State Securities Regulators Are Scrutinizing Elderly Seminars Used to EIAs
It appears that certain state securities regulators are continuing their investigation of insurance only agents offering equity indexed annuities by focusing upon the use of seminars targeted toward the elderly and underlying training associated with such seminars.
As noted in a recent article in Investment News, the Massachusetts Securities Division is scrutinizing various marketing efforts by insurance marketing companies to train agents to disturb elderly clients about their current financial situation and separate the elderly client from his or her current financial advisor. For your reference, click here for a copy of the Investment News article referenced above.
Based on this article and our experience in working with insurance only agents subject to a regulatory investigation, it appears that certain state securities regulators are utilizing the internal training and marketing materials of insurance marketing companies to support enforcement actions against insurance only agents offering equity indexed annuities.
If your firm would like to retain RIA Compliance Consultants for guidance regarding its seminar materials or to prepare an investment advisor registration, please contact us at your convenience.
As noted in a recent article in Investment News, the Massachusetts Securities Division is scrutinizing various marketing efforts by insurance marketing companies to train agents to disturb elderly clients about their current financial situation and separate the elderly client from his or her current financial advisor. For your reference, click here for a copy of the Investment News article referenced above.
Based on this article and our experience in working with insurance only agents subject to a regulatory investigation, it appears that certain state securities regulators are utilizing the internal training and marketing materials of insurance marketing companies to support enforcement actions against insurance only agents offering equity indexed annuities.
If your firm would like to retain RIA Compliance Consultants for guidance regarding its seminar materials or to prepare an investment advisor registration, please contact us at your convenience.
Labels: Advertising, Equity-Indexed Annuities
posted by bhill at 10:07 AM
SEC Announces CCOutreach Schedule for 2007
The SEC has announced dates and locations for the 2007 CCOutreach Program regional seminars. Seminars are conducted by the various SEC regional and district offices, but seating is limited for the seminars and priority is given to CCOs of investment advisors and mutual funds.
According to the SEC, the goal of the CCOutreach Program is to provide Chief Compliance Officers (CCOs) of investment advisors with the information on the SEC, resources available to CCOs, and the SEC examination process, including hot topics and items examiners will be focusing on. Another goal of the program is to create a continuous dialogue between the SEC and CCOs. According to the SEC press release, this year's seminar topics will include:
According to the SEC, the goal of the CCOutreach Program is to provide Chief Compliance Officers (CCOs) of investment advisors with the information on the SEC, resources available to CCOs, and the SEC examination process, including hot topics and items examiners will be focusing on. Another goal of the program is to create a continuous dialogue between the SEC and CCOs. According to the SEC press release, this year's seminar topics will include:
- the examination and risk assessment process;
- books and records and disclosures and filings;
- brokerage arrangements, best execution, trade allocation, and soft dollars;
- marketing, performance, advertising, and distribution.
The CCOutreach program was an outcome from passage of Rule 206(4)-7, "Compliance Procedures and Policies", which can seem challenging and downright intimidating to the average investment advisor. The thought of an SEC, risk-based examination only compounds the pressure placed upon the CCO. The SEC should be commended for making a serious effort to work with investment advisors and their CCOs. RIA Compliance Consultants, Inc. believes investment advisors are better off by taking advantage of this program. Click here to read more information from the SEC website.
If your firm cannot attend one of the CCOutreach seminars but would still like to talk to a compliance professional regarding the current regulatory environment facing investment advisors, give us a call today.
Labels: SEC
posted by bhill at 12:35 PM
SEC Charges 14 individuals for Insider Trading Scheme.
In a March 1 press release, the SEC announced that it is charging "14 defendants in a brazen insider trading scheme that netted more than $15 million in illegal trading profits on thousands of trades, using information stolen from UBS Securities, LLC and Morgan Stanley & Co., Inc. The SEC complaint alleges that eight Wall Street professionals, including UBS research executive and a Morgan Stanley attorney, two broker-dealers and a day-trading firm participated in the scheme. The defendants also include three hedge funds, which were the biggest beneficiaries of the fraud." To read the full text of the press release click here.
This announcement is a reminder for all investment advisors to ensure the implementation and adequacy of policies and procedures prohibiting the misuse of material, nonpublic information. Policies and procedures must be designed to prevent insider trading (Section 204A of the Investment Advisers Act). It should also be noted that Section 204A applies not only to federally registered advisors, but to all state registered firms as well.
The SEC is basing the charges under the anti-fraud rules of the federal securities laws. It should be pointed out that all investment advisors are subject to the anti-fraud provisions, particularly Section 206 of the Advisers Act. Like other federal securities laws, the Advisers Act contains several broad antifraud provisions. Section 206 states:
It shall be unlawful for any investment adviser by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly -
1) to employ any device, scheme, or artifice to defraud any client or prospective client;
2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;
3) acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an investment adviser in relation to such transaction.
4) to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules and regulations define, and prescribe means reasonably designed to prevent, such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.
Has your firm developed sufficient policies and procedures designed to comply with the anti-fraud provisions and prohibit insider trade? If not, you are subjecting the firm to significant risk and liability. Failure to properly supervise associated persons can bring severe punishment to the firm. In fact the SEC and state securities examiners have issued deficiencies to firms that have failed to establish policies and procedures, even when no violations have occurred.
This announcement is a reminder for all investment advisors to ensure the implementation and adequacy of policies and procedures prohibiting the misuse of material, nonpublic information. Policies and procedures must be designed to prevent insider trading (Section 204A of the Investment Advisers Act). It should also be noted that Section 204A applies not only to federally registered advisors, but to all state registered firms as well.
The SEC is basing the charges under the anti-fraud rules of the federal securities laws. It should be pointed out that all investment advisors are subject to the anti-fraud provisions, particularly Section 206 of the Advisers Act. Like other federal securities laws, the Advisers Act contains several broad antifraud provisions. Section 206 states:
It shall be unlawful for any investment adviser by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly -
1) to employ any device, scheme, or artifice to defraud any client or prospective client;
2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;
3) acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an investment adviser in relation to such transaction.
4) to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules and regulations define, and prescribe means reasonably designed to prevent, such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.
Has your firm developed sufficient policies and procedures designed to comply with the anti-fraud provisions and prohibit insider trade? If not, you are subjecting the firm to significant risk and liability. Failure to properly supervise associated persons can bring severe punishment to the firm. In fact the SEC and state securities examiners have issued deficiencies to firms that have failed to establish policies and procedures, even when no violations have occurred.
Labels: Enforcement, Insider Trading
posted by bhill at 11:30 AM
