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January 11, 2011

FINRA News Release For the same conduct addressed in the SEC action discussed above, FINRA ordered Charles Schwab and Co. Inc. to pay $ 18 million dollars into a Fair Fund to be established by the SEC. FINRA's release stresses that Schwab failed to amend their marketing of the funds in response to changes in the fund's portfolio. Date January 11, 2011 Cross References (links may require a Cabinet subscription) FINRA Action No. 2008012876902 NASD Rules 2110, 2210, 3010(a)

January 11, 2011

Financial Services Authority On January 6 2011, the Financial Services Authority ("FSA") published a consultation paper on the suitability of investment advice. The consultation paper recommends that financial advisers should assess the suitability of investments, adopt risk-profiling tools and develop processes to identify clients who are risk averse. The FSA was concerned that financial advisers had used insufficient risk profiling analyses and in doing so, had failed to take appropriate account of clients' capacity for loss. The FSA warned that financial advisers' explanations of risks

January 11, 2011

FINRA Regulatory Notice FINRA issued a regulatory notice to alert firms of the SEC's approval of new know-your-customer and suitability rules and to establish the effective date of the new rules as October 7, 2011. New FINRA Rules 2090 (Know Your Customer) and 2111 (Suitability) are modeled after NYSE Rule 405(1) and NASD Rule 2310, respectively. Among other things, the new rules amend the previous rules by (i) applying the suitability rule to investment "strategies" as well as "recommendations"; (ii) expanding the types of information firms must consider in assessing a customer's investment

January 14, 2011

News Article According to a report from Bloomberg, the SEC is currently debating whether to make recommendations to Congress in its reports (due next week) on the regulation of brokers and advisers. The report also notes that the SEC is considering recommending that Congress enact legislation authorizing the SEC to designate a self-regulatory organization for investment advisers, and notes that SEC Chairman Mary Schapiro has recused herself from this question, due to her previous status as head of FINRA. Date January 14, 2011

January 24, 2011

SEC Press Release The SEC submitted to Congress a study (required under § 913 of the Dodd-Frank Act) in which the staff recommends, among other things, a uniform fiduciary standard of conduct for broker-dealers and investment advisers. The study states that such a standard would be "no less stringent" than the standard currently applied to advisers under the Investment Advisers Act and would apply to financial professionals that provide "personalized investment advise about securities to retail investors." The study recommends that the SEC undertake rulemaking focused on assisting broker