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Best Execution and Trade Allocation Guidance

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The Securities Exchange Commission (“SEC”) and state regulators have often stated that an Adviser’s fiduciary duty concerning the trading activities the Adviser conducts on behalf of its clients is a key obligation. Most importantly, regulators regularly examine Advisors’ compliance with their fiduciary duties of best execution and trade allocation, and sanction Advisors for violations of their duties. This Spotlight provides an overview of Adviser’s best execution and trade allocation obligations. Please keep in mind that there is no bright line test for determining whether an Adviser has met their best execution and trade allocation obligations but we outline the relevant factors regulators have highlighted.

 

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