Ethics 101 for Advisers
Investment advisers may soon get a crash course in ethics thanks to a rule proposed by the Securities and Exchange Commission (SEC). The Investment Adviser Codes of Ethics rule would require all registered advisers to adopt and enforce a code of ethics applicable to their supervised persons. Advisers would need to supply each employee with a copy of the code and require each employee to acknowledge, in writing, receipt of the code.
In response to the rule proposal, which was published in January and was open for industry comments through March 15, the Securities Industry Association (SIA) has created an e-learning program to help investment advisers develop a code of ethics, distribute it throughout the firm and monitor its receipt by employees. Collaborating with the Practising Law Institute (PLI) and PLI-Corpedia - a joint venture between PLI and Denver, Colo.-based Corpedia Education - SIA is introducing the SIA/PLI Investment Adviser Code of Ethics (ACE) System. ACE will turn an investment company's paper-based code of ethics into an interactive, multimedia training program.
What if a firm lacks a delineated code of ethics? "We school the organization on developing a code of conduct that is fund related," says David Celmins, vice president of business development with Corpedia. ACE also "gives them an opportunity to poll the workplace to make sure there isn't any impropriety going on," he adds.
For a tutorial in late trading, users can view the short lesson, indicate if they have experienced late trading and note if they have questions or concerns. They then are linked to an anonymous hotline, where they can report any violation.
ACE covers more than 35 possible areas of concern, including market timing, late trading and soft-dollar brokerage arrangements.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio