RegEd to Participate in 2021 ARM Educational Conference

Thought leaders from RegEd will participate at the upcoming 2021 Association of Registration Management (ARM) Educational Conference, which will be held both in Sarasota, Fla., and virtually, from Oct. 11-13. RegEd is also a sponsor of the annual event.

Attendees of the 2021 ARM Educational Conference, both in-person and virtual, will learn about and discuss issues and developments surrounding the registration and licensing functions for the securities and insurance industries. Attendees will benefit from in-depth educational sessions and hear from representatives at FINRA, NFA, NASAA, and SROs who will inform attendees of the latest changes affecting the industry.

As the largest provider of compliance technology solutions to the financial services industry, RegEd will exhibit its market-leading Enterprise Xchange Licensing and Registration solution as well as its newly launched CLEARXchange product. CLEARXchange provides the only real-time “clear to sell” for producers, which allows them to immediately place compliant business.

Also, Brandi Brown, Senior Vice President of Regulatory Affairs for RegEd, will be a panelist for the IAR Training and Fingerprint Solutions panel, being held Tuesday, Oct. 12 at 8:15AM. Attend this session to hear from Brandi and other subject matter experts on recent changes and best practices.

 The agenda for the 2021 ARM Educational Conference also includes sessions on topics such as “FINRA Continuing Education and Qualifications Updates” and “State Regulatory Updates.”

RegEd representatives will be on-site to meet with conference attendees to understand their compliance challenges and discuss significant developments in licensing and registration technology that can help firms improve efficiency and mitigate non-compliance risk. 

The RegEd conference exhibit will be in the conference’s main exhibitor hall at The Ritz-Carlton Sarasota. For more information on RegEd or its attendance at the 2021 ARM Educational Conference, please call 800-334-8322 or email sales@reged.com.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

RegEd to Participate in 2021 AICP Annual Conference

Thought leaders from RegEd will participate at the upcoming 2021 Association of Insurance Compliance Professionals (AICP) Conference, which will be held in San Diego on Oct. 3-6. RegEd is also a Bronze Level sponsor of the annual event.

Conference attendees, both in-person and virtual, will learn about and discuss key issues facing compliance professionals at Property and Casualty and Life and Health companies. The event will bring together hundreds of senior insurance compliance professionals, regulators and industry thought leaders. “ReFRESH-ReNEW-ReFOCUS” is the theme of this year’s AICP conference.

As the largest provider of regulatory technology solutions to the financial services industry, RegEd will exhibit its market-leading enterprise compliance platform, including its Regulatory Change Management solution. RegEd’s Regulatory Change Management solution streamlines the end-to-end process of managing regulatory change throughout the organization, facilitating a workflow-enabled, closed-loop process that provides firms with everything they need to be aware of, comply with, and demonstrate compliance with all relevant regulatory changes.

Also, RegEd thought leaders will participate in a panel discussion about “The State of the Insurance Industry and Covid-19” at 11:15 a.m. PST on Oct. 5. RegEd’s Merlinda Johnson, Director of Insurance Regulatory Compliance, and Margie Webber, Director of Regulatory Compliance, will join other expert panelists in providing insight into the past and current state of the industry in the wake of COVID-19, including what changes have taken place in 2021 and what may be coming in the future.

The agenda for the 2021 AICP Conference also includes dozens of sessions on topics such as:

  • Standards of Conduct – What is in a Consumer’s Best Interest?
  • Market Conduct and Independent Distribution Models
  • Building & Maintaining a Successful Compliance Unit

RegEd representatives will be on-site to help conference attendees identify effective and cost-efficient strategies to manage compliance, licensing and education requirements across the enterprise, including through RegEd’s Regulatory Change Management solution, which provides a highly configurable, workflow-enabled and content-rich solution that captures changes to rules, regulations and filing office procedures. The solution is powered by Regulatory Intelligence, which delivers precise information and tasks to streamline compliance.

The RegEd conference exhibit, Booth #19, will be in the main exhibitor hall at Sheraton San Diego Hotel & Marina. For more information on RegEd or its attendance at the 2021 AICP Annual Conference, please call 800-334-8322 or email sales@reged.com.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

RegEd to Exhibit at 2021 InsureTech Connect Conference

As the leading provider of regulatory technology solutions to the financial services industry, RegEd will exhibit its market-leading enterprise compliance platform at the 2021 InsureTech Connect Conference in Las Vegas.

ITC Vegas is among the world’s largest InsureTech events – offering access to a comprehensive and global gathering of tech entrepreneurs, investors, and insurance industry incumbents. From Oct. 4-6, the industry will convene to showcase new innovations, to learn how to increase productivity and reduce costs, and ultimately to enrich the lives of policyholders.

RegEd representatives will be on-site to help conference attendees identify effective and cost-efficient strategies to manage compliance, licensing, and education requirements with enterprise compliance solutions for insurance companies. Representatives will also offer ways to increase producer satisfaction by providing a simplified user experience from contracting to managing day-to-day requirements.

The RegEd conference exhibit, Booth #915, will be in the main exhibitor hall at Mandalay Bay Resort & Casino. For more information on RegEd or its attendance at the 2021 InsureTech Connect Conference, please call 800-334-8322 or email sales@reged.com.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

State-registered Investment Advisers Lack Protections for Financial Abuse of Elderly

Recently released results from a sweep exam show that state-registered investment advisers must do more to prevent and address financial abuse of elderly investors, regulators say.

“The results of this multi-state coordinated initiative show that investment advisers must make improvements in recognizing and reporting cases of suspected abuse,” said Lisa A. Hopkins, NASAA President and West Virginia Senior Deputy Commissioner of Securities, in announcing its findings of deficiencies in policies to protect seniors and vulnerable persons. “Our hope is that this data will foster greater and earlier detection and reporting of suspected financial exploitation of older Americans.”

NASAA’s push for state-registered IAs to do more came just a week after it urged legislators to enact more laws and take more steps to address the financial abuse of elderly investors. “These recommendations are designed to strengthen ongoing efforts and collaboration by industry and government agencies in preventing and detecting senior financial exploitation,” NASAA wrote in pushing for more protection for senior investors in a recently released legislative commentary on NASAA’s Senior Model Act.

In pushing both state-registered IAs and legislators to do more, NASAA has demonstrated that it considers financial abuse of elderly investors to be a multi-faceted problem that requires multiple solutions, said Margie Webber, director of regulatory compliance for RegEd. Additionally, NASAA has also advocated for comprehensive education and training, including through resources such as elderly abuse prevention training for the securities industry that NASAA, FINRA, and the SEC recently released jointly.

“NASAA knows that enacting state laws and establishing policies and procedures within firms are not enough. State-registered investment advisers must also ensure that staff is properly trained and that policies and procedures are followed,” Webber said.

Coordinated exams find deficiencies among state-registered investment advisers

The recently released results of the coordinated sweep exam by state regulators showed that state-registered investment advisers largely lack policies, procedures, and training for preventing or handling financial abuse of elderly investors. Specifically, in 1,206 routine investment adviser examinations that were conducted from Jan. 1 to July 7 and covered 10 categories of compliance, state examiners found the following deficiencies related to protecting seniors and vulnerable persons:

  • 58.53% of state-registered IAs did not have policies or procedures for suspected financial exploitation
  • 23.5% of state-registered IAs did not provide training regarding suspected financial exploitation of vulnerable persons
  • 17.72% of state-registered IAs either did not have supervision and compliance in place for the protection of vulnerable clients or such measures were inadequate
  • 8.29% of advisers did not maintain training content for protecting vulnerable persons
  • 7.83% of advisers failed to provide training in the protection of seniors and vulnerable persons to all appropriate personnel
  • Based on the exam findings, NASAA recommended that state-registered investment advisers add policies or procedures for seniors and vulnerable persons to include training of personnel. “Establishing policies and procedures and training staff to follow them are of great importance to state examiners,” Webber said.

State securities regulators have regulatory oversight responsibility for investment advisers with assets under management of $100 million or less. Of the asset-managing investment advisers included in this year’s coordinated examinations, 67% had assets under management between $30 million and $100 million and 33% had assets under management of less than $30 million, according to NASAA.

Compliance technology can help state-registered IAs

RegEd helps state-registered IAs protect against financial abuse of elderly investors through its compliance education and regulatory technology solutions for the securities industry. RegEd’s compliance management platform includes the following solutions (among others).

  • Education and Training Solution Suite – Advanced learning management technology streamlines the creation of a firm’s annual compliance program, simplifies course enrollment, provides access to timely course materials, and efficiently tracks course completion.
  • Policies and Procedures Management Solution – An enterprise workflow, work-process, and task management solution enables comprehensive, end-to-end administration and oversight of all elements of a firm’s policies and procedures.

Schedule a consultation to learn more about how RegEd’s enterprise compliance solutions improve efficiency and mitigate risk.

About RegEd

RegEd is a leading provider of RegTech enterprise solutions that address Advertising Review, Conflicts of Interest, Audit Management, Compliance Disclosures, Regulatory Change Management, Onboarding, Licensing and Registration, and more. RegEd works with hundreds of enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with enterprise-grade solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and transforming the value proposition that compliance delivers. For more information, please visit https://www.reged.com.

NASAA Pushes for More Protection for Senior Investors

The North American Securities Administrators Association (NASAA) urges legislators to enact more laws and take more steps to increase protection for senior investors.

NASAA reiterates its ongoing concerns about the potential financial exploitation of seniors and vulnerable adults while also recommending additional protections in a recently released legislative commentary on NASAA’s Senior Model Act.

“Through this legislative commentary, we hope to encourage states to continue to adopt report and hold laws based on the Model Act,” said Lisa A. Hopkins, NASAA President and West Virginia Securities Commission General Counsel and Senior Deputy Commissioner of Securities, in announcing the commentary’s release. “We believe adopting these types of laws and implementing the recommendations outlined will go a long way to increasing protection for senior and vulnerable adult investors.”

NASAA has long advocated for the protection of senior investors. The new legislative commentary comes from a year-long review of the efficacy and implementation of state laws modeled on or influenced by NASAA’s Senior Model Act, which the association adopted in 2016.

“NASAA has been a leading proponent of protections for senior investors,” said Margie Webber, director of regulatory compliance for RegEd. “Their efforts have helped curtail financial exploitation across the country and they continue to push for new laws and regulations.”

Progress in protections

NASAA’s model act provides state regulators and industry participants with information about the need to protect seniors and vulnerable adults as well as tools and suggested regulations for deterring, reporting, or addressing financial exploitation. Thirty-four states have adopted statutes based on or similar to the model act’s provisions, including three states in 2021. Two more states have pending legislation that includes similar provisions.

Key provisions of the model act include:

  • Mandatory reporting of financial exploitation committed or attempted
  • Notification of reporting only to third-parties previously designated by the senior or vulnerable adult, except if that third-party is suspected of financial exploitation
  • Delayed disbursements of funds from an eligible adult’s account for up to 15 business days “if the broker-dealer or investment adviser reasonably believes that a disbursement would result in the financial exploitation of the eligible adult”
  • Immunity from administrative and civil liability for qualified individuals, broker-dealers, or investment advisers who comply with the act’s provisions in good faith
  • Requirement that broker-dealers and investment advisers comply with requests for information from agencies or law enforcement in cases of suspected or attempted financial exploitation

In its year-long retrospective review of the Model Act and its impact, NASAA determined that no amendments were necessary. “The information derived from the review indicated that the Model Act and similar report and hold laws have been overwhelmingly successful at protecting investors. Securities regulators in several states reported that report and hold laws are being used to delay disbursements, and in some states, transactions in cases of suspected and attempted financial exploitation. No state securities regulator reported concerns of systematic inappropriate use of these holds,” NASAA wrote in its recently released legislative commentary.

However, NASAA did recommend ways to make the model act more effective. “These recommendations are designed to strengthen ongoing efforts and collaboration by industry and government agencies in preventing and detecting senior financial exploitation,” NASAA wrote.

NASAA’s recommendations include:

Approaching cases of suspected financial exploitation in a multi-disciplinary manner

Creating a network of agencies and resources would help investors who may experience financial exploitation and other harmful acts, says NASAA, which offers a taskforce toolkit to assist its members with starting a partnership with other state and provincial agencies dedicated to preventing senior financial exploitation, generating resources, educating the community, and advocating for the needs of older and vulnerable victims.

Promoting the use of a trusted contact

The Model Act’s provision that allows firms to contact a third-party previously designated by the client, such as a trusted contact person, is an effective, yet often underutilized tool in assisting investors who face financial exploitation, according to NASAA. Jurisdictions should continue to encourage firms and associated persons to discuss the merit of appointing a contact person with clients, NASAA says.

Providing ongoing training for potential reporters and agency staff

Ensuring that state securities regulators, adult protective services agencies, firms, and anyone who encounters financial exploitation know the relevant rules is crucial, NASAA says. Therefore, the association supports comprehensive education and training, including through resources such as elderly abuse prevention training for the securities industry that NASAA, FINRA, and the SEC recently released together.

“NASAA wants to protect seniors from financial exploitation but it knows that it needs broad support. It also recognizes that it will take an ongoing effort,” RegEd’s Webber said.

Firms can be particularly helpful through their work with clients, which makes the ongoing training that NASAA recommends even more important. “Financial professionals are ideally positioned to protect seniors and can do so through proper policies, procedures, and training,” Webber said.

RegEd can help firms protect seniors through its compliance education and regulatory technology solutions for the securities industry. RegEd’s compliance management platform includes the following solutions (among others).

  • Education and Training Solution Suite – Advanced learning management technology streamlines the creation of a firm’s annual compliance program, simplifies course enrollment, provides access to timely course materials, and efficiently tracks course completion.
  • Policies and Procedures Management Solution – An enterprise workflow, work-process, and task management solution enables comprehensive, end-to-end administration and oversight of all elements of a firm’s policies and procedures.

Schedule a consultation to learn more about how RegEd’s enterprise compliance solutions improve efficiency and mitigate risk.

About RegEd

RegEd is a leading provider of RegTech enterprise solutions that address Advertising Review, Conflicts of Interest, Audit Management, Compliance Disclosures, Regulatory Change Management, Onboarding, Licensing and Registration, and more. RegEd works with hundreds of enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with enterprise-grade solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and transforming the value proposition that compliance delivers. For more information, please visit https://www.reged.com.

RegEd Launches Real-time ‘Clear to Sell’ for Agents

RegEd CLEARXchangeSM enables real-time validation of contracting, licensure, education/training, appointment and registration for an instant “clear to sell.”

RALEIGH, N.C., September 17, 2021 — Agents can place compliant business faster with the newly released RegEd CLEARXchange, the financial services industry’s most comprehensive Clear to SellSM solution for eliminating “not in good order” (NIGO) transactions and improving agent and adviser satisfaction.

RegEd CLEARXchange offers a frictionless path to placing business and paying commissions compliantly by automatically validating that the producer holds the proper licenses and appointments for the business they are placing and for which they are receiving payment. The real-time “clear to sell” positions a properly credentialed producer to immediately place compliant business as they are onboarded.

Only RegEd CLEARXchange delivers a real-time “clear to sell” by instantaneously validating licensure, appointment, registration, education, and mandated training at the source, including just-in-time training completions, thereby improving efficiency for firms and the user experience for producers.

By accessing data directly from the source in real-time, RegEd CLEARXchange enables producers to immediately fulfill training requirements. To date, more than 920,000 agents have taken just-in-time training from RegEd’s Annuities and Industry Training Platform to complete required courses before they were on the agent file from the carrier.

Debra Freitag, Chief Strategy Officer at RegEd, said, “With RegEd CLEARXchange, firms and producers do not have to delay placing business or paying commissions while waiting hours or days for training completion reports to be run or files to be uploaded to external systems.”  Freitag continued, “Both agent and client satisfaction improve as well because policies and contracts can be bound in near-real time without the burden of redoing NIGO applications.”

As a new module of RegEd’s market-leading Enterprise Xchange Contracting, Licensing, and Registration solution, RegEd CLEARXchange can be integrated with more than two dozen commercial solutions, including account-opening, order-entry, and compensation systems such as Ebix, iPipeline, Broadridge, and DXC, as well as with regulatory and industry gateways. The solution is also fully integrated with RegEd’s Annuities and Industry Training Platform and can be integrated with third-party training providers.

When a new appointment is required, RegEd CLEARXchange will automatically generate it as well as validate that the producer has completed the mandatory state, industry, and carrier training required to place the business. If the individual’s credentials are not in good order, they can immediately fulfill the requirement via RegEd’s Annuities and Industry Training Platform.  

As the leading provider of compliance education, product training, and annual compliance programs to the financial services industry, RegEd delivers more than 1 million CE courses, insurance certificates, and training completions each year, making it ideally suited for fulfilling the requirements that a producer may have to satisfy to be properly credentialed.

With more than 200 enterprise implementations, RegEd is the industry leader for licensing and registration solutions. RegEd manages 13 million active licenses and registrations and processes more than 5.3 million insurance and securities transactions for clients annually.

RegEd CLEARXchange, Enterprise Xchange Contracting, Licensing, and Registration, and other industry-leading regulatory technology solutions will be featured at the 2021 SILA National Education Conference, which will be held in Philadelphia on September 19-22. For more information about RegEd CLEARXchange or other enterprise compliance solutions from RegEd, visit: https://www.reged.com/.

About RegEd

RegEd is a leading provider of RegTech enterprise solutions that address Advertising Review, Conflicts of Interest, Audit Management, Compliance Disclosures, Regulatory Change Management, Onboarding, Licensing and Registration, and more. RegEd works with hundreds of enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with enterprise-grade solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and transforming the value proposition that compliance delivers. For more information, please visit https://www.reged.com.

RegEd to Participate in 2021 SILA National Education Conference

Thought leaders from RegEd will participate at the upcoming 2021 SILA National Education Conference, which will be held in Philadelphia on September 19-22. RegEd is also a Diamond Level sponsor of the annual event.

Attendees at the in-person conference will use their collective ideas, voices, and energies to work “Together Towards Tomorrow” to address insurance licensing and securities registration challenges. The conference agenda includes dozens of sessions around tracks for Surplus, Securities, LHPCV, Adjusters, and General attendees.

As the largest provider of compliance technology solutions to the financial services industry, RegEd will exhibit its market-leading Enterprise Xchange Licensing and Registration solution as well as its newly launched CLEARXchange product. CLEARXchange provides the only real-time “signal to sell” for producers, which allows them to immediately place compliant business.

RegEd will present a featured session, Unified Onboarding, Licensing and Registration: The Key to Growth in a Digital Era, which will highlight exclusive market research of industry challenges and trends.  The session will be presented by a panel of the industry’s most seasoned onboarding, licensing, and registration experts, who will discuss key challenges and opportunities facing the industry in the context of these changing times – including the digitization of insurance; M&A and consolidation; economic uncertainty; competitive pressures; advances in technology; and of course, more regulation. The session will be held on Tuesday, September 21, at 10:00AM EDT.

Jason McCartney, Senior Solutions Architect for RegEd, will also moderate an industry panel, Legislative Update Session, on Wednesday, September 22, at 8:30AM EDT.

Additional sessions at the 2021 SILA National Education Conference will include: 

  • Regulator Exchange
  • Life, Liberty & The Pursuit of Uniformity in Adjuster Licensing
  • State Securities Regulatory Roundup
  • Criminal Background Checks and Insurance Fraud Hot Topics
  • Regulator Exchange
  • Securities Open Forum
  • Legislative Updates
  • Regulatory System Updates

RegEd representatives will be on-site to meet with conference attendees to understand their onboarding, licensing, and registration challenges as well, and to discuss solutions that speed the compliant placement of business while improving the producer experience.

The RegEd conference exhibit, booth #128, will be in the conference’s main exhibitor hall at Philadelphia Marriott Downtown Hotel. For more information on RegEd or its attendance at the 2021 SILA National Education Conference, please call 800-334-8322 or email sales@reged.com.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

Documentation and Compliance Key in FINRA Sweep Exams of Options Accounts

Broker-dealers need to document their firm’s processes for supervising options trading and demonstrate compliance with them in new FINRA sweep exam on option accounts.

The industry self-regulator is conducting targeted examinations of broker-dealers’ supervision of options trading as part of its ongoing efforts to protect retail investors. FINRA CEO Robert Cook had indicated in July that the sweep would be coming and the regulator followed through shortly thereafter, releasing its Targeted Examination Letter on Option Account Opening, Supervision, and Related Areas in early August.

“Options are tricky and can be difficult to understand for certain investors. Even registered representatives recommending them can struggle understanding and explaining their inherent risks to investors. This sweep exam attempts to determine if firm compliance and supervision programs are adequate to protect investors holding option accounts,” said Margie Webber, Director of Regulatory Compliance for RegEd.

