Does your Investment Adviser Have Effective Procedures to Monitor and Approve Performance Advertisements?
Advertising continues to be one of the primary focus areas of the SEC during investment adviser examinations. More specifically, performance advertising is one of the more common deficiencies found during SEC examinations and one that needs effective compliance oversight. During examinations, the SEC is interested in whether investment advisers have effective policies and procedures to make sure that their claims about past investment performance, their advertisements, and other marketing materials, among other things, contain accurate information, are not misleading, are not promissory, and have been reviewed by compliance.
Unfortunately, SEC Rule 206(4)-1 (Advertisements by Investment Advisers) under the Investment Advisers Act of 1940 provides little guidance on performance advertising. Much of the SEC's guidance is spelled out in no-action letters, with probably the most important one being Clover Capital Management, Inc., and enforcement actions. Investment advisers that regularly advertise performance need be familiar with the parameters outlined in Clover. The importance of Clover is heightened by the fact that the SEC staff, as a matter of policy, does not review specific advertisements except when conducting an examination of an investment adviser.
The following is a general summary of proper performance advertising compliance outlined by the SEC’s Division of Investment Management and Office of Compliance.
The SEC staff has said that, if you advertise your past investment performance record, you should disclose all material facts necessary to avoid any unwarranted inference. For example, SEC staff has indicated that it may view performance data to be misleading if it:
· does not disclose prominently that the results portrayed relate only to a select group of the adviser’s clients, the basis on which the selection was made, and the effect of this practice on the results portrayed, if material;
· does not disclose the effect of material market or economic conditions on the results portrayed (e.g., an advertisement stating that the accounts of the adviser’s clients appreciated in value 25% without disclosing that the market generally appreciated 40% during the same period);
· does not reflect the deduction of advisory fees, brokerage or other commissions, and any other expenses that accounts would have or actually paid;
· does not disclose whether and to what extent the results portrayed reflect the reinvestment of dividends and other earnings;
· suggests or makes claims about the potential for profit without also disclosing the possibility of loss;
· compares model or actual results to an index without disclosing all material facts relevant to the comparison (e.g., an advertisement that compares model results to an index without disclosing that the volatility of the index is materially different from that of the model portfolio); and
· does not disclose any material conditions, objectives, or investment strategies used to obtain the results portrayed (e.g., the model portfolio contains equity stocks that are managed with a view towards capital appreciation).
If your investment adviser utilizes performance advertising, you should attend our webinar, “Approving Performance Advertising,” on Wednesday, January 27, 2010 from 12:00 p.m. to 1:00 p.m. CST to learn more about developing strong compliance policies and procedures for preparing, approving and maintaining records related to performance advertising. During this webinar, our consultants will examine the SEC's advertising rule, the SEC no-actions concerning performance advertising and related SEC enforcement actions. RIA Compliance Consultants will provide best practices and disclosures for investment advisers utilizing performance advertising.
Labels: Advertising, Webinar
posted by bhill at 11:01 AM
Nebraska Fines B-D Rep $3,000 for Advertising Violations - IA Reps Should Make Sure Any Advertising Discloses Advisory Services Offered Through RIA
A recent consent order in a matter before the Nebraska Securities Bureau serves as a reminder to registered investment advisors of the necessity to clearly and accurately disclose that advisory services are offered by the registered investment advisor and not an outside business activity of the investment advisor representative.
According to the consent order, the individual, who was subject to this enforcement proceeding by the Nebraska Securities Bureau, advertised an upcoming savings and retirement protection seminar through a flyer that described the seminar as sponsored by the individual's outside business activity and listed himself as a registered representative of his outside business activity, which was not a registered entity with the Nebraska Securities Bureau; however, the flyer also described the individual as a registered representative of a broker-dealer and noted the outside business activity and the broker-dealer were not affiliated, which were both accurate statements. The Nebraska Securities Bureau concluded in the consent order that the individual violated NASD Rule of Conduct 2210(d)(2)(C), in that the flyer did not identify the products and services of the broker-dealer. The Nebraska Securities Bureau fined the individual in question $3,000 for this and other violations.
Although this enforcement proceeding by the Nebraska Securities Bureau was against a registered representative of a broker-dealer, this type of problem can often be found with a registered investment advisor that lacks a clear disclosure about the services offered by the firm as compared to the outside business activities of its investment advisor representatives. If you would like compliance assistance with your registered investment advisor's advertising, please contact RIA Compliance Consultants.
According to the consent order, the individual, who was subject to this enforcement proceeding by the Nebraska Securities Bureau, advertised an upcoming savings and retirement protection seminar through a flyer that described the seminar as sponsored by the individual's outside business activity and listed himself as a registered representative of his outside business activity, which was not a registered entity with the Nebraska Securities Bureau; however, the flyer also described the individual as a registered representative of a broker-dealer and noted the outside business activity and the broker-dealer were not affiliated, which were both accurate statements. The Nebraska Securities Bureau concluded in the consent order that the individual violated NASD Rule of Conduct 2210(d)(2)(C), in that the flyer did not identify the products and services of the broker-dealer. The Nebraska Securities Bureau fined the individual in question $3,000 for this and other violations.
Although this enforcement proceeding by the Nebraska Securities Bureau was against a registered representative of a broker-dealer, this type of problem can often be found with a registered investment advisor that lacks a clear disclosure about the services offered by the firm as compared to the outside business activities of its investment advisor representatives. If you would like compliance assistance with your registered investment advisor's advertising, please contact RIA Compliance Consultants.
Labels: Advertising
posted by bhill at 4:50 PM
SEC Bars Investment Advisor for Inflating AUM and Performance Advertising
In January of this year, the SEC entered bar and cease and desist orders against a two member registered investment advisor firm. The firm was owned by a husband and wife with the wife serving strictly in an administrative capacity. The law judge in the case found that the registered investment advisor had willfully violated the Investment Advisers Act of 1940 because it falsely represented to the SEC that it had assets under management (AUM) exceeding $25 million in order to remain eligible for SEC registration. The inflated AUM numbers were reported on several Form ADV Part 1 amendments from 1996 through 2000. The SEC terminated the firm’s registration in 2002. However, the firm continued to hold itself out to the public as an investment advisor and reported its AUM numbers through several database services. The reporting of those numbers were also found to be intentionally inflated and therefore misleading. Further, the firm was not able to provide documentation substantiating its AUM and performance numbers. The firm claimed all paperwork and client files were lost in a fire and then claimed the paperwork was lost in flood. To read the entire order click here.
While this firm’s actions were found to be willful and were intentionally done to mislead potential clients and the public in general, the lessons learned can be applied to every registered investment advisor. This case illustrates the importance of disclosing accurate AUM on the Form ADV Part 1. If your firm does not meet an eligibility requirement for SEC registration, it must deregister with the SEC and register with the state regulators. Do not take the risk of over reporting or misreporting AUM simply to maintain SEC registration. This case also illustrates action the SEC is willing to take when a registered investment advisor presents misleading AUM and performance information to the public through advertising and other marketing channels. All performance numbers need to be substantiated, documented and maintained with the firm’s books and records. Finally, a registered investment advisor is required to maintain books and records under Rule 204-2 and other applicable regulations, even after the firm terminates its registration. Once termination is effective, a registered investment advisor must maintain all books and records for the time period required under Rule 204-2, typically not less than five years from the end of the fiscal year during which the last entry was made on such record.
