SEC will Examine Firms that Hire Previously Discipline Advisers

From Cipperman Compliance Services LLC

The SEC’s Office of Compliance Inspections and Examinations has launched a “Supervision Initiative” to examine supervision practices of investment advisers that employ previously-disciplined advisers or brokers. OCIE will focus on a firm’s compliance practices including its policies and procedures for hiring, reporting, oversight, and complaint handling. The staff will also review disclosures, conflicts of interest, and marketing materials. The Supervision Initiative cites a recent study concluding that reps with a disciplinary history are 5 times more likely to engage in misconduct (See http://blog2.cipperman.com/2016/03/academic-study-reports-widespread-financial-adviser-misconduct/.)

OUR TAKE: The SEC wants to discourage firms from hiring disciplined advisers and brokers. This sweep puts the burden on such hiring firms to prove that they can prevent future violations.

https://www.sec.gov/ocie/announcement/ocie-2016-risk-alert-supervision-registered-investment-advisers.pdf

Advertisements
This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s