Archive for August, 2013

A peek into the bright mind of Corey Kupfer with @navallonet

Wednesday, August 21st, 2013 interviews the world’s most successful people, and this week they chose Corey Kupfer, Partner at the Hamburger Law Firm and President of Entrepeneurs’ Organization New York Chapter. Corey discusses success, adversity and challenges, and offers advice to college students about to enter the workforce.

When asked about the greatest lesson he ever learned, Corey responded, “Take on something (whether it is building a business, pursuing a cause or manifesting anything else) that is bigger than yourself and come from a place of being of service to others. If you do that, you will always be taken care of. If you play small and focus on your needs and successes, you will always have limited success and happiness.”

Click here to read more.

Dan Bernstein and Gary Davis Jr. made @ByAllAccounts “The Best of Compliance” summer reading list!

Wednesday, August 21st, 2013

MarketCounsel’s Dan Bernstein, Research + Development and Chief Knowledge Officer, and Gary Davis Jr., Vice President of Practice Management made ByAllAccounts “The Best of Compliance” summer reading list.

Discover how to prepare for the SEC’s 2013 examination priorities, tips for asset management operations and how to implement leading practices to better manage risk.

Soak up the last days of summer by clicking here to download.

SEC Gets New Commissioners

Tuesday, August 20th, 2013

The U.S. Senate recently confirmed two new commissioners at the SEC.  Kara Stein, an aide to Senator Jack Reed (D., RI) and Michael Piwowar, an aide to Senator Mike Crapo (R., ID) have filled out the SEC’s commissioner positions.  Ms. Stein will succeed Elisse Wlater, while Mr. Piwowar is set to succeed Troy Paredes.

Commissioners Paredes and Walter have been at odds on most SEC rulemaking.  Time will tell if Mr. Piwowar and Ms. Stein will be similar to their predecessors.

Investment Advisers Poised to Pick Up Market Share

Thursday, August 15th, 2013

An article in InvestmentNews cited to an Aite Group report that found that independent investment advisers, as well as discount brokers, are expected to continue to gain market share from traditional brokerage firms this year.  According to the study, advisers are expected to increase their number of clients by 12%, while wirehouses expect 7% growth.

Alois Pirker, research director in wealth management at Aite Group, feels that advisers have an advantage because they are more nimble and able to customize services. “The focus that RIAs have is really something that’s hard to replicate,” he said.

According to Mr. Pirker, discount brokers are doing well with their focus on technology and self-service.  Discounter brokers gained three-tenths of a point of asset market share last year, reaching 19%, according to a separate Aite study completed this month.  RIAs gained nine-tenths, to a 13% share.  Wirehouses still had a hefty 37%, but lost seven-tenths of a point.

Looking at both of  the Aite studies, advisers continue to grow, but wirehouses are still the 800 pound gorilla.  Hopefully, this allows advisors to continue to pick off assets with their ability to give clients what they really want.

SEC Sanctions CCO for Failure to Supervise and Implement Policies and Procedures

Tuesday, August 13th, 2013

Ronald Rollins, CCO of Comprehensive Capital Management (CCM) and of an affiliated broker-dealer, agreed to a settlement with the SEC pursuant to allegations that Rollins failed to supervise and implement compliance policies and procedures thereby aiding and abetting violations of the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934.  Most notably, Rollins failed to implement a custody policy, a policy requiring daily review of transactions, an e-mail policy, and an office audit policy.  On July 29, 2013, Rollins agreed to a 12-month ban from working in the financial industry and a 3-year ban from associating in a supervisory capacity with a financial institution.  This indicates the importance the SEC places on a CCO’s supervisory responsibility such that, even without malicious intent, failure to reasonably supervise and to implement appropriate policies and procedures will be aggressively pursued.

The predicating circumstances centered on Timothy Roth, a registered representative of the broker-dealer.  Roth misappropriated over $16 million of client funds.  He accomplished this by setting up an account (Custody Account) over which he had custody at CCM’s clearing broker-dealer which was also the custodian of CCM’s clients’ assets.

The settlement highlights the SEC’s stance that ultimate supervisory responsibility lies with the CCO especially where a CCO, with proper due diligence, could have detected violations of applicable law and the firm’s policies and procedures.  Rollins was aware of the Custody Account, correctly identified Roth as having custody of client funds in 2003, and notified Roth that maintaining custody of client assets violated CCM policies.  Thereafter, Rollins did not investigate the matter further though Rollins had access to information on which he could have concluded that Roth had constructive custody of client funds.  The SEC asserted that Rollins should have investigated to ensure steps were taken to remedy custody or to put in place proper procedures to accommodate custody (e.g., independent verifications); instead Rollins relied on associated persons to self-report.

The SEC went on to assert that Rollins failed to implement CCM’s policy to conduct a daily review of transactions.  While not necessarily required, the SEC claimed that omitting such review represented a failure to implement stated policies and would have served to put Rollins on notice of Roth’s suspicious activity.  Third, the SEC asserted that Rollins failed to enforce an e-mail policy requiring all work-related e-mails be sent through company e-mail.  Rollins himself communicated with Roth through Roth’s personal e-mail address.  Finally, the SEC accused Rollins of failing to conduct annual audits of all supervised persons.  While documented, the SEC found these audits were “perfunctory and were not designed to prevent or detect fraud.”

CCOs should be aware that the SEC will pursue circumstances where, without malicious intent, a CCO fails to catch a supervised person’s violation of policies and procedures.  Equally egregious are those instances where policies and procedures are codified and not followed or not followed effectively.  As such, it is important to review any policies and procedures to be sure they reflect actual practices and address identified problem areas or concerns.

Happy 13th Anniversary to MarketCounsel and the Hamburger Law Firm

Thursday, August 1st, 2013

Perhaps teenagers in years but brimming with the energy of a startup. I never could have imagined they would grow to have such an impact upon our industry. I wish for them to continue to be a gift for our beloved clients, industry partners and amazing staff and continue to receive the gratitude and accolades that have fueled our passion for the first 13 years.