Every time you clarify these relationships they somehow manage to sound even shadier than before.
That seems to be the running theme of these kind of things. Every explanation just reveals more of a world where this kind of shit that looks shady to you and me is perfectly normal.
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Okay so the promoters get a big bonus if the investment does well.
If the investment does badly, does the promoter suffer at all?
Is there a reason to deter them from taking a riskier investment option that gives commissions rather than a safer investment that does not?
Promoters do not get paid based on investment outcomes. They get paid based on how much their clients invest in the fund.
So it's fire-and-forget for the promoters, then. I mean, they don't handle any of the actual investing.
Remember, they are intermediaries that are enabling the process to run, taking regulatory constraints into account. The regulatory system funds operate under predates the hedge fund and the private equity fund by decades. It is clunky and ill suited to the modern financial world. Tax exempt investors invest in U.S. Funds through Cayman entities formed just for them to invest through because NYU owned a macaroni factory in 1947 (this is not a joke). Pension plans invest in private funds in reliance on an interpretation of a DOL rule that some lawyers came up with on their own and which the DOL never actually addressed, but there is so much money invested in reliance on it that it can't not be true, because of the disaster it would create otherwise. This whole area is a mess.
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jmcdonaldI voted, did you?DC(ish)Registered Userregular
Okay so the promoters get a big bonus if the investment does well.
If the investment does badly, does the promoter suffer at all?
Is there a reason to deter them from taking a riskier investment option that gives commissions rather than a safer investment that does not?
Promoters do not get paid based on investment outcomes. They get paid based on how much their clients invest in the fund.
So it's fire-and-forget for the promoters, then. I mean, they don't handle any of the actual investing.
Remember, they are intermediaries that are enabling the process to run, taking regulatory constraints into account. The regulatory system funds operate under predates the hedge fund and the private equity fund by decades. It is clunky and ill suited to the modern financial world. Tax exempt investors invest in U.S. Funds through Cayman entities formed just for them to invest through because NYU owned a macaroni factory in 1947 (this is not a joke). Pension plans invest in private funds in reliance on an interpretation of a DOL rule that some lawyers came up with on their own and which the DOL never actually addressed, but there is so much money invested in reliance on it that it can't not be true, because of the disaster it would create otherwise. This whole area is a mess.
Sounds like this regulation is the first step in the right direction then.
I'll be frank here - when an industry complains about a regulation hindering the ease of doing business, I'm inclined to think that the regulation is on the right track.
+4
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FencingsaxIt is difficult to get a man to understand, when his salary depends upon his not understandingGNU Terry PratchettRegistered Userregular
So updating these regulations to not be archaic and ridiculous is bad because...?
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
Okay so the promoters get a big bonus if the investment does well.
If the investment does badly, does the promoter suffer at all?
Is there a reason to deter them from taking a riskier investment option that gives commissions rather than a safer investment that does not?
Promoters do not get paid based on investment outcomes. They get paid based on how much their clients invest in the fund.
So it's fire-and-forget for the promoters, then. I mean, they don't handle any of the actual investing.
Remember, they are intermediaries that are enabling the process to run, taking regulatory constraints into account. The regulatory system funds operate under predates the hedge fund and the private equity fund by decades. It is clunky and ill suited to the modern financial world. Tax exempt investors invest in U.S. Funds through Cayman entities formed just for them to invest through because NYU owned a macaroni factory in 1947 (this is not a joke). Pension plans invest in private funds in reliance on an interpretation of a DOL rule that some lawyers came up with on their own and which the DOL never actually addressed, but there is so much money invested in reliance on it that it can't not be true, because of the disaster it would create otherwise. This whole area is a mess.
Sounds like this regulation is the first step in the right direction then.
I'll be frank here - when an industry complains about a regulation hindering the ease of doing business, I'm inclined to think that the regulation is on the right track.
I think that the definition of fiduciary needed to be updated. It is outdated and was never clear enough in the first place. The problems with this proposal are mostly that (1) it eliminates an entire asset class from otherwise accredited investors and (2) the SEC is in the process of preparing its own fiduciary regulations, so there will continue to be different definitions of fiduciary under ERISA and securities laws. It's a real shame they couldn't just release a joint regulation to unify the definition.
