RegEd Regulatory Affairs Team, Author at RegEd.com

FINRA CEO to SIFMA Audience: Protecting Investors and Addressing Workplace Evolution are Priorities for 2022

Investor protection remains atop FINRA’s priorities for 2022. “There will be a theme around retail-investor protection,” CEO Robert Cook said, during a recent webinar hosted by SIFMA. And FINRA will proceed with some existing initiatives as well as launch new efforts in 2022, he told SIFMA President & CEO Kenneth Bentsen, Jr., in a virtual Q&A session. FINRA will also revisit rules and regulations in light of changes brought about by the COVID-19 pandemic and the industry’s shift to remote work, Cook noted. In doing so, the regulator could modify or extend some short-term responses to make them long-term changes. […]

FINRA Weighs Lasting Impact of Remote Work

FINRA is preparing for a “new normal” in which firms will work remotely even after the pandemic passes. For example, FINRA is considering changing how it defines “branch office” and “office of supervisory jurisdiction” for supervision and inspection purposes based on industry feedback. “Many” commenters that responded to a request for feedback on lessons learned during the COVID-19 pandemic urged the regulator to revisit the definitions under FINRA Rule 3110 because firms have shifted to remote work. “Several commenters expressed concern that without amendments, personal residences of many associated persons will need to be registered (and inspected) to facilitate remote […]

FINRA Extends Remote Branch Inspections Until End of 2022

FINRA has proposed to extend temporary relief allowing firms to conduct their 2022 branch inspections remotely through year-end. If approved by the SEC, the extension of FINRA Rule 3110.17 would extend COVID-related branch office inspection relief that is now scheduled to end on June 30. “The proposed additional six-month extension would provide further clarity to firms on regulatory requirements and account for the time needed for many firms to carefully assess when and how to have their employees safely return to their offices in light of vaccination coverage in the U.S. and transmission levels of the virus, including any emergent […]

SEC Examiners: Advisers Should Review Policies and Procedures for Calculating Advisory Fees

SEC examiners have recommended that investment advisers “review routinely, refine, and improve, as appropriate, their fee billing policies, procedures, and practices and address new risks as they are identified” to ensure that they are calculating advisory fees correctly. They also should review their disclosures to confirm that clients are aware of all fees and expenses and related material conflicts of interest, examiners have suggested. Examiners made the recommendations after identifying deficiencies related to the advisory fees charged by most of the approximately 130 investment advisers that it examined in a nationwide initiative. The deficiencies “often resulted in financial harm to […]

SEC Urges Stricter Robo-Adviser Compliance

The SEC has suggested that investