SEC investigators, according to an order issued March 29, found that Alison had willfully violated three sections of the federal Investment Advisors Act
before his business closed.
Graycliff Partners LP is an SEC-registered investment advisor under the US Investment Advisors Act
of 1940, as amended.
Cerulli defines a bank trust organization as a division of a bank or registered broker/dealer that provides fiduciary wealth management advice under the 1940 Investment Advisors Act
, which exempts banks from securities registration.
Under the legislation, the Investment Advisors Act would be amended to simply delete the current exclusion under that law for broker-dealers whose advice is incidental to the conduct of his or her business and who therefore receive no special compensation for such advice.
"Perhaps most troubling, what started out in the administration's draft as an effort to provide the SEC with authority to engage in rulemaking to provide for a harmonized fiduciary standard of care, has become, in Dodd's draft, a significant expansion of the application of the Investment Advisors Act to all broker-dealers, other than mere order takers," Spear says.
The advice must be provided by a "fiduciary adviser," which is defined as a registered investment adviser (under the Investment Advisors Act
of 1940) or a bank, insurance company or broker-dealer (under the Securities Act of 1934).
The AICPA Personal Financial Planning (PFP) Executive Committee has been tracking the SEC's activities relating to its final rule, "Certain Broker-Dealers Deemed Not to Be Financial Advisers" (www.sec.gov/rules/ final/34-51523.pdf), which exempts certain fee-based broker-dealers from the provisions of the Investment Advisors Act
It covers all significant statutory provisions, including the Security Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act
of 1940 and the privacy provisions of the Gramm--Leach--Bliley Act.
The first panel debated the scope of the Investment Advisors Act
of 1940 (Act); among the participants was the AICPA's Director of Personal Financial Planning.
(CPAs can find details on the SEC rules in section 275.206(4)-3, "Cash Payments for Client Solicitations," of the Investment Advisors Act
of 1940.) According to Rob Stype, managing partner of Adviser Compliance Associates LLC, a regulatory consulting firm in Washington, D.C., SEC-registered firms should review the regulations of each state where they do business.
A recent issue included stories on: alternative dispute resolution activities; the application of the Investment Advisors Act
to dealer/brokers on the Internet; SEC proposals to clean up the microcap securities market; and, an SEC order to cease securities sales at three Internet auction sites.