What we really need is a wholesale overhaul of the securities laws and the related aspects of the tax code and ERISA, but no one seems interested in actually doing that (least of all congress, which would need to pass new securities laws to replace or supplement the the existing laws from 1933, 1934 and 1940.
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Cantelope on
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jmcdonaldI voted, did you?DC(ish)Registered Userregular
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
+1
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jmcdonaldI voted, did you?DC(ish)Registered Userregular
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Too bad so sad?
Edit
Seriously, per your own prior posts in this thread they are allowed to market, just under restrictions (both self imposed and regulatory) that they don't want to adhere to. I don't think I could play a smaller sympathy violin for this situation.
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Sure they are. You have spent this whole thread explaining how their marketers do it.
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Sure they are. You have spent this whole thread explaining how their marketers do it.
Those are independent entities from the fund though. It's a work around based on an inflexible and outdated rule. Direct marketing would be preferable, but it would require changes to the law.
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Sure they are. You have spent this whole thread explaining how their marketers do it.
Those are independent entities from the fund though. It's a work around based on an inflexible and outdated rule. Direct marketing would be preferable, but it would require changes to the law.
But literlaly everything you've said on this subject indicates that they aren't. They are just like independent marketing contractors for the firm.
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Sure they are. You have spent this whole thread explaining how their marketers do it.
Those are independent entities from the fund though. It's a work around based on an inflexible and outdated rule. Direct marketing would be preferable, but it would require changes to the law.
Independent from the fund in the same way uber drivers are independent contractors rather than employees.
It doesn't matter if you're a direct employee or a contractor if you're doing marketing work you're marketing for the firm. If firms were getting around a no marketing rule by hiring independent contractors to market then we are faced with two options
1) get rid of the no marketing rule
2) stop the independent contractors
The regulatory agencies seemed to take the second approach, saying "we still believe in no marketing so we are taking steps to make that rule enforceable"
+4
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spacekungfumanPoor and minority-filledRegistered User, __BANNED USERSregular
The primary problem as I see it is that you can advise individuals about investments without establishing a principle-agent relationship. Once you've hired someone as an agent, they are legally obligated to be looking out for your best interests, and to give you certain types of information that would make you not want to buy a product. Once someone is your agent, they enter into a whole world of legal obligation to look out for your best interests.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Sure they are. You have spent this whole thread explaining how their marketers do it.
Those are independent entities from the fund though. It's a work around based on an inflexible and outdated rule. Direct marketing would be preferable, but it would require changes to the law.
Independent from the fund in the same way uber drivers are independent contractors rather than employees.
It doesn't matter if you're a direct employee or a contractor if you're doing marketing work you're marketing for the firm. If firms were getting around a no marketing rule by hiring independent contractors to market then we are faced with two options
1) get rid of the no marketing rule
2) stop the independent contractors
The regulatory agencies seemed to take the second approach, saying "we still believe in no marketing so we are taking steps to make that rule enforceable"
They are more like a true independent contractor though. They each work with hundreds of unrelated funds. They definitely provide a service to the funds they work for, but it isn't accurate to say that they are effectively part of those funds.
The SEC is responsible for the rules on marketing and the DOL promulgated this new rule. At least as of now, the SEC has not moved to restrict these arrangements. The DOL is only restricting them in the IRA context. It would be a mistake to read a coherent intent here, because the rules promulgated by different agencies are not consistent with each other. Part of the real shame here is that the DOL and SEC are both working on redefining "fiduciary" and they aren't coordinated, so we will have another 30+ years of inconsistency.
Okay so the promoters get a big bonus if the investment does well.
If the investment does badly, does the promoter suffer at all?
Is there a reason to deter them from taking a riskier investment option that gives commissions rather than a safer investment that does not?
Promoters do not get paid based on investment outcomes. They get paid based on how much their clients invest in the fund.
So it's fire-and-forget for the promoters, then. I mean, they don't handle any of the actual investing.
Sounds like Insurance Agents.
The popularity of the company and insurance plan tends to be based on the compensation the agent gets, and not the price/benefit of the actual plan.
(no site, just anecdotal from my stint at an insurance company. They're pretty forthcoming about this, and like 90% of their marketing is targeted at agents)
It will be interesting how this will play with Clinton, given how the original repeal occurred during President Clinton's tenure.
Glass-Steagel just raised the transaction cost of investment by commercial banks. Repeal made a lot of sense. The same crisis would have played out whether glass-Stengel existed or not. If I banks and commercial banks were separated out then the commercial banks would have just been invested in sub prime backed securities through the I banks and still would have needed the bail out. All it would have really meant was that the I banks themselves would have taken longer to recover, which would have delayed the reopening of the debt markets and thereby delayed recovery.
The problems that caused 2008 were lax mortgage issuing standards and absurdly high ratings for CMOs. Glass-Steagel would not have helped with either.
Sometimes I wonder if Warren choosing such well known, high profile issues over real issues with finance is just strategy or if she straight up doesn't understand the financial system as well as everyone thinks she does.
Or she could be targeting one of the other half dozen existential scandals in finance aside from mortgage backed securities? The 'London Whale' would have been impacted by Glass-Steagall.
That hardly seems fair, since they were breaking the law anyway. Once someone is committed to a course of fraud, regulations can't really deter them. All glass Steagel would have done there is prevent FDIC backed funds which weren't supposed to be invested the way they were from being available to this particular criminal. It wouldn't have prevented the fraud from occurring, and a commercial bank could have engaged in the same type of fraud.
So basically, why even have any regulations at all ever then?
To enforce them in the breach, which should result in conformity to the regulations. Some people won't conform, of course, but the crime here was not related to Glass-Steagel. Like I said before, even if commercial banks were seperate from I banks, someone could have carried out the same kind of fraud at a commercial bank.
In short, is reinstating Glass-Steagel sensible policy or an easy buzz word?
I'm not understanding this at all. Can someone explain to me how what the fund is engaging in isn't what any other industry would call marketing/sales, and is instead a conflict of interest?
Whenever I hear "fund" and "independent" I kinda laugh. I use independent a little differently though.
I audit a Company that has an investment portion, with assets rated as Level 3 assets. These assets are typically PIK loans, but they also have tranches of preferred equity and convertible debt that make shit a little complicated. They are technically managed by a investment manager and there are enough third-party agreements and documentation to support the claim of independence in fact.
But the two companies are the exact same staff, in the exact same building.
There's so much intertwinement between the fiduciary duties of each entity that we have to raise and address the risk that bias has been introduced into the investment management decisions. We mitigate the risk, but still.
EDIT: Oh also I get to audit the Colleralized Debt Obligations (CDO's. yes, those. types). And the valuation that goes into those are fun
It will be interesting how this will play with Clinton, given how the original repeal occurred during President Clinton's tenure.
Glass-Steagel just raised the transaction cost of investment by commercial banks. Repeal made a lot of sense. The same crisis would have played out whether glass-Stengel existed or not. If I banks and commercial banks were separated out then the commercial banks would have just been invested in sub prime backed securities through the I banks and still would have needed the bail out. All it would have really meant was that the I banks themselves would have taken longer to recover, which would have delayed the reopening of the debt markets and thereby delayed recovery.
The problems that caused 2008 were lax mortgage issuing standards and absurdly high ratings for CMOs. Glass-Steagel would not have helped with either.
Sometimes I wonder if Warren choosing such well known, high profile issues over real issues with finance is just strategy or if she straight up doesn't understand the financial system as well as everyone thinks she does.
Or she could be targeting one of the other half dozen existential scandals in finance aside from mortgage backed securities? The 'London Whale' would have been impacted by Glass-Steagall.
That hardly seems fair, since they were breaking the law anyway. Once someone is committed to a course of fraud, regulations can't really deter them. All glass Steagel would have done there is prevent FDIC backed funds which weren't supposed to be invested the way they were from being available to this particular criminal. It wouldn't have prevented the fraud from occurring, and a commercial bank could have engaged in the same type of fraud.
So basically, why even have any regulations at all ever then?
To enforce them in the breach, which should result in conformity to the regulations. Some people won't conform, of course, but the crime here was not related to Glass-Steagel. Like I said before, even if commercial banks were seperate from I banks, someone could have carried out the same kind of fraud at a commercial bank.
In short, is reinstating Glass-Steagel sensible policy or an easy buzz word?
That isn't the thread of the conversation there at all.
I personally think that restoring Glass-Steagall is sensible policy because we need to divorce Federal Reserve insured bank accounts from the uninsured gambling that is investment banking.
