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

SEC, regulation, advisers
+ Zoom
(Bloomberg)

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

Featured video

INTV

Stephanie Bogan: How financial advisers can achieve more by reframing their realities

By revaluating the choices they make and the outcomes that result from them, financial advisers can make sure they're properly serving those most important to them — their clients, according to Stephanie Bogan, founder of Educe Inc.

Latest news & opinion

Jay Clayton says SEC, DOL can give market 'clarity' on fiduciary rule

Chief regulator is confident two agencies could reach 'common ground' on an investment advice standard across all accounts.

Vanguard winning at bond inflows, too

But iShares is strong competition.

Sen. Gary Peters brings broker background to work every day on Capitol Hill

Michigan Democrat resists ripping up DOL fiduciary rule but would be open to some changes.

DOL fiduciary rule causing DC-plan record keepers to change business with insurance agents

Principal has communicated that independent agents must change their business models to keep receiving compensation.

DOL fiduciary rule opponents want to push implementation back until 2019

ICI, Chamber of Commerce among groups asking for delay, while Democratic lawmakers call on DOL to keep to its earlier planned schedule of Jan. 1, 2018.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print