While this firm’s actions were found to be willful and were intentionally done to mislead potential clients and the public in general, the lessons learned can be applied to every registered investment advisor. This case illustrates the importance of disclosing accurate AUM on the Form ADV Part 1. If your firm does not meet an eligibility requirement for SEC registration, it must deregister with the SEC and register with the state regulators. Do not take the risk of over reporting or misreporting AUM simply to maintain SEC registration. This case also illustrates action the SEC is willing to take when a registered investment advisor presents misleading AUM and performance information to the public through advertising and other marketing channels. All performance numbers need to be substantiated, documented and maintained with the firm’s books and records. Finally, a registered investment advisor is required to maintain books and records under Rule 204-2 and other applicable regulations, even after the firm terminates its registration. Once termination is effective, a registered investment advisor must maintain all books and records for the time period required under Rule 204-2, typically not less than five years from the end of the fiscal year during which the last entry was made on such record.
Labels: Advertising, Enforcement, Form ADV, SEC
posted by bhill at 12:27 PM
SEC Chair Previews Results of "Free Lunch" Seminar Exams
During recent testimony before the U.S. Senate's Special Committee on Aging, United States Securities and Exchange Commission ("SEC") Chairman Christopher Cox offered a preview of the results from the SEC's targeted exams of financial firms that sponsor "free lunch" seminars in advance of the full release next week at the SEC's "Senior Summit". The following is an excerpt of SEC Chairman Cox's comments regarding the SEC's "free lunch" seminar exam findings:
But even at this point it is clear that we were right to identify these "free lunch" sales seminars as posing serious risks to senior investors. Many of the advertisements and mailers used to solicit seniors to attend these events were confusing or misleading about the intent of the event. Our examinations have found that, despite being advertised as "educational" or touting "nothing will be sold," the purpose of these seminars is to convince attendees to open new accounts with the sponsoring firm – and ultimately, to sell financial products to seniors.
Based on this insight, RIA Compliance Consultants would recommend that financial professionals immediately consider deleting terms and descriptions such as "educational" or "nothing will be sold" from the marketing materials promoting seminars or actual seminar presentations. Moreover, financial professionals that conduct seminars focused upon seniors should carve out time next week to review the complete results of the SEC target examinations of sponsors of "free lunch" seminars since this report will undoubtedly be used as guide by securities regulators for areas of further scrutiny.
If your firm needs guidance with respect to ensuring its sales literature and advertising is in compliance with the requirements of an investment adviser under state or federal law, please contact RIA Compliance Consultants at 877-345-4034.
But even at this point it is clear that we were right to identify these "free lunch" sales seminars as posing serious risks to senior investors. Many of the advertisements and mailers used to solicit seniors to attend these events were confusing or misleading about the intent of the event. Our examinations have found that, despite being advertised as "educational" or touting "nothing will be sold," the purpose of these seminars is to convince attendees to open new accounts with the sponsoring firm – and ultimately, to sell financial products to seniors.
Based on this insight, RIA Compliance Consultants would recommend that financial professionals immediately consider deleting terms and descriptions such as "educational" or "nothing will be sold" from the marketing materials promoting seminars or actual seminar presentations. Moreover, financial professionals that conduct seminars focused upon seniors should carve out time next week to review the complete results of the SEC target examinations of sponsors of "free lunch" seminars since this report will undoubtedly be used as guide by securities regulators for areas of further scrutiny.
If your firm needs guidance with respect to ensuring its sales literature and advertising is in compliance with the requirements of an investment adviser under state or federal law, please contact RIA Compliance Consultants at 877-345-4034.
Labels: Advertising, Equity-Indexed Annuities, SEC
posted by bhill at 10:15 PM
Senate Hearing Scheduled Regarding “Free Lunch” Seminars for Seniors & Professional Designations
The United States Senate Special Committee on Aging will hold a hearing entitled as "Advising Seniors About Their Money: Who Is Qualified - and Who Is Not?” on Wednesday, September 5, 2007 at 2:00 p.m. EST. If interested in hearing the webcast, you should visit the website of the Special Committee on Aging.
Joseph P. Borg, the North American Securities Administrators Association (“NASAA”) President and Alabama Securities Commission Director, will testify as to the efforts by state securities administrators to regulate “free lunch” seminars for seniors and the use of professional designations implying special expertise with seniors.
It has been RIA Compliance Consultants’ experience that this focus by state securities regulators on “free lunch” seminars and professional designations has also translated into scrutiny by state regulators as to whether an individual only licensed as an insurance agent (with no securities licenses) selling equity indexed annuities can discuss securities markets in general or encourage the liquidation of securities to prospective or existing insurance clients. Many state securities regulators have concluded that such activity by an insurance only agent constitutes acting as an unregistered investment advisor in violation of the state securities act.
If you are an agent that is only insurance licensed and would like help in avoiding allegations that you are acting as an unregistered investment adviser, please contact RIA Compliance Consultants at 877-345-4034.
Joseph P. Borg, the North American Securities Administrators Association (“NASAA”) President and Alabama Securities Commission Director, will testify as to the efforts by state securities administrators to regulate “free lunch” seminars for seniors and the use of professional designations implying special expertise with seniors.
It has been RIA Compliance Consultants’ experience that this focus by state securities regulators on “free lunch” seminars and professional designations has also translated into scrutiny by state regulators as to whether an individual only licensed as an insurance agent (with no securities licenses) selling equity indexed annuities can discuss securities markets in general or encourage the liquidation of securities to prospective or existing insurance clients. Many state securities regulators have concluded that such activity by an insurance only agent constitutes acting as an unregistered investment advisor in violation of the state securities act.
If you are an agent that is only insurance licensed and would like help in avoiding allegations that you are acting as an unregistered investment adviser, please contact RIA Compliance Consultants at 877-345-4034.
Labels: Advertising, Equity-Indexed Annuities
posted by bhill at 9:52 PM
California Proposes Amendments to Rules under the Corporate Securities Law of 1968
Earlier this month, the California Department of Corporations announced proposed changes to rules regulating investment advisers registered in California. According to the release, the objective in proposing the amendments is to increase uniformity with the model rules suggested by the North American Securities Administrators Association (NASAA), rules already in effect in other states, and rules established by the Securities and Exchange Commission (SEC). California is giving the public an opportunity to comment on the proposed changes. The time period for comment ends on October 30, 2007.
The proposed rules will have an impact on registered investment advisors in California, and all registered investment advisor firms doing business in California should take time to read the various releases and the text of the proposed rules. We feel the following are some of the more important changes proposed.
RIA Compliance Consultants, Inc. can help your firm comply with these proposed changes. Contact us to find out more about our written compliance manual and code of ethics drafting and reviewing services.
The proposed rules will have an impact on registered investment advisors in California, and all registered investment advisor firms doing business in California should take time to read the various releases and the text of the proposed rules. We feel the following are some of the more important changes proposed.
- Requirement to establish and maintain written procedures designed to supervise employees and ensure their compliance with securities laws.
- Incorporation of the principles governing performance-based advertising set forth in the 1996 SEC No-Action letter involving Clover Capital Management.
- Requirement to provide all clients a written disclosure document containing the same information in Form ADV Part II. While we suggest all registered investment advisors provide a disclosure document to clients, apparently this has not been a requirement in California.
- Amendment to the definition of custody and the procedures regarding custody. This rule will mirror the NASAA Model Rule for custody.
- Rule requiring the implementation of codes of ethics. The rule will copy the same requirements set forth under the SEC’s codes of ethics rule (Rule 204A-1 under the Advisers Act).
- Changes to “largely mirror” Rule 206(4)-3 of the Advisers Act which sets forth requirements that must be followed when fees are paid to solicitors.
- The adoption and implementation of a business continuity plan.
RIA Compliance Consultants, Inc. can help your firm comply with these proposed changes. Contact us to find out more about our written compliance manual and code of ethics drafting and reviewing services.
