Did you know that most state securities regulators require paid solicitors of investment advisor firms to license as investment advisor representatives? This means that the solicitor must either establish his/her own investment advisor firm or license under an existing investment advisor firm. From the solicitor’s perspective it is far easier to simply license under an existing investment advisor firm rather than forming a new investment advisor firm. However, what does that mean for the existing investment advisor firm holding the solicitor’s investment advisor representative license?
When a solicitor is licensed as an investment advisor representative under an investment advisor firm, the investment advisor firm is responsible for supervising the investment advisory activities of the solicitor. The relationship moves away from a due diligence requirement to a supervision requirement. An investment advisor must treat all licensed investment advisor representatives, even those that are just solicitors, as supervised persons for purposes of the firm’s compliance policies and procedures and code of ethics. Therefore, in addition to ensuring compliance with the SEC’s solicitor rule, the solicitor must follow the firm’s written compliance policies and procedures including the firm’s code of ethics. The registered investment advisor must establish reasonable policies and procedures designed to properly supervise its licensed solicitors. These procedures could include training events, advertising limitations, and monitoring the actual services provided by the solicitor.
If your firm has an active solicitor program, is considering such a program or if you just want to learn more about SEC Rule 206(4)-3, please join us for our Thursday, August 26 webinar entitled “Establishing & Supervising Solicitor Arrangements”. A seat to attend this webinar is only $59.95.
During this webinar, RIA Compliance Consultants will detail the requirements of SEC Rule 206(4)-3, discuss best tips for complying with the rule and provide opportunity for attendees to pose specific questions. We will be examining the differences between affiliated and unaffiliated solicitors and the ramifications of holding licenses of solicitor-only investment advisor representatives.
To register for “Establishing & Supervising Solicitor Arrangements” click here.
Posted by Bryan Hill