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Category Archives: Fiduciary Liability

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Trading Ahead Of Investment Policies and Procedures

Posted in Compliance, Fiduciary Liability, Governance, Investment Management, Non-Profits, Risk Management, Trading
In response to a recent request by a reporter, I examined some public documents relating to what appears to be unauthorized trading. As is the situation when only some information is available, it’s hard to tell whether said trades can be characterized as rogue, mistaken or deemed to fall within a broader, albeit ill-communicated, mandate. Should this matter proceed further, obviously… Continue Reading

Investment Management Delegation Challenges

Posted in Compliance, Fiduciary Liability, Investment Consultants, Investment Management, Risk Management
Chief Investment Officer describes the surge in delegated management activity as “staggering,” noting a nearly nine hundred percent rise in discretionary assets in recent times. Of the 188 asset owners that were questioned as part of a 2016 survey, many cited “better performance as being either ‘critical’ or ‘important’ to their decision to outsource…” Other findings suggest a willingness to authorize third… Continue Reading

Investment Vendor Due Diligence and the Fiduciary Rule

Posted in Compliance, Credit Risk, Disclosure and Transparency, Fiduciary Liability, Financial Reporting, Liquidity, Susan Mangiero
When I was a university professor and gave written homework, I frequently found myself in the position of having to remind students that reliance on a spell checker may not always produce good results. “I through the ball” is grammatically incorrect but would not reveal itself as an error. Someone would have to know that “threw” is… Continue Reading

It’s Heeeere – The Fiduciary Rule Has Arrived – Now What?

Posted in Compliance, Disclosure and Transparency, ERISA, Fees, Fiduciary Liability, Governance, Investment Management, Mutual Funds, Regulation
Like most people who work in the financial services arena, I hastily downloaded the long anticipated “Fiduciary Rule” when it was released by the U.S. Department of Labor (“DOL”) on April 6, 2016 and am busy tackling this final version. With more than two hundred pages, it’s going to take longer than a lunch break but is nevertheless vital reading. DOL’s Fact… Continue Reading

Breach of Fiduciary Duty Tops FINRA Disputes Again

Posted in Compliance, Fiduciary Liability, FINRA, Investment Management
According to dispute resolution statistics, published by the Financial Industry Regulatory Authority (“FINRA”), breach of fiduciary duty continues to lead the list of “controversy types in customer arbitrations.” Negligence, failure to supervise, misrepresentation, breach of contract, suitability and omission of facts follow. That breach of fiduciary duty allegations feature so prominently in FINRA customer disputes… Continue Reading

Investment Advisors, Monitoring and Compliance

Posted in Fiduciary Liability, Governance, Investment Management, Regulation, Risk Management
I talked last week about the intricacies of investment monitoring as part of a Bloomberg BNA webinar entitled “Life After Tibble: Investment Monitoring and Litigation Defense Considerations for ERISA Fiduciaries.” One of the points I made, repeatedly I might add, is that it is critical to evaluate the facts and circumstances related to a specific situation.… Continue Reading

Dr. Susan Mangiero Earns Certified Fraud Examiner (CFE) Credential at a Time When Global Fraud is Estimated at $3.7 Trillion Per Year

Posted in Fiduciary Liability, Fraud, Susan Mangiero
Dr. Susan Mangiero, financial expert and author, has earned the Certified Fraud Examiner (CFE) credential from the Association of Certified Fraud Examiners (ACFE), having successfully met the ACFE’s character, experience and education requirements for the CFE credential, and having demonstrated knowledge in four areas critical to the fight against fraud: Fraudulent Financial Transactions, Fraud Prevention… Continue Reading

Insights on Economic Analysis of Fiduciary Monitoring Disputes

Posted in ERISA, Fiduciary Liability, Investment Management, Litigation, Regulation, Susan Mangiero
While I typically avoid republishing posts from my other blog, Pension Risk Matters, there are numerous topics that are important to all types of investment industry professionals and not just those who work with retirement plan sponsors and participants. One such topic looks at investment monitoring and the fiduciary responsibilities to oversee and make changes,… Continue Reading

Electronic RFP Process and Fiduciary Duty

Posted in Compliance, Fiduciary Liability, Financial Expert, Investment Management, Pension
As I have mentioned on other occasions, my work as a forensic economist (and sometimes testifying expert witness) has frequently focused on how service providers were selected and then monitored. Always interested in knowing about industry innovations as they occur, I was intrigued to recently learn about a firm called InHub. Founded in 2014 by… Continue Reading

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

More About Fiduciary Outsourcing

Posted in ERISA, Fiduciary Liability, Pension
In an earlier commentary entitled “Fiduciary Outsourcing Considerations” (March 4, 2015), I talked about the expectations gap that arises when “a plan sponsor thinks that certain activities are going to be done by a fiduciary adviser, but the fiduciary adviser does not believe they are obliged to do such work…” I mentioned the work of… Continue Reading

Fiduciary Outsourcing Considerations

Posted in ERISA, Fiduciary Liability, Investment Management, Regulation
Plan Sponsor contributor, Judy Ward, takes a hard look at what many believe is a growing trend to outsource certain activities by retirement plan fiduciaries. A central theme in “Fiduciary Outsourcing Options” (February 2015) is that buyer and seller must be clear about the scope of work and document the agreement accordingly. This conversation importantly starts with a… Continue Reading

Litigation Trends – Regulatory Compliance and Global Reach

Posted in Compliance, Fiduciary Liability, International Investing, Investment Management, Litigation
A few weeks ago, I attended an interesting webinar about U.S. litigation trends. The event was sponsored by Norton Rose Fulbright and featured numerous legal experts. Otway Denny, senior partner in charge of dispute resolution and litigation in the United States, described an undeniable rise in regulatory investigations due to “stricter” scrutiny “from a broad… Continue Reading

Institutional Investors Uniting Over Limited Partner Terms

Posted in Disclosure and Transparency, Fiduciary Liability, Hedge Fund, Private Equity, Venture Capital
During a recent trip to London, I had a fascinating discussion with a UK attorney who advises institutional investors on contract terms. One of her admonitions to clients is to negotiate hard with a general partner and embrace the power of the purse rather than accept less favorable terms with respect to fees, transparency and… 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

Wall Street and Fiduciary Angst

Posted in Compliance, Fiduciary Liability, Governance, Regulation
According to Forbes contributor John Wasik, brokers and advisers may not be the biggest fans of any new rules related to fiduciary conduct. In “Why Wall Street, Insurers Don’t Want Fiduciary Duty” (August 23, 2013), he asserts that “brokers and the insurance industry hate the idea,” touting higher costs that would “price investors out of… Continue Reading

Susan Mangiero Attends FI360 Insights Conference on Fiduciary Standards of Care for Investors

Posted in Fiduciary Liability, Financial Expert, Hedge Fund, Private Equity, Valuation
Protecting investors and improving the quality of investment advice were once again themes at the ninth annual fi360 Conference in Scottsdale, Arizona. With two full days of educational content covering 32 distinct topics, the event provided investment advisors with expert insights on improving fiduciaryprocedures, benefits and risks common to investment products, the current state of… Continue Reading

Dr. Susan Mangiero Speaks at Fiduciary Conference About Due Diligence for Alternative Investments

Posted in Fiduciary Liability, Valuation
I am delighted to have been invited to join the faculty of the Master’s Track at the annual fi360 investment fiduciary conference, held this year in Scottsdale, Arizona. Speakers include: (1) ERISA attorney Charles Humphrey (2) Edward Lynch, AIFA, RF, GFS with Fiduciary Plan Governance, LLC (3) Dr. Susan Mangiero, AIFA, CFA, FRM with Fiduciary Leadership,… 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

401(k) Lawsuits, Investment Advisers and Fiduciary Breach

Posted in ERISA, Fiduciary Liability, Litigation
One wonders if financial professionals ever tire of new rules, regulations and the pressures of trying to do their job while avoiding liability landmines at the same time. Based on October 2012 comments made by several prominent ERISA attorneys – Michael Prame (Groom Law Group) and Fred Reish (Drinker Biddle & Reath LLC) – as part of the annual… Continue Reading

FINRA’s New Suitability Rule and Investment Complexity

Posted in Compliance, Fiduciary Liability, Investment Management, Mutual Funds
Given the confusion about suitability versus fiduciary duty, Wilson Elser attorney Janene Marasciullo (with assistance from Attorney Paula Toomey) sheds light on these timely and important topics. In “Sellers Beware: FINRA’s New Suitability Rule and the Sale of Complex Investments” (Securities Regulation & Law Report, October 15, 20212), the point is made that FINRA’s new… 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

New Studies Conclude That Legal and Compliance Risks Are a Big Concern

Posted in Compliance, Disclosure and Transparency, Fiduciary Liability, Litigation, Risk Management
A new study published by the Corporate Board Member and FTI Consulting, Inc. and entitled “Legal Risks on the Radar” suggests that cyber security, operations and corporate reputation are top concerns for U.S. directors and general counsel. In this 12th annual Law and the Boardroom Study, researchers with the Corporate Board Member and FTI Consulting, Inc. attribute globalization… Continue Reading