It wouldn't prevent "too big to fail" because for a financial collapse of investment banking of the size of 2008, the Fed would have stepped in regardless.
Since then, banking institutions have only grown due to both of the above factors. Glass-Steagall's repeal allowed massive merges, and the banks grew through acquisitions of failing banks.
I think we need to restore Glass-Steagall to even have a legitimate option to not shore up failing commercial/investment banks. And there are many other things that Glass-Steagall did that have been repealed or rolled that should also be considered.
It will be interesting how this will play with Clinton, given how the original repeal occurred during President Clinton's tenure.
Glass-Steagel just raised the transaction cost of investment by commercial banks. Repeal made a lot of sense. The same crisis would have played out whether glass-Stengel existed or not. If I banks and commercial banks were separated out then the commercial banks would have just been invested in sub prime backed securities through the I banks and still would have needed the bail out. All it would have really meant was that the I banks themselves would have taken longer to recover, which would have delayed the reopening of the debt markets and thereby delayed recovery.
The problems that caused 2008 were lax mortgage issuing standards and absurdly high ratings for CMOs. Glass-Steagel would not have helped with either.
Sometimes I wonder if Warren choosing such well known, high profile issues over real issues with finance is just strategy or if she straight up doesn't understand the financial system as well as everyone thinks she does.
Or she could be targeting one of the other half dozen existential scandals in finance aside from mortgage backed securities? The 'London Whale' would have been impacted by Glass-Steagall.
That hardly seems fair, since they were breaking the law anyway. Once someone is committed to a course of fraud, regulations can't really deter them. All glass Steagel would have done there is prevent FDIC backed funds which weren't supposed to be invested the way they were from being available to this particular criminal. It wouldn't have prevented the fraud from occurring, and a commercial bank could have engaged in the same type of fraud.
So basically, why even have any regulations at all ever then?
To enforce them in the breach, which should result in conformity to the regulations. Some people won't conform, of course, but the crime here was not related to Glass-Steagel. Like I said before, even if commercial banks were seperate from I banks, someone could have carried out the same kind of fraud at a commercial bank.
In short, is reinstating Glass-Steagel sensible policy or an easy buzz word?
Having financial institutes with fingers in every pie sounds like a bad way to run an economy. Glass-Steagal was chipped away with loopholes and even though it was a good policy to have it was being neutered. Instead of repealing it we should of reinforced it with tighter regulations.
It goes a long with the major problems we have in america. Everything is too big and one mistake and the house of cards falls because companies are too far reaching.
Posts
Promoters do not get paid based on investment outcomes. They get paid based on how much their clients invest in the fund.
That seems to be the running theme of these kind of things. Every explanation just reveals more of a world where this kind of shit that looks shady to you and me is perfectly normal.
So it's fire-and-forget for the promoters, then. I mean, they don't handle any of the actual investing.
Rock Band DLC | GW:OttW - arrcd | WLD - Thortar
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Probably
As long as you understand that their customers are the funds, not the investors
Which I'm sure is made very clear to the investors in very, very fine print
Remember, they are intermediaries that are enabling the process to run, taking regulatory constraints into account. The regulatory system funds operate under predates the hedge fund and the private equity fund by decades. It is clunky and ill suited to the modern financial world. Tax exempt investors invest in U.S. Funds through Cayman entities formed just for them to invest through because NYU owned a macaroni factory in 1947 (this is not a joke). Pension plans invest in private funds in reliance on an interpretation of a DOL rule that some lawyers came up with on their own and which the DOL never actually addressed, but there is so much money invested in reliance on it that it can't not be true, because of the disaster it would create otherwise. This whole area is a mess.
Sounds like this regulation is the first step in the right direction then.
I'll be frank here - when an industry complains about a regulation hindering the ease of doing business, I'm inclined to think that the regulation is on the right track.
I think that the definition of fiduciary needed to be updated. It is outdated and was never clear enough in the first place. The problems with this proposal are mostly that (1) it eliminates an entire asset class from otherwise accredited investors and (2) the SEC is in the process of preparing its own fiduciary regulations, so there will continue to be different definitions of fiduciary under ERISA and securities laws. It's a real shame they couldn't just release a joint regulation to unify the definition.
