The RIA's Compliance Solution Book E-Book

Elayne Robertson Demby

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg Professional
• Sprache: Englisch

Seitenzahl: 268

Veröffentlichungsjahr: 2010

Beschreibung

Registered investment advisers are accustomed to regulatory scrutiny. But the pressure to understand changing compliance regulations and to meet the requirements they impose has never been more intense. A range of scandals and abuses--from the laundering of terrorist funds to mutual fund trading shenanigans--has caused the Securities and Exchange Commission to tighten regulation and step up enforcement. Unfortunately, definitive compliance information--the kind that can save advisers precious time and spare them serious trouble--has not been easy to find. Until now. The RIA's Compliance Solution Book gathers the information needed most and puts it all in one place. Here advisers will find plain-English translations of the rules that regulate such issues as: * advisory contracts and fees * advertising and client communications * RIA compliance programs and codes of ethics * custody of customer accounts * completing, filing, and amending Form ADV * selecting brokers and executing trades

Leseprobe

Table of Contents

Praise

Also available from Bloomberg Press

Title Page

Copyright Page

Dedication

Acknowledgements

Introduction

Chapter 1 - Terms and Acronyms

Defined Terms

Acronyms

Chapter 2 - Federal and State Laws and Other Regulations

Laws Governing Advisers

Chapter 3 - RIA Registration: What It Means, How It’s Done

Chapter 4 - The Nuts and Bolts of Form ADV

Filing Form ADV

Chapter 5 - How to Complete Form ADV Part 1

Chapter 6 - How to Complete Form ADV Part 2

Chapter 7 - RIA Compliance Programs and Codes of Ethics

Chapter 8 - Investment Recommendations and Fiduciary Obligations

Chapter 9 - Advisory Contracts and Fees

Chapter 10 - Custody of Customer Accounts

Chapter 11 - Selecting Brokers and Executing Trades

Chapter 12 - Personal Securities Trading and Reporting

Chapter 13 - Voting Client Proxies

Chapter 14 - Record-Keeping Requirements

Chapter 15 - Advertising and Client Communications

Chapter 16 - Referrals

Chapter 17 - ERISA Plans

Chapter 18 - Soft Dollars

Chapter 19 - Protecting Clients’ Privacy

Chapter 20 - Money Laundering

Chapter 21 - Supervising Employees

Chapter 22 - SEC Examinations and Enforcement Actions

APPENDIX A - Contact Information for the SEC and Securities Regulators

APPENDIX B - Form ADV

APPENDIX C - Adviser Designation Requirements

Continuing Education Exam for CFP Continuing Education Credit and PACE ...

Index

About Bloomberg

About the Author

Praise for

The RIA’s Compliance Solution BockAnswers for the Critical Questionsby Elayne Robertson Demby, JD

“A great book. It’s extremely valuable to both the experienced and soon-to-be adviser. If I’d had it when I was setting up my RIA firm, it would have saved me hundreds of dollars in legal fees. Now, as an experienced adviser, The RIA Compliance Solution Book can save me thousands in fees. Demby’s book is an important tool to preventing many compliance problems and heading off potential noncompliance fines. I learned a lot while reading it. The Q&A format is great and very easy to read. Overall, a very useful, all-in-one guide book.”

JEFFREY B. BROADHURST, MBA, CFA Financial Advisor and President of Broadhurst Financial Advisors, Inc.

“If someone could define all those murky terms regulators like to use and put them in one place with a clear outline of all the regulatory issues advisers must address along with a roadmap for getting all the answers into an ADV, that resource would look a lot like The RIA’s Compliance Solution Book.”

DAVID J. DRUCKER, MBA, CFP President, Drucker Knowledge Systems Author, Virtual-Office Tools for a, High-Margin Practice

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ATTENTION CORPORATIONS

THIS BOOK Is AVAILABLE for bulk purchase at special discount. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets, or phone [phone].

© 2006 by Elayne Robertson Demby. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 731 Lexington Avenue, New York, NY 10022, U.S.A. or send an e-mail to [email protected].

