SEC targets advisers who inflate credentials

The agency is actively reviewing advisers' ADV forms for suspect information, according to speakers Thursday at a compliance conference hosted by National Regulatory Services

Oct 12, 2012 @ 3:09 pm

By Dan Jamieson

Advisers who inflate their education or credentials on ADV forms might get called out on it by the Securities and Exchange Commission.

The SEC is actively reviewing advisers' ADV forms for suspect information, according to speakers Thursday at a compliance conference hosted by National Regulatory Services.

“Some of the areas they're looking at are education, business background, disciplinary disclosures and credentials,” said Marilyn Miles, vice president at NRS. “They're not taking [those items] at face value anymore.”

Indeed, the SEC is independently confirming that individuals truly have the credentials they list on ADVs, said Martin Murphy, associate regional director for the SEC in Los Angeles.

“Credentials on the ADVs are sent out for accuracy,” he said.

“My understanding is that [the SEC is] taking a look at the claims of experience, and they're essentially running commercial background checks on those individuals,” said John Walsh, a partner a Sutherland Asbill & Brennan LLP, and a former SEC official in its examinations office.

“They're saying, 'OK, someone claimed they graduated summa cum laude. Well, did they really?'” Mr. Walsh said.

The agency is also using the internet and other filings to check registered individual's background information, said Ellyn Roberts, an attorney at Shartsis Friese LLP.

For example, SEC examiners are cross-checking business experience information listed on Form U-4s and comparing it to ADVs.

Advisers may have disclosed only advisory-related work on their ADVs, Ms. Roberts said, “and then the regulator comes in, and you've got all these other businesses” showing on the U-4.

Ms. Roberts said that so far, inconsistent disclosures of experience have not resulted in enforcement actions, “but I see a potential for embarrassment,” she said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

When can advisers expect an SEC fiduciary rule proposal and other regs this year?

Managing editor Christina Nelson and senior reporter Mark Schoeff Jr. discuss regulations of consequence to financial advisers in 2018, and their likely timing.

Recommended Video

Path to growth

Latest news & opinion

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors.

Morgan Stanley reports a loss of advisers after exiting the protocol for broker recruiting

The firm said it lost 47 brokers in the fourth quarter, the most in any quarter of 2017.

Morgan Stanley's wealth management fees climb to all-time high

Improvement reflect firm's shift of more clients into fee-based accounts priced on asset levels, which boosts results as markets rise.

Legislation would make it harder for investors to sue mutual funds over high fees

A plaintiff would have to state in their initial complaint why fiduciary duty was breached, and then prove the violation with 'clear and convincing evidence.'

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print