The four parts of the SEC’s standards of care package, adopted this past June by the SEC and met with some concern and confusion by those affected by them in the asset management community, can be expected to result in the agency issuing guidance to help advisers and others comply. In that regard, the SEC’s Division of Investment Management’s new set of answers to FAQs, released December 3, might provide some help.
Advisory contracts with clients are, in many ways, not that different than they have always been. They outline the scope of services a firm provides to clients, contain non-exclusivity clauses allowing firms to do business with other clients, and generally set forth the advisers and the clients responsibilities - but are they keeping up with the times in ways that affect a firms compliance, not to mention protection?
Its good news for those in the advisory firm business. The number of SEC-registered advisers is at an all-time high, the number of clients is up nine million from last year, and the amount of registered assets under management that registered advisers manage is almost four times what is was in 2001. Thats according to […]
The end of 2021 may still seem some far off, but in terms of advisers and other market participants that will need to transition from the London Interbank Offered Rate (LIBOR), it may be getting uncomfortably close. The SEC staff in July issued a statement urging all market participants using LIBOR to begin the process of moving away.
The SEC is standing its ground on Regulation Best Interest, the investment adviser fiduciary interpretation, Form CRS and the agencys interpretation of the "solely incidental" prong under the Advisers Act. Much of the criticism, agency Chairman Jay Clayton said in a strongly-worded July 8 Boston speech, is "false, misleading, and, unfortunately, in some cases, is simply policy preferences disguised as legal critiques."
Every day is different. Less than a month ago, the SEC adopted the components of its Standards of Conduct Package - Regulation Best Interest, Form CRS, an interpretation of an advisers fiduciary duty, and an interpretation of what constitutes "solely incidental" advice provided by broker-dealers. On June 26, the U.S. House of Representatives passed an amendment to an appropriations bill that would prevent the SEC from using its funds to "implement, administer, enforce or publicize" those same rules and interpretations.
Sometimes completing a two-page or four-page form may be just as challenging as completing a much longer one. The SECs new Form CRS, while not overly daunting in what it requires of advisers and broker-dealers, will require a certain degree of attention to the information the agency wants shared and perhaps some imagination in just how registrants choose to share it.
Now that the dust is settling following the SECs adoption of its Standards of Care Package, advisers and broker-dealers are looking over the parts that affect them the most. For advisers, the Commissions interpretation and clarification of their fiduciary duty may be the first thing they look at. While the interpretation does not appear to contain any earthshaking changes, it does make some, while clarifying what it sees as important. Advisers would be wise to review the interpretation to get a better handle on what the agency wants to see.
SEC Adopts Form CRS, Regulation Best Interest, Adviser Fiduciary and Solely Incidental Interpretations
The SEC on June 5, with one commissioner dissenting, adopted the much-discussed Standards of Care package, including Form CRS, Regulation Best Interest, a new Commission interpretation of adviser fiduciary duty, and an interpretation relating to when a broker-dealer may give advice to a client without being considered an adviser.
The long wait may finally be over. The SEC on June 5 will conduct an open public meeting to consider whether it will adopt new and amended rules and interpretations that have been a source of contention within the asset management community for years: the standards of conduct package.