Labels: Advertising, Code of Ethics, Custody, Form ADV, Solicitors
posted by bhill at 3:00 PM
Washington Securities Division is Scrutinizing Professional Designations that Imply Expertise with Seniors
The State of Washington's Securities Division is currently seeking comments regarding the possible regulation of professional designations by investment adviser representatives related to senior citizens. It appears that the Washington Securities Division might be following the lead of many other state securities regulators that have expressed concern about the use of a professional designation that implies a special expertise, training or experience in dealing with seniors when in fact the investment adviser representative utilizing such a designation does not possess such expertise, training or experience with seniors. Even if your state securities regulator hasn't adopted a senior professional designation rule, you should exercise caution about using certain senior related professional designations if you're registered as an investment adviser representative since your state securities regulator may attempt to argue that your use of such designtations is a material misrepresentation in violation of the state securities act.
Labels: Advertising
posted by bhill at 9:20 PM
SEC Highlights Performance Advertising Deficiencies
In the first SEC ComplianceAlert issue, the United States Securities and Exchange Commission (SEC) cautioned registered investment advisors against inappropriate performance advertisements and inadequate policies regarding performance advertising. According to the ComplianceAlert article, the SEC discovered numerous deficiencies as a result of a risk-based sweep examination of several registered investment advisors.
The most common deficiency of registered investment advisors was the lack of sufficient disclosures necessary to prevent advertising from being misleading. The SEC provided the following as examples: firms failed to disclose they did not deduct investment advisory fees from the results, firms failed to disclose whether results reflected dividends, and registered investment advisor firms failed to disclose differences with the particular index used to benchmark performance claims. The SEC also noted firms had inadequate compliance policies and procedures designed to adequately control performance advertising. Another major concern of the SEC is a registered investment advisor firm’s inappropriate or inaccurate claim of compliance with the CFA Institute’s Global Investment Performance Standards (more commonly known as GIPS).
While the SEC does not require GIPS compliance, nor has it set specific standards to follow, RIA Compliance Consultants would remind registered investment advisor firms of the SEC’s guidance provided in its October 28, 1986 no-action letter to Clover Capital Management. This important no-action letter provides guidance about what's prohibited when advertising performance of a model portfolio and when advertising actual performance. The following are some key takeaways from Clover:
Model and Actual Results
- Fails to disclose the effect of material market or economic conditions on the results portrayed;
- Fails to reflect the deduction of advisory fees, brokerage commissions, and other expenses that a client would have paid;
- Fails to disclose whether and to what extent the results portrayed include the reinvestment of dividends and other earnings;
- Suggests potential profits without also disclosing the possibility of loss;
- Compares results to an index without disclosing all material factors relevant to the comparison;
- Fails to disclose any material conditions, objectives or investment strategies used to obtain the performance advertised;
Model Results
- Fails to disclose prominently the limitation inherent in model results;
- With respect to model performance results, fails to disclose, if applicable, material changes in the conditions, objectives or investment strategies of the model portfolio during the period portrayed and, if so, the effect thereof;
- With respect to model performance results, fails to disclose, if applicable, that some of the securities or strategies reflected in the model portfolio do not relate, or relate only partially, to the services currently offered by the adviser;
- With respect to model performance results, fails to disclose, if applicable, that the advisor’s clients actually had investment results that were materially different from those portrayed in the model;
Actual Results
- If actual performance results used in the advertising are only for a selected group of clients, fails to disclose the basis on which the selection was made and the effect of this practice on the results.
If your registered investment advisor firm has made performance advertising an integral part of its marketing campaign, have you made sure performance advertising is an integral part of the firm’s compliance manual? Registered investment advisors need to make sure all performance advertisements are consistent with the expectations set by the SEC. A well designed compliance policy with sufficient supervisory procedures is a must when trying to control and monitor performance advertising. If you would like to know how RIA Compliance Consultants can help your firm design reasonable policies and procedures for performance advertising, give us a call today.
Labels: Advertising
posted by bhill at 2:38 PM
Nebraska Securities Bureau Requiring Approval of Professional Designations
In today's edition of the Omaha World-Herald, Jack Herstein, deputy director of the Securities Bureau of the Nebraska Department of Banking and Finance, noted that the Securities Bureau has approved eight (8) professional designations for use by registered investment advisers in Nebraska.
Those professional designations already approved for use by registered investment advisers in Nebraska include the following: Certified Financial Planner (CFP); Chartered Financial Consultant (ChFC); Personal Financial Specialist (PFS); Chartered Financial Analyst (CFA); Chartered Investment Counselor (CIC); Chartered Life Underwriter (CLU); Life Underwriter Training Council Fellow (LUTCF); and Financial Services Specialist (FSS).
In the Omaha World-Herald article, Herstein noted that the Securities Bureau is currently reviewing a dozen other professional designations that have requested approval, but there are over fifty (50) other professional designations that have not yet applied for approval with Nebraska. Herstein also explained that once this professional designation review process is completed, a person (presumably an investment adviser representative or registered representative of a broker-dealer in Nebraska) could be fined or suspended for using professional designations that haven't been approved by the Nebraska Securities Bureau.
In light of these comments and the Nebraska Securities Bureau's recent regulatory investigations of the marketing of equity-indexed annuities to seniors and scrutiny of the professional designations used by insurance-only agents, investment adviser representatives registered in Nebraska need to be careful and utilize only approved professional designations.
For investment adviser representatives registered outside of Nebraska, it should be recognized that other state securities regulators are taking note of the Nebraska Securities Bureau's efforts to regulate the use of professional designations. In particular, the Massachusetts Securities Division is utilizing an approach similar to Nebraska.
Even if an investment adviser representative is registered in a state that hasn't adopted a rule or otherwise taken a public position regarding the use of professional designations, RIA Compliance Consultants recommends that such investment adviser representatives exercise extreme caution and only utilize a professional designation that has substantial educational requirements, experience standards, a code of ethics, and a continuing education requirement. It should be understood that a state securities regulator may attempt to argue that the use of certain professional designations, which are lacking of the above requirements, are misleading under the general anti-fraud provisions of the state securities act despite the lack of any specific rule regarding designations.
Those professional designations already approved for use by registered investment advisers in Nebraska include the following: Certified Financial Planner (CFP); Chartered Financial Consultant (ChFC); Personal Financial Specialist (PFS); Chartered Financial Analyst (CFA); Chartered Investment Counselor (CIC); Chartered Life Underwriter (CLU); Life Underwriter Training Council Fellow (LUTCF); and Financial Services Specialist (FSS).
In the Omaha World-Herald article, Herstein noted that the Securities Bureau is currently reviewing a dozen other professional designations that have requested approval, but there are over fifty (50) other professional designations that have not yet applied for approval with Nebraska. Herstein also explained that once this professional designation review process is completed, a person (presumably an investment adviser representative or registered representative of a broker-dealer in Nebraska) could be fined or suspended for using professional designations that haven't been approved by the Nebraska Securities Bureau.
In light of these comments and the Nebraska Securities Bureau's recent regulatory investigations of the marketing of equity-indexed annuities to seniors and scrutiny of the professional designations used by insurance-only agents, investment adviser representatives registered in Nebraska need to be careful and utilize only approved professional designations.
For investment adviser representatives registered outside of Nebraska, it should be recognized that other state securities regulators are taking note of the Nebraska Securities Bureau's efforts to regulate the use of professional designations. In particular, the Massachusetts Securities Division is utilizing an approach similar to Nebraska.
