that paid the adviser or its affiliates 12b-1 fees when lower-cost classes were available, and for having failed to provide adequate disclosure about the conflicts of interest arising from those payments. These are the first share class enforcement cases made public since February 2018, when the SEC’s Enforcement […]