What we really need is a wholesale overhaul of the securities laws and the related aspects of the tax code and ERISA, but no one seems interested in actually doing that (least of all congress, which would need to pass new securities laws to replace or supplement the the existing laws from 1933, 1934 and 1940.
The idea that we license anyone to sell products, but do not also require them to make such a relationship with virtually everyone they do business with is absurd. What was the point in establishing their competence/education if we allow them to swindle and deal without their customers best interest in mind?
Edit: I don't have a proper understanding of all of the nuances of the law involved, but my understanding is that depending on the type of financial adviser you are, you basically have no responsibility to look out for your customers best interests.
Yes and no. The customer in this case is the fund, not the investor.
The simple solution is to force the funds to do their own marketing, eliminating this NVA middleman, and making this regulation moot.
But the funds aren't allowed to market to them. . .
Too bad so sad?
Edit
Seriously, per your own prior posts in this thread they are allowed to market, just under restrictions (both self imposed and regulatory) that they don't want to adhere to. I don't think I could play a smaller sympathy violin for this situation.
Sure they are. You have spent this whole thread explaining how their marketers do it.
Those are independent entities from the fund though. It's a work around based on an inflexible and outdated rule. Direct marketing would be preferable, but it would require changes to the law.
But literlaly everything you've said on this subject indicates that they aren't. They are just like independent marketing contractors for the firm.
Independent from the fund in the same way uber drivers are independent contractors rather than employees.
It doesn't matter if you're a direct employee or a contractor if you're doing marketing work you're marketing for the firm. If firms were getting around a no marketing rule by hiring independent contractors to market then we are faced with two options
1) get rid of the no marketing rule
2) stop the independent contractors
The regulatory agencies seemed to take the second approach, saying "we still believe in no marketing so we are taking steps to make that rule enforceable"
They are more like a true independent contractor though. They each work with hundreds of unrelated funds. They definitely provide a service to the funds they work for, but it isn't accurate to say that they are effectively part of those funds.
The SEC is responsible for the rules on marketing and the DOL promulgated this new rule. At least as of now, the SEC has not moved to restrict these arrangements. The DOL is only restricting them in the IRA context. It would be a mistake to read a coherent intent here, because the rules promulgated by different agencies are not consistent with each other. Part of the real shame here is that the DOL and SEC are both working on redefining "fiduciary" and they aren't coordinated, so we will have another 30+ years of inconsistency.
Sounds like Insurance Agents.
The popularity of the company and insurance plan tends to be based on the compensation the agent gets, and not the price/benefit of the actual plan.
(no site, just anecdotal from my stint at an insurance company. They're pretty forthcoming about this, and like 90% of their marketing is targeted at agents)
It’s not a very important country most of the time
http://steamcommunity.com/id/mortious
In short, is reinstating Glass-Steagel sensible policy or an easy buzz word?
I audit a Company that has an investment portion, with assets rated as Level 3 assets. These assets are typically PIK loans, but they also have tranches of preferred equity and convertible debt that make shit a little complicated. They are technically managed by a investment manager and there are enough third-party agreements and documentation to support the claim of independence in fact.
But the two companies are the exact same staff, in the exact same building.
There's so much intertwinement between the fiduciary duties of each entity that we have to raise and address the risk that bias has been introduced into the investment management decisions. We mitigate the risk, but still.
EDIT: Oh also I get to audit the Colleralized Debt Obligations (CDO's. yes, those. types). And the valuation that goes into those are fun
That isn't the thread of the conversation there at all.
If so bring it on
If your company is too big to fail, it's too big to exist
It wouldn't prevent "too big to fail" because for a financial collapse of investment banking of the size of 2008, the Fed would have stepped in regardless.
Since then, banking institutions have only grown due to both of the above factors. Glass-Steagall's repeal allowed massive merges, and the banks grew through acquisitions of failing banks.
I think we need to restore Glass-Steagall to even have a legitimate option to not shore up failing commercial/investment banks. And there are many other things that Glass-Steagall did that have been repealed or rolled that should also be considered.
Having financial institutes with fingers in every pie sounds like a bad way to run an economy. Glass-Steagal was chipped away with loopholes and even though it was a good policy to have it was being neutered. Instead of repealing it we should of reinforced it with tighter regulations.