Even if an investment adviser representative is registered in a state that hasn't adopted a rule or otherwise taken a public position regarding the use of professional designations, RIA Compliance Consultants recommends that such investment adviser representatives exercise extreme caution and only utilize a professional designation that has substantial educational requirements, experience standards, a code of ethics, and a continuing education requirement. It should be understood that a state securities regulator may attempt to argue that the use of certain professional designations, which are lacking of the above requirements, are misleading under the general anti-fraud provisions of the state securities act despite the lack of any specific rule regarding designations.
Labels: Advertising, Equity-Indexed Annuities
posted by bhill at 10:24 AM
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
Nebraska Requests that IA Firms Prohibit IARs from Using Senior Designations & Cautions Against “Free Lunch” Seminars to Seniors
The Nebraska Securities Bureau recently issued a special notice to all federally covered and state registered investment advisors in Nebraska requesting that “firms prohibit the use of all professional designations that state or imply a specialized knowledge of the needs of senior investors by their … investment adviser representatives registered in Nebraska. This prohibition should cover all mass mailings, advertising, business cards and letterhead of the … representative.” (The Nebraska securities regulator noted that the CFA, CFP, ChFC or CPFS are still acceptable professional designations.) This effort appears to be aimed directly at barring designations such as the Certified Senior Advisor ("CSA"). Although this special notice is crafted as a request instead of a rule, the Nebraska Securities Bureau is warning investment advisors that it will pursue enforcement actions if an investment advisor representative uses a professional designation in a manner misleading to investors.
Also within this special notice, Nebraska announced that each investment advisor must report all the “free-lunch” sales seminars that its investment advisor reps have offered or plan to offer to seniors. The Bureau specifically urged investment advisors to exercise care when offering complex products to seniors. RIA Compliance Consultants believes it’s likely that those investment advisor reps (even when acting in their capacity as insurance agents) marketing equity indexed annuities through such seminars will be subject to intense scrutiny from the Nebraska Securities Bureau, which very well could include field examiners attending client seminars and subsequently interviewing clients sold equity indexed annuities. As a result, investment advisor firms in Nebraska should carefully review the insurance activities of their investment advisor reps.
Also within this special notice, Nebraska announced that each investment advisor must report all the “free-lunch” sales seminars that its investment advisor reps have offered or plan to offer to seniors. The Bureau specifically urged investment advisors to exercise care when offering complex products to seniors. RIA Compliance Consultants believes it’s likely that those investment advisor reps (even when acting in their capacity as insurance agents) marketing equity indexed annuities through such seminars will be subject to intense scrutiny from the Nebraska Securities Bureau, which very well could include field examiners attending client seminars and subsequently interviewing clients sold equity indexed annuities. As a result, investment advisor firms in Nebraska should carefully review the insurance activities of their investment advisor reps.
Labels: Advertising
posted by bhill at 9:23 PM
MA Proposes New Regulations on Use of Senior Designations
The Massachusetts Securities Division (the "Division") is proposing a new rule that would prohibit investment advisor representatives from using certain professional designations implying specialized or knowledge associated with seniors.
According to the Division, this proposed rule is based on concerns about the use of designations that falsely convey a certain expertise in matters dealing with seniors and their special needs. The Division specifically cited the example of using the designation "Certified Elder Planning Specialists" ("CEPS") as misleading and a method to disguise that the associate was an insurance agent.
Under this regulation, professional designations that are the result of a meaningful educational or training process would be exempted from the prohibition. For more information about the proposed professional designation rule for Massachusetts, pleas click here.
According to the Division, this proposed rule is based on concerns about the use of designations that falsely convey a certain expertise in matters dealing with seniors and their special needs. The Division specifically cited the example of using the designation "Certified Elder Planning Specialists" ("CEPS") as misleading and a method to disguise that the associate was an insurance agent.
Under this regulation, professional designations that are the result of a meaningful educational or training process would be exempted from the prohibition. For more information about the proposed professional designation rule for Massachusetts, pleas click here.
Labels: Advertising
posted by bhill at 9:37 AM
