The State of Washington’s Department of Financial Institutions recently sent out a memo to investment advisors registered in Washington that described potential updates, amendments, and additions to Washington’s investment advisor rules and regulations. Amendments to the custody requirements and an exemption for private fund advisors are the major provisions included in the memo, but the Washington Department of Financial Institutions also proposed changes for financial reporting, books and records, unethical practices, proxy voting, advisory contracts, and compliance procedures. You can access a copy of the draft amendments here.
On May 8, 2009, the U.S. Securities and Exchange Commission (“SEC”) announced that it has initiated an administrative proceeding to charge a federally registered investment adviser and its former chief operating officer for violating the SEC’s proxy voting rule. Under SEC Rule 206(4)-6 of the Investment Advisers Act of 1940, it is considered a fraudulent act for a registered investment adviser to vote its clients proxies unless the investment adviser establishes sufficient written policies and procedures, provides a summary of those policies and procedures to all clients along with an offer to provide a complete copy of the policies and procedures, votes all proxies in the best interests of the clients, and maintains adequate books and records for all proxy votes.
July 22, 2008
Today, the U.S. Securities and Exchange Commission (SEC) released its July 2008 ComplianceAlert letter which identifies and describes common deficiencies and weaknesses that SEC examiners have found during compliance examinations of SEC registered investment advisers/mutual funds, broker-dealers, and transfer agents. The release, which is considered official comment from the SEC’s Office of Compliance Inspections and Examinations and other select SEC department staff, provides valuable guidance for registered investment advisors trying to navigate the regulatory maze. In the release, the SEC provides guidance on four major areas: (1) personal trading by advisory staff; (2) proxy voting and funds’ use of proxy voting services; (3) valuation and liquidity issues in high yield municipal bond funds; and (4) soft dollar practices of investment advisors.
March 14, 2006
Does your firm vote proxies on the behalf of its clients? If so, you need to have a full understanding of the SEC’s rule, Proxy Voting by Investment Advisers, issued in 2003. The days of being able to simply fill out the proxy voting paper work and drop it in the mail are long over. According to the SEC, it is fraudulent under Investment Advisers Act to exercise proxy voting authority without (1) adopting and implementing written policies and procedures that are reasonably designed to ensure that all proxy votes are done in the best interest of the client, (2) describing your firm’s proxy voting policy to clients and providing copies of the policy upon client request, and (3) disclosing to clients how they may obtain information on how the adviser voted their proxies.