Validity Of The 'Reliance On Consultant' Defense

Law360, New York (December 1, 2016, 12:05 PM EST) -- Brian L. Rubin

Rebekah R. Runyon In a recent enforcement proceeding against an investment adviser (IA), the U.S. Securities and Exchange Commission rejected “reliance on compliance consultants” as a defense to violating the law.[1] Although the SEC’s rejection of the IA’s argument may appear to call into question the value of hiring consultants, if the proper steps are taken, IAs (as well as broker-dealers, or BDs) may still be able to retain consultants and defend themselves based on the advice they receive.

Background

Last year, the...
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