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It's Going To Cost Millions For Brokers To Upgrade Their Compliance Systems For Dodd-Frank

Jul 6, 2013, 02:46 IST

New Line Cinema via IMDBFA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors. For more visit Business Insider's new Wealth Advisor vertical.

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SEC Told That Dodd-Frank Fiduciary Standard For Brokers Would Be Very Pricey (Investment News)

As part of Dodd Frank, the SEC has the power to require anyone giving investment advice to meet the fiduciary standard that investment advisors are held up to. The Securities Industry and Financial Markets Association (SIFMA) told the SEC that raising investment advice standards for brokers would be extremely expensive for individual firms.

Nine of SIFMA's member firms said it would cost about $5 million every year to "upgrade their compliance, supervision and training systems," according to Investment News. SIFMA further added that companies would stomach the costs if they accounted for the brokerage business model.

"The SIFMA letter was in response to an SEC request for information for a cost-benefit analysis the agency is conducting of a potential uniform fiduciary standard for retail investment advice," Investment News reported.

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The 'Grand Disconnect' Is Closing, And It's Now Time To Shift To Risk-Off Investment Themes (A Gary Shilling Insights)

In his latest Insights, economist Gary Shilling writes that the the "Grand Disconnect' between robust security markets and subdued economic reality" is closing. This is because of recent shocks to investors in the form of recent Fed comments on the taper, and China's crack down on shadow banking.

Shilling writes that he is shifting to risk off investment themes. In this scenario, Treasury bonds and Japanese stocks are attractive. Also, the dollar vs. the yen, euro, and commodity currencies are a good bet. Meanwhile, developed country stocks, homebuilders, junk bonds, commodities, and emerging market stocks and bonds are unattractive.

Understanding The Crowd Is The Key To Good Investing (The Reformed Broker)

"When people ask me what my edge is, I tell them I have a very good sense of what the crowd is thinking and I think I've gotten pretty good at what they'll do about it next. I pay close attention to when there's an emotional or tonal shift to the rhetoric of the Pundit Class because I know that the masses gradually adopt these oft-repeated tropes and heuristics for their own and act accordingly

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"Keynes figured out that his job as the King's College endowment portfolio manager was not to guess at the future - but to guess at what other market participants would be guessing and to beat them to those assumptions. Before he realized that this was the way to invest, his track record was terrible - lots of trading, very little to show for it, the Crash of '29 nearly wiped him out of his own small fortune. But after this realization hit him, his confidence grew and his cockiness faded. His average holding times lengthened, his turnover decreased and his returns began to trounce the market."

SAC Capital's Steven Cohen Could Avoid Criminal Charges (The Wall Street Journal)

SAC Capital's Steven Cohen is unlikely to face criminal insider-trading charges according to the Wall Street Journal because U.S. prosecutors don't have enough evidence against him ahead of the July deadline.

There is a five year statute of limitations to file the charges tied to his trading activity with Mathew Martoma, according to the WSJ. Martoma's trial is set to begin November 4. If fresh evidence emerges before the deadline, prosecutors could still move against Cohen, but Martoma who has pleaded not guilty hasn't incriminated Cohen.

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