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This publication contains the author’s opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the author, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, compliance, or other professional advice. The reader should seek the services of a qualified professional for such advice; the author, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

Library of Congress Cataloging-in- Publication Data

Demby Elayne Robertson

Summary: “A handbook for registered investment advisers that not only explains how regulations affect their firms, but also provides step by step directions on what they need to do to comply with them”-- Provided by publisher.

Includes index.

ISBN 1-57660-192-7 (alk. paper)

1. Investment advisors--Legal status, laws, etc.--United States. 2. Investment advisors--Licenses--United States. 3. Investments--Law and legislation--United States. I. Title

KF1072.D46 2006 346.73’0926--dc22 2006009549

Acquired by Jared Kieling

Edited by Mary Ann McGuigan

To Glenn, Evan, and Charlotte

Acknowledgments

I WOULD LIKE TO THANK Bloomberg Press for giving me the opportunity to write this book. In particular, my thanks go to Robert Casey for recommending me for the project. Thanks also to Jared Kieling for his enthusiasm for and support of my vision and concept for the work and to Mary Ann McGuigan and Tracy Tait for guiding me through the publishing and editorial processes.

I thank my husband, Glenn Demby, for his encouragement and my parents, Marion and Charles Robertson, for sacrificing for years to send me to college, graduate school, and law school. My children, Charlotte and Evan Demby, also deserve a thank you for being good when Mommy had to work, as does Sayuri Aguillon for entertaining Charlotte and Evan so that I could work.

Introduction

IN THE PAST DECADE, the Securities and Exchange Commission has measurably increased the breadth and scope of investment adviser compliance requirements. Mushrooming federal rules and regulations have made it increasingly difficult for investment advisers to keep their practices in compliance. New SEC rules put in place since 2001 include requiring registered investment advisers to have written compliance procedures and written rules of ethics. The SEC also imposed new rules on personal securities trading by firm personnel who are access persons.

Layering on new rules and regulations increases the complexity of compliance and places a burden on investment advisers to stay informed about what they must do or not do to avoid running afoul of the rules. For example, if an investment adviser wants to send a quick e-mail to several clients, the adviser must ascertain whether or not the content of the e-mail would violate the advertising rules set out in the Investment Advisers Act of 1940. Even trading a stock for an adviser’s personal account is now subject to a myriad of new rules.

The RIA’s Compliance Solution Book fills the adviser’s need for a convenient desk reference, addressing the rules and regulations under the Investment Advisers Act of 1940. This book explains in plain English the federal securities laws, rules, and regulations for investment advisers who are registered with the SEC. It is a hands-on reference manual for investment advisers working with individual clients. It includes instructions on how to fill out Form ADV and how to comply with federal rules when advertising, executing trades, voting proxies, or any other task the adviser may encounter in the day-to-day management of the firm. Issues relating to retirement and ERISA plan issues are also discussed in the context of working with individual clients.

The RIA’s Compliance Solution Book is designed to help registered investment advisers comply with their legal obligations under the Investment Advisers Act of 1940 when they work with individual clients. The book provides only general guidance, however, to serve as a reference. No book can take the place of qualified legal advice from an attorney experienced in securities law compliance. More complex issues may need to be referred to a competent attorney.

Information is presented in a question-and-answer format, and individual questions can be accessed easily. Related information is cross-referenced to help direct advisers to the complete answers for their questions.

1

Terms and Acronyms

The regulation of investment advisers is a complex topic. To make sense of it, advisers will find it helpful to become familiar with a number of standardized terms and acronyms. For example, the Investment Advisers Act of 1940—the main statute regulating investment advisers—defines twenty-seven words and phrases, and many of the rules promulgated under the act employ terms of their own. Working with Form ADV and its accompanying schedules and disclosure reporting pages, which investment advisers must use in filling out or revising their forms, involves no fewer than thirty-five defined words and phrases.

Gathered and defined here for convenient reference are all the terms and acronyms that are used throughout the book. Terms defined specifically as they apply in this book are defined first, followed by terms and definitions under the Investment Advisers Act and terms and definitions used on Form ADV. Terms that are used in only one chapter are defined in that chapter and, where necessary, cross-referenced. The meanings of various acronyms are given in question 1.21.

FIGURE 1.1Directory of Defined Terms

Defined Terms

The terms in figure 1.1 are used throughout this book and defined here in chapter 1.