The SEC isnt slowing down in its enforcement campaign against dually registered advisers/broker-dealers offering wrap fee programs when those advisers charge fees in addition to the annual wrap fee. This is particularly true when the additional fees are generated by subadvisers who "trade away" transactions to non-affiliated broker-dealers.
Best execution, best execution, best execution. Those two words are pounded into the minds of advisers and their trading desks so that clients receive the best deals possible. But they apparently made little difference to the SEC, which settled with a wrap fee program subadviser for failing to adequately disclose the frequency of trades it sent to non-affiliated brokers - even though the subadviser said those trades resulted in lower execution costs.
No one ever said that GIPS compliance is easy.
The SEC has sued a wrap fee program sponsor for failing to disclose that it made exceptions to its stated due diligence process in order to offer two proprietary funds on its wrap platform. The two funds would not have made the usual due diligence cut. The SECs May 1 order named two of Bank […]
Unified managed accounts (“UMAs”), wrap accounts (a.k.a. “separately managed accounts” or “SMAs”), and other “managed accounts” create challenges for compliance officers as well as for the SEC, according to Division of Investment Management director Buddy Donohue. In a luncheon address at last weeks IAA/IA Week conference, Donohue pointed out that in managed accounts, the people […]
Best execution can mean different things for different types of clients and different types of trades. That was the theme of a panel discussion on best ex at last months ALI-ABA investment adviser conference. Depending on the type of client, explained Steven Yadegari, general counsel of Cramer Rosenthal McGlynn, a firm may use the same […]
Heres an SEC document request list used in an adviser exam last month by the SECs Chicago Regional Office. A close read of the list reveals several items of interest: Wrap fee programs. In comparison to another version of the exam list used just a few months ago, last months list requests six new items pertaining […]
Ever since the Division of Market Regulation dropped a footnote in its 2005 letter to Morgan Keegan “clarifying” the scope of the relief in its 1999 letter to Money Management Institute/Securities Industry Association, dual registrants that sponsor wrap programs have had to obtain their own firm-specific relief in order to suppress trade-by-trade confirms for wrap […]
Sure, youve ticked through the seven items required by ICA Rule 3a-4. But to best prepare for the SECs upcoming wrap fee sweep exam, youll want to consider a host of broader issues. To help you along, here are the highlights of the wrap fee panel at last months IAA/IA Week conference. The panel featured […]
The SEC examination staff is planning to conduct a new sweep focusing on wrap fee program best execution, suitability, and disclosure issues, as well as basic ICA Rule 3a-4 compliance. SEC associate director Robert Plaze announced the pending sweep while speaking on a panel on wrap fee accounts at the recent IAA/IA Week conference. “At […]