Good Risk Governance Pays

Good Risk Governance Pays

Investment Best Practices | Risk Management | Valuation

Category Archives: Broker Dealers

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New York City Comptroller Urges New Fiduciary Rules

Posted in Broker Dealers, Compliance, Fiduciary Liability, Investment Management
In a March 25, 2015 press release, Mr. Scott M. Stringer laid bare the details of his plan to “enact a state law requiring that financial advisors disclose whether they put their own financial interests above those of their clients.” In support of his desire for an expanded fiduciary standard to be implemented across the… Continue Reading

Investment Risk Management, Kanye West and Paul McCartney

Posted in Broker Dealers, Compliance, Disclosure and Transparency, FINRA, Investment Management, Liquidity, Regulation, Risk Management, Valuation
Thank heavens for the absurdities of life. A few chuckles here and there make the difference between blah and pizzazz in life. A recent example is the Twitterverse response to a recent artistic collaboration between Kanye West and Paul McCartney. Supposedly some of the members of the younger generation are unaware of this Beatle’s musical eminence. See “Genius… Continue Reading

Financial Fraud At Ball State University

Posted in Broker Dealers, Compliance, Ethics, Financial Reporting, Fraud, Key Person, Trading
According to “Ex-prosecutor helps Ball State avert future fraud” (Indianapolis Business Journal, December 7, 2014), the university has hired a team to implement safeguards in the aftermath of losing more than $13 million in several investment scams. Using a reputable brokerage firm, establishing a third party managed hotline for whistleblowers and ensuring custodial best practices for securities are some… Continue Reading

Automated Investment Management and Fiduciary Liability

Posted in Broker Dealers, Compliance, ERISA, Investment Management, Litigation, Model Risk, Regulation, Venture Capital
As I read about the pros and cons of providing automated investment advice, I am reminded of one of my former financial modeling students. Knee deep in math and not very happy about the hard work ahead, he felt strongly that hiring someone else to do the “grunt” work would leave him free to tackle more… Continue Reading

SEC Examination Priorities For 2014

Posted in Broker Dealers, Compliance, Leverage, Model Risk, Regulation, Risk Management, Valuation
In case you missed it, the U.S. Securities and Exchange Commision (“SEC”) recently published its “Examination Priorities for 2014.” According to this January 9, 2014 document, important priorities include, but are not limited to, the following: Fraud detection and prevention analysis to entail the use of “quantitative and qualitative tools and techniques to seek to… Continue Reading

Fiduciary Regulations, Financial Literacy and the Cost of Compliance

Posted in Broker Dealers, Compliance, Fees, Fiduciary Liability, FINRA, Investment Management, Regulation
As financial industry participants know, once the regulatory machine is in motion, it is difficult to go back to the beginning. At a certain stage, those organizations and individuals that are expected to be on the receiving end of new rules spend money and time to prepare. According to “Fiduciary rules will cost millions in… Continue Reading

Asset Management Industry Trends For 2013

Posted in Broker Dealers, Compliance, Derivatives, Fiduciary Liability, Financial Expert, FINRA, Governance, Investment Management, Regulation
Life in asset management land will never be the same again. According to “The Future of Asset Management” by Maha Khan Phillips (CFA Institute Magazine, Jan/Feb 2013), operating margins are under pressure, asset growth is anemic, investors are moving away from equity around the world and competitive pressures are not going away. This is bad news… Continue Reading

CFTC Regulation and Compliance: Not Just for Commodities Brokers Anymore

Posted in Broker Dealers, Commodities, Compliance, Disclosure and Transparency, Financial Reporting, Hedge Fund, Regulation, Trading
Although the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed over two years ago, regulators and financial market participants are still grappling with its complexities. Some aspects are still being finalized which adds to the challenge of compliance. According to “U.S. regulators yet to implement one-third of Dodd-Frank rules” by reporter Pat Dulnier (Bank… Continue Reading

Breach of Fiduciary Duty as Top Complaint in FINRA Arbitration Matters

Posted in Broker Dealers, Fiduciary Liability, FINRA
According to ADVISORONE journalist Melanie Waddell, the debate about fiduciary standard-setting continues as various experts cite urgency with respect to investment complexity and the advice they are getting from financial professionals. In “Breach of Fiduciary Duty No. 1 Complaint in FINRA Arbitration Cases” (September 25, 2012), Waddell writes that many investors do not understand the… Continue Reading

$200 Million Settlement Paid Relating to Mortgage Backed Security Valuations

Posted in Broker Dealers, Compliance, Fraud, Mutual Funds, Regulation, Valuation
Investors rely on the net asset values (“NAVs”) provided to them as a way to make all sorts of financial decisions such as asset allocation, rebalancing, hedging and possibly exiting a particular money pool. In a recent case, the bear invaded the tent, eventually denying investors for several funds any illusion about security related to… Continue Reading

Life for Broker-Dealers With An Expanded Definition of Fiduciary

Posted in Broker Dealers, Compliance, ERISA, Fiduciary Liability
The U.S. Department of Labor’s (“DOL”) proposal to expand the definition of fiduciary is stirring the pot for multiple sectors of the investment world. Investment News journalist Darla Mercado writes that the U.S. Securities and Exchange Commission (“SEC”) and the DOL should work together on any initiative that expands the scope of the fiduciary in… Continue Reading

Fiduciary Duties, Post Madoff

Posted in Broker Dealers, Compliance, Fiduciary Liability, Hedge Fund, Litigation, Risk Management
In “The Post-Madoff Emergence of a Fiduciary Duty of Due Diligence – Recent Regulatory Enforcement Actions and Their Impact on Best Practices for Investment Managers” (Practical Compliance & Risk Management For The Securities Industry, September-October 2009), Attorneys Scott A. Meyers and James G. Martignon describe a renewed scrutiny of the relationship between hedge funds, investment… Continue Reading