Auditors Seek Specific Information

FINRA and other regulators use targeted exam letters, or sweeps, to focus examinations and pinpoint regulatory responses to emerging issues. The number of firms included in targeted exams and the criteria for inclusion vary.

FINRA’s targeted exam sweep of broker-dealers’ options account activity covers the period from January 2020 to August 2021. In its letter, FINRA asks firms to provide the following information for both self-directed accounts and accounts in which registered representatives recommended options for retail investors.

  1. Written Supervisory Procedures (WSP), compliance manuals, and any other written guidance related to the firm’s processes and procedures regarding the firm’s options account opening and due diligence activities specific to each level of trading permission
  2. Compliance manuals and any other written guidance pertaining to the firm’s supervision of options trading in customer accounts
  3. Methods for surveilling activity of existing options customers
  4. Descriptions of the technology and processes for approving or denying customer options account applications and the supervisory review of those systems
  5. Requirements to open margin accounts or otherwise be approved for margin in connection with options activity as well as descriptions of any technology or process for approving or denying margin accounts
  6. Instances where options limitations (account approval or transactions in options accounts) were not appropriately applied, and any steps taken to date to prevent future breaches of requirements 
  7. Whether the firm reviewed non-options customers and/or existing options customers for promotion or recommendation of a new options account, and if so, how it conducted the review(s) and how often
  8. Means of advertising options accounts and how applications were provided to and submitted by customers
  9. Sample options account applications or similar records used to collect information from customers as part of the firm’s options account approval process 
  10. Sample options-related disclosure materials or other communications provided to customers that explain firm practices and policies

Responding to Auditors’ Requests

“Firms leveraging technology in their compliance and supervision programs are well-positioned to respond to this sweep,” Webber said. “Enterprise compliance solutions give firms visibility throughout the organization and allow for the ownership of procedures and delegation of responsibilities, enabling the compliance professional to more efficiently respond to regulatory examinations such as this options account sweep” she said.

As built-for-purpose tools tailored to the needs of broker-dealers and investment advisers, RegEd’s compliance solutions for securities firms are highly effective as well as cost-efficient. Firms can seamlessly manage all aspects of their compliance programs, reducing risks and costs by automating and streamlining processes. And each solution is configured for optimal performance by RegEd’s implementation experts, who have worked with many of the nation’s largest securities firms.

RegEd’s compliance management platform includes the following solutions (among others).

  • Policies and Procedures Management Solution – An enterprise workflow, work-process, and task management solution, it enables comprehensive, end-to-end administration and oversight of all elements of a firm’s policies and procedures.
  • Education and Training Suite – Robust technology and content power firms’ compliance programs. Solutions like CE Program Management and Firm Element Training simplify training and education and improve compliance.
  • Advertising Review – Automates and streamlines compliance reviews to reduce compliance risk and speed time to market. Hallmarked by unmatched flexibility and ease-of-use, it drives the highest levels of efficiency, enabling firms to handle projected volume growth without compromising review quality or turnaround.

Schedule a consultation to learn more about how RegEd’s compliance solutions enable broker-dealers to improve efficiency, effectiveness, and transparency across the enterprise.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

Form CRS Enforcement Begins with $910,092 in Fines

The grace period for firms to furnish investors with Form CRS customer relationship summaries has indeed ended now that the SEC has sanctioned firms for the first time, a little more than a year after the requirement took effect.

The SEC has fined 21 investment advisers and six broker-dealers a total of $910,092. Without admitting or denying the findings, the firms agreed to be censured, cease and desist from violating the charged provisions, and pay civil penalties ranging from $10,000 to $97,523.

“Registration with the SEC as an investment adviser or broker-dealer comes with mandated filing and disclosure obligations,” Gurbir S. Grewal, director of the SEC’s Enforcement Division, stated in a July 26 release announcing why the SEC charged 27 financial firms for Form CRS filing and delivery failures.

“Today’s cases reinforce the importance of meeting those obligations and providing retail investors with information that is intended to help them understand their relationships with their securities industry professionals.”

Form CRS Requirements Protect Retail Investors

Customer relationship summaries are meant to explain the types of services a firm offers as well as the fees and costs it charges for them and to alert investors to any potential conflicts of interest or disciplinary histories on behalf of the firm or its financial professionals. Firms must also disclose any standards of conduct that they are obligated to fulfill.  The relationship summary must be written in plain English and be concise.

