Archive for June, 2014

Full Speed Ahead!

Monday, June 30th, 2014

The cover story of REP. Magazine features our very own Brian Hamburger and MarketCounsel.  The story, while using Brian’s likeness, is really about the MarketCounsel story and the role we are so humbled to play in the success of so many firms and our small part of the securities industry.  Our deepest gratitude and thanks for the contributions and support of all of the clients, partners and staff, without whom this is not even a story worth telling.

Read more.


Senate Subcommittee Goes Opposite House and Votes For Full SEC Funding

Wednesday, June 25th, 2014

InvestmentNews is reporting that the Senate Financial Services and General Government Subcommittee has voted to give the SEC a $350 million budget increase for fiscal year 2015.  This starkly contrasts last week’s decision by the House Appropriations Subcommittee to slash the SEC’s budget increase to a mere $50 million.

Senator Richard Shelby, (R-AL), the ranking member of the Senate Appropriations Committee expressed concern, noting that the budget would fail to address “serious management lapses at agencies.”

The budget arguments still have a long way to go, and the House’s funding levels have been closer to the final appropriation in past years.

FINRA Withdraws Recruitment Compensation Rule Proposal

Tuesday, June 24th, 2014

FINRA announced that it has withdrawn its proposed rule change that would require brokers to disclose certain recruitment compensation to clients when soliciting them to move accounts with that broker.  MarketCounsel submitted comments to both FINRA and the SEC expressing concern over certain of the seemingly arbitrary provisions that favor more established institutions.

FINRA spokesman George Smaragdis said that FINRA intends to review the 184 comment letters that were filed, then revise and refile the proposal with the SEC later this year.

SEC Denied Significant Funding Increase Again

Thursday, June 19th, 2014

InvestmentNews reported that a House panel slashed the budget allocated to the SEC by the Obama administration.  The House set the budget at $1.4 billion, which is a $50 million increase from its current budget.  The Obama administration had requested a $350 million increase.  Chairman Mary Jo White has said that the SEC needed the full $1.7 billion request in order to hire an additional 240 examiners for investment advisers.

The House’s action to lower the SEC’s budget request is not a surprise and has become an annual occurrence.  Republican representatives claim that the SEC’s failures cause them to vote to cut the agency’s budget.  The article points out that the budget only controls how much the SEC can spend.  The money it uses comes from fees charged to financial institutions and wouldn’t increase taxes.  The Senate has not yet acted on the SEC’s budget, but the article points out that recently the House’s budget has been closer to the final approved number.

SEC Issues Investor Alert on Affinity Fraud

Thursday, June 19th, 2014

The SEC’s Office of Investor Education and Advocacy issued an Investor Alert to educate investors about affinity fraud.  Affinity fraud involves someone exploiting a relationship of trust, friendship or family that makes the defrauded person(s) more vulnerable.  This often includes frauds against religious groups and family members.

The alert gives examples of recent fraud schemes uncovered by the SEC’s Division of Enforcement as well as tips for avoiding affinity fraud scams.

While the Investor Alert was aimed towards investors, investment advisers should be on the lookout for affinity fraud as well.  Often times firms employ less rigorous supervision over representatives providing services to family members or affinity groups, especially if fee concessions were made.  The firm has a fiduciary duty to act in the best interest of those clients and may have liability if a representative commits fraud.

Why is Brian Hamburger Left to Clear the Air and Call “Bull” on Merrill Lynch Clear?

Wednesday, June 18th, 2014

Merrill Lynch Clear is the “thundering herd’s” new financial planning tool that validates the efforts of independent RIAs.  But, as Brian (@HDelux) explains to @RIAbiz, looks can be deceiving.  In fact, the offering fails at the most critical point for RIAs: the mitigation and disclosure of material conflicts of interests.  Not so clear now, huh?

Read more.

Dan Bernstein on the biggest regulatory issues for RIAs

Friday, June 13th, 2014

Dan sat down with InvestmentNews (@newsfromIN) at Pershing #INSITE2014 to share some of the regulatory issues that loom large for investment advisers.

Watch now.

Schwab and TD Ameritrade Express Interest in Third-Party Exams to Congress

Friday, June 13th, 2014

InvestmentNews reported that executives from Charles Schwab & Co. and TD Ameritrade brought up the idea of third-party exams of investment advisers to legislators.  As we have reported, SEC Commissioner Daniel Gallagher recently revived this potential solution to the SEC’s lack of resources to examine advisers.  The third-party examinations would be in lieu of an SRO for advisers or user fees paid by advisers for SEC exams.

Schwab’s executive vice president for adviser services, Bernie Clark, and senior vice president and acting general counsel, Jeff Brown, both expressed interest in the idea of third-party exams.  In addition, TD Ameritrade’s managing director of adviser advocacy, Skip Schweiss, also told legislators that the idea has potential to help increase the frequency of adviser examinations.

According to former SEC Chairman, Harvey Pitt, who first brought up the option of third-party exams during his term, the SEC would not need congressional permission to require third-party exams.  This could make it the most practical option considering that the SEC’s budget has barely moved of late, and the user fee bill proposed by Rep. Maxine Waters seems to be dead.

Negotiate from the Inside Out

Friday, June 13th, 2014

This is another good Harvard Business Review post on negotiating.   The recommendation of being genuine, being yourself as opposed to posturing, role playing and using tactics is one I believe in, employ and teach.

Advisors Need To Leverage Interns

Friday, June 13th, 2014

It may seem strange to some that this CNBC post on hiring interns is in the Succession Planning category, but not to me.  The author, Jon Yankee, points out the need for advisors to bring in and train up young talent to create the next generation of advisors.  We see that one of the many benefits to firms that follow this advice is that they have potential internal successors in place giving them another exit option.