In November of 2020, the North American Securities Administrators Association (“NASAA”) adopted a new rule (PDF) that will require Investment Advisor Representatives (“IARs”) to complete 12 credit hours of Continuing Education annually, 6 for IAR Ethics and Professional Responsibility Requirements and 6 for IAR Products and Practice Requirements. This will be the first time IARs have been subject to Continuing Education requirements and as NASAA president Lisa A. Hopkins states, is intended to “promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices.” 2022 IAR CE Read more about 2022 & 2023 Continuing Education Requirements for IARs[…]
Advisory representatives are prohibited from accepting anything of value that might influence their investment decisions or serve to reward them in connection with their investment advisory activities. Additionally, advisory representatives are expected to refrain from knowingly conducting advisory business with any individuals or entities that use gifts, gratuities, or other items of value to bribe or influence others.
The provision and receipt of gifts and business entertainment by investment advisers and their employees are subject to pervasive regulation. Firms are to supervise and document all gifts and gratuities given to or received from any clients and prospective clients. The rule protects against the improprieties that may arise when firms or their associated persons gives gifts or gratuities. Firms must take any action to identify or examine the nature, frequency, extent and dollar amount to determine if such gifts and/or gratuities are in compliance with the firm’s policies. RIA’s are to adopt a policy governing professional conduct and conflicts of interest. Such policy is to provide that all associated persons have high standards of performance, integrity, productivity and professionalism. The firm should monitor for any and all conflicts of interest that could result, including instances of preferential treatment over other clients.
When a registered investment adviser on boards a new registered person, there are a couple of new hire forms the firm needs to collect to be compliant with applicable securities laws and regulations.
To evidence completion of new hire forms by all associated persons, firms should adopt and implement written policies and procedures reasonably designed to prevent violations. Implementation of procedures will often rely on the use of forms and other documents designed to gather or report important data. While the completion of some forms is required by law or regulation, the implementation of other forms reflects principles of good management and controls. Regulators view the adequacy of procedures and the proper completion of forms as indicators of a culture of compliance within the firm. Consequently, firms should periodically verify the adequacy of their policies, procedures, and controls related to new hire forms.
Firms will use a wide range of customized forms and attestations to help them achieve compliance with applicable securities laws and regulations. Firms should periodically assess how it can enhance its compliance program and better supervise employees through the use of new or improved forms, reports, acknowledgments, or attestations.
On December 1, 2020, the state of New York adopted new regulations that amended its Investment Advisory Act to require the registration of investment adviser representatives (“IAR”) including principals, supervisors, and solicitors through the WebCRD/IARD system. Prior to the rule change, New York was the only state that did not license IAR via the WebCRD/IARD system. The change to to New York IAR registration will go into effect on February 1, 2021 for all new registrants, and December 2, 2021 for any New York IARs already providing services, provided they apply for registration by August 31, 2021. The Amendments The Read more about Change to New York IAR Registration[…]
Individuals looking to be in the business of giving investment advice for compensation will most likely need to register as an investment advisor representative (“IAR”). There are a couple of differences between becoming an IAR and a registered investment advisor(“RIA”). Most notably, only a natural person (a human being and not an entity) can be considered and IAR, and IARs never register with the SEC, only with the individual states. For an example of how to register with a state, check out the process for registering as an IAR with the state of Georgia on the Georgia Secretary of State’s website.
The North American Securities Administrators Association (“NASAA”) recently adopted a new rule that will require Investment Advisor Representatives (“IARs”) to complete 12 credit hours of Continuing Education annually, 6 for IAR Ethics and Professional Responsibility Requirements and 6 for IAR Products and Practice Requirements. This will be the first time IARs have been subject to Continuing Education and as NASAA president Lisa A. Hopkins states, is intended to “promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices.”