Firms have been required to provide customer relationship summaries to retail investors since June 30, 2020. They are also to post the summaries to their websites. Broker-dealers are to complete Form CRS while advisers use Form ADV Part 3.

Regulators shared their expectations for summaries with firms leading up to last year’s effective date and during the first 12 months that they were required. They also offered guidance on completing, filing, and distributing Form CRS.

For example, in April 2020, the SEC issued a risk alert regarding Examinations that Focus on Compliance with Form CRS. It then shared preliminary observations from their initial examinations at a Roundtable on Regulation Best Interest and Form CRS in October 2020. Then it went on to list Form CRS in the examination priorities for 2021 that it released in March.

More recently, at FINRA’s annual conference in May, executives from the industry regulator said that enforcing Form CRS would be a top item on examiners’ agendas this year. They would no longer take a “good faith approach” in which they largely assessed a firm’s implementation progress.

“Form CRS is the first stop for examiners at the beginning of an exam, both to look for compliance with Form CRS instructions and also for getting a high-altitude understanding of the firm for the exam,” said Bill St. Louis, senior vice president and firm group leader for FINRA member firms assigned to the Retail and Capital Markets firm grouping, in a panel discussion about Reg BI and Form CRS observations and expectations.

Form CRS Training Key to Compliance

If any questions as to regulators’ priorities or intents had lingered in the months since FINRA’s conference, the SEC’s first enforcement actions for Form CRS violations have since dispelled those doubts. According to the SEC’s orders, each of the firms charged missed regulatory deadlines for filing or delivering its Form CRS, or posting it to its website, until being twice reminded of the missed deadlines by their regulators — in the case of investment advisers, by the SEC’s Division of Examinations, and in the case of broker-dealers, by FINRA.

“It’s noteworthy that chief compliance officers weren’t named in these enforcement cases since they were reminded at least twice by FINRA and/or the SEC before complying,” said Margie Webber, Director of Regulatory Compliance for RegEd. “It will be interesting to see if state securities regulators will piggyback on the SEC enforcement.”

Regulators’ intent to enforce Form CRS reinforces the need for related education and training for firms, advisers, and brokers, Webber said. “Investor protection is a top regulatory priority for state and federal regulators. It should be a top priority for industry as well.”

As built-for-purpose tools tailored to the needs of broker-dealers and investment advisers, RegEd’s compliance solutions for securities firms are effective and cost-efficient. Firms seamlessly manage all aspects of their compliance programs, reducing risks and costs by automating and streamlining processes. And each solution is configured for optimal performance by RegEd’s implementation experts, who have worked with many of the nation’s largest securities firms.

RegEd’s compliance management platform includes the following solutions (among others).

  • Education and Training Solution Suite – Advanced learning management technology streamlines the creation of a firm’s annual compliance program, simplifies course enrollment, provides access to timely course materials, and efficiently tracks course completion.
  • Policies and Procedures Management Solution – An enterprise workflow, work-process, and task management solution enables comprehensive, end-to-end administration and oversight of all elements of a firm’s policies and procedures.
  • Conflicts of Interest Solution Suite – Automated end-to-end management of request processes, compliance monitoring, and exception management associated with conflict of interest policies embeds best practices in a firm’s compliance program. 

Schedule a consultation to learn more about how RegEd’s compliance solutions enable securities firms to improve efficiency, effectiveness, and transparency across the enterprise.

For additional ways to strengthen your firm’s compliance program, view our recent webinar on FINRA, SEC, and State Securities Enforcement Trends.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

Broker-dealers Hope for Permanent Remote Inspections as FINRA Ponders Extension

Regulators remain open to extending remote examinations for broker-dealers into 2022 and firms hope the relief will last even longer.

FINRA President Robert Cook recently reiterated the need for exams to remain remote into 2022 during a conference held by the Securities Industry and Financial Markets Association’s (SIFMA), WealthManagement reported. “What I’d like to see happen here, at least where my thinking currently is, is we would extend it into next year, and that we would also step back and look at that rule more holistically, and think about whether it could use some updating to accommodate a thoughtful, risk-based approach to when in-person exams would be necessary,” Cook said, according to WealthManagement.

FINRA Chief Legal officer Bob Colby expressed a similar desire to extend remote exams into 2022 during the regulator’s annual conference in May, noting that FINRA had been discussing a possible extension with the SEC. “That is intended to buy a little time in order to figure out how to do this in the longer term,” he said.

FINRA granted firms temporary relief to allow remote inspections for calendar years 2020 and 2021 last November. “The temporary rule change is necessitated by the compelling health and safety concerns and the operational challenges member firms are facing due to the sustained COVID-19 pandemic,” FINRA noted in explaining why firms could complete remotely their inspection obligations under FINRA Rule 3110(c) (Internal Inspections) without an on-site visit to the office or location.

Firms have pushed for lasting changes to FINRA’s onsite branch inspection component. “Many broker-dealers believe they can maintain compliance remotely with the right technology and processes through a risk-based approach to branch supervision,” said Margie Webber director of regulatory compliance for RegEd. “They’ve been able to achieve branch supervision efficiencies through the use of technology during the pandemic by streamlining audit management, with the added bonus of eliminating travel risks and costs.” 

Pandemic shows that remote branch inspections can work.

SIFMA has urged FINRA to make permanent changes to branch inspections for broker-dealers.  “A remote inspection should be the default, and if firms determine that there are additional risks, only then should an on-site inspection be warranted. If significant concerns are discovered within a location that cannot be addressed in a virtual environment, an on-site inspection could be conducted,” SIFMA wrote in a February letter in response to a request for comment on lessons from the COVID-19 pandemic that FINRA issued in December. In its request, FINRA asked the industry for comment on the utility of current office definitions as well as the use and effectiveness of remote inspections.

“In order to implement risk-based inspection scheduling, we recommend that FINRA remove the annual requirement of FINRA Rule 3110.12 and the FINRA Rule 3110.13 presumption that such locations require inspection at least every three years in favor of a risk-based schedule,” SIFMA continued in its response.

“Risk factors weighed by firms, such as business conducted, access to firm books and records, heightened supervision of certain persons, and access to firm capital, could be documented. This process would allow for greater flexibility in handling supervision of lower risk areas of firm business without increasing risk of customer harm and would significantly lower costs on firms as more employees work more frequently from remote locations.”

Firms say the industry is prepared to conduct proper supervision virtually, noting as well that most broker/dealer functions can be performed remotely without on-site supervision and that many employees will not return full-time to a physical office, WealthManagement wrote in reporting that FINRA firms want inspectors to work remotely, permanently.

At FINRA’s annual conference in May, the regulator’s senior director of examinations, John Edmonds, and brokerage compliance officers agreed that remote examinations have been effective but challenging. As participants in a panel discussion, they noted challenges like tracking outside business activities and private securities transactions.

Technology improves remote supervision for broker-dealers.

“Firms need the proper technology to reduce risks associated with remote supervision,” said Webber from RegEd, whose conflict of interest suite includes solutions for tracking outside business activities, personal securities account management, and gifts, gratuities and political contributions.

RegEd assists broker-dealers in overcoming challenges associated with remote supervision through its Audit Management solution as well, which enables firms to implement an effective audit program per FINRA Rule 3110. Also, RegEd’s compliance questionnaires streamline the annual certification of the registered representative population in accordance with FINRA’s Supervision Rule.

During the COVID-19 pandemic, RegEd has helped firms review their branch exams with remote work and remote exams in mind, like with pre-audit questionnaires (PAQs) that streamline audit coordination and data input. “The PAQ is a perfect tool for compliance teams that want to cover the basics for a large volume of branch exams,” said Lindsay Restrepo, product manager for RegEd. “With auditors free to focus their on-site visits on higher-risk individuals and branches, the firm can prioritize travel based on federal and local health and safety guidelines. “

As built-for-purpose enterprise compliance solutions tailored to the needs of broker-dealers and investment advisers, RegEd’s compliance solutions for securities firms are highly effective as well as cost-efficient. Firms can seamlessly manage all aspects of their compliance programs, reducing risks and costs by automating and streamlining processes. And each solution is configured for optimal performance by RegEd’s implementation experts, who have worked with many of the nation’s largest securities firms.

Schedule a consultation to learn more about how RegEd’s enterprise compliance solutions improve efficiency, effectiveness, and transparency for broker-dealers.

About RegEd

RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.

Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.

Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.

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