Sunday, December 16, 2012

Texas Advisor's Licensing Revoked for False Statements

A Texas registered investment advisor had its license revoked for providing false information to the regulators in exams and filed documents. Click here for the enforcement action.

AdvisorAssist Analysis
Aside from the obvious, we post this matter to remind our clients that not only willful acts, but omissions can result in similar issues. The securities regulators are here to protect the interests of investors and any omission, poor business practice or conflict that is contrary to client interests will be their focus.

Some common deficiencies we encounter:

  • Failure to maintain Form ADV for changes in your business or personnel
  • Inconsistency in employment, activities and relevant dates on your social media vs. regulatory filings. Did you file a false U4 with the state? Or post a misleading advertisement? Pick your rule violation.
  • Do you maintain accurate financial records? This was the issue at hand with this matter. We know running a business is tough and many small businesses are forced into some level of commingling. That said, you are running a business. Your financial situation must be solid and meticulous. If you can't do it yourself, you need to hire someone.
  • Suitability and documentation. This is not a one-time event and YES, you need to document these efforts. Leverage your CRM system with a few custom fields and let the workflow engine (in most CRMs) help you with these tasks and reminders.
  • Timeliness. If there is a change to your business, practices, fees, personnel, etc., changes must be filed and/or communicated promptly. Usually 30 days is considered the latest date to make such updates/communications.
  • Complete topic-based risk assessments. AdvisorAssist provides all compliance clients with risk assessment questionnaires on the risk management topics and regulations. We encourage you to complete these.
  • Ask questions and show progress. The regulators are not out to get advisors. They are out to protect clients. Continuous improvement and a culture of compliance will be obvious to a regulator (as will the lack thereof).

If you have any questions or concerns regarding your risk management or audit readiness, please contact us at


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