Practical analysis for investment professionals

SEC


DOL Fiduciary Rule: Moving Investment Advice in the Right Direction

After more than a year of posturing, agonizing, and distress, the US Department of Labor (DOL) has finally released its conflicts of interest and fiduciary rules for personal retirement accounts, including IRA rollovers.

Introspection Can Improve Your Investing

A. Michael Lipper, CFA, offers his guide as to what one can produce through introspection for review of one’s investments.

Supervisory Responsibilities: “See No Evil, Hear No Evil” Won’t Fly

SAC Capital Advisors has agreed to plead guilty to insider trading violations, but owner Steven A. Cohen still faces SEC charges that he failed to “reasonably supervise two of his senior employees who engaged in insider trading under his watch.” These charges should make all investment professionals with supervisory responsibilities stop and think about whether they are “reasonably supervising” their employees.

Detecting Earnings Manipulation and Fraud: A Light Tutorial on Probit Analysis

Lies, damned lies, and earnings management. If 20% of firms misrepresent economic reality through earnings management, analysts and portfolio managers must protect themselves by knowing how, why, and when individuals lie. Quantitative methods with forensic formulas, such as the Beneish model, offer part of the necessary skills to distinguish earnings manipulation from earnings management.

Averting the Pension Cliff with Commonsense Accounting Principles

At the recent CFA Institute Global Investment Risk Symposium, Ron Ryan, CFA, of Ryan ALM, appealed for greater transparency and the application of commonsense principles in pension accounting, warning that without such changes the solvency of corporations, cities, and states is at stake.

Weekend Reading for Financial Advisers: Scoundrels, Birds and Bees, and Risky Shifts

Over the past couple of weeks there have been lots of compelling articles for financial advisers. Here are some of my favorite reads in case you missed them.

Five Reasons for a Uniform Fiduciary Standard

In order to have fair and transparent markets, all investors must feel confident that the investment advice, products, and services offered by investment professionals are not only suitable for them but also in their best interest. This can be accomplished by imposing a uniform fiduciary standard of care on all investment professionals that provide advice to clients.

13F Watch: Bullish on Consumer Staples and Health Care Stocks, Bearish on Technology and Energy

Based on a review of the aggregate filings for the second quarter of 2012, institutional investors added to their holdings in consumer staples and health care stocks while reducing their exposure to the technology and energy sectors.

Poll: Are High-Frequency Trading Reforms Needed?

In a poll conducted earlier this week, CFA Institute asked its members if tighter regulation of high-frequency trading would meaningfully reduce technical glitches in the stock market. Not surprisingly, nearly two-thirds of respondents thought that tighter regulations would indeed be effective.

Fact File: Annual Budget of the U.S. Securities and Exchange Commission

How paltry is the U.S. market regulator's funding? This paltry: Last year Citigroup disposed of assets worth more than the SEC’s entire operating budget.



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