Proposed DOL regs expose more advisors to fiduciary liability

The Department of Labor is working to reduce the fees and costs in 401(k) plans and make these fees totally transparent. The DOL has broadened the definition of fiduciary, which means that more people who are advising retirement plans, including IRAs, will be held liable as fiduciaries.  This new definition includes advisors who are giving advice to a plan on a one-time basis and advisors whose advice does not necessarily serve as a primary basis for plan investment decisions. While I think this will cause the more irresponsible advisors think twice about selling a 401(k) plan, the vast majority will welcome this new definition. They have argued fr years that they do feel they have a fiduciary responsibility to these clients. What will be interesting to see is how this will affect registered reps who are not investment advisors and have sold plans for years.

For more information, click here: Proposed DOL Regs on Fiduciary Responsibility

New Rules Could Curb Advisers' Use of Some Professional Designations

The Securities and Exchange Commission requires registered investment advisers to file certain disclosure forms. Advisers are now being required to explain the training requirements for any professional designation included in that disclosure. This change might discourage some advisers from using certain designations.

For the full story, click here: New SEC Rules Regarding Designations

BP Payout Recipients: Be on the Lookout for Investment Scams

It seems it never fails; scam artists appear to go where the money is. The latest news affects BP payout recipients. Be wary of oil spill-related investment opportunities that promise high returns with little or no risk, or involve secretive or complex strategies. The wise old adage, "If it appears to be too good to be true, it probably is", should always be remembered.

To read the full article click here: BP Payout Recipients: Be on the Lookout for Investment Scams

FINRA September Disciplinary Actions

FINRA had a big month in September. Over 50 firms and individuals either sanctioned or barred. FINRA is working hard to show they are doing thier job and finding the "bad guys". AML and supervisory isses continue to top the list of violations. Of particular note is SunTrust Investment Services was ordered to pay $1.44 Million for Unsuitable UIT, Closed-End Fund and Mutual Fund Transactions and Deutsche Bank Securities was fined $7.5 Million for Negligent Misrepresentations Related to Subprime Securitizations
Click here to read all the sanctions for September: FINRA September Sanctions

US Court of Appeals Crushes Rule 151a

The insurance lobby is celebrating thier vistory today. The U.S. Court of Appeals vacated the Rule as a result of the SEC’s “arbitrary and capricious” failure to perform the required analysis of the effect of the Rule on efficiency, competition, and capital formation. But the SEC has volunteered to help the states in their bid to implement the 2010 NAIC Suitability in Annuity Transactions Model Regulation.

To read more, click here: U.S. Court of Appeals crushes Rule 151a

The SEC is proposing changes that would replace Rule 12b-1 fees

The Securities and Exchange Commission  is proposing changes that would replace Rule 12b-1 fees that allow mutual funds to use their assets to compensate securities professionals who sell shares of the fund. What are your thoughts on this topic? Should this ending result in the brokerage industry setting up a fee for service schedule at same time they eliminate the 12b-1 that can be included in the. mutual fund prospectus?
Exactly what do you feel this fee provides to the client? Is this how reps "pay" for ongoing servicing of the client's accounts? Or should the fee be replaced with a managment fee where client's would have to hire advisors to obtain advice on thier funds?

Click here for more information:SEC Fact Sheet

States Target Structured Products and Gold

Broker-dealers' sales of structured products, including private-placement notes and reverse convertibles, remain a top concern of state securities regulators. In addition there is growing concerns among state regulators about the firm's complaice department being located thousands of miles away at the Home Office.

Structured products are complicated baskets of investments that many advisors have difficulty understanding, let alone trying to get the average cleint to understand. Given the enforcement actions arising from Auction Rate Securities, Structured product sales may be nest.

What are you thoughts on this hot topic?


To read the full article click here: States Target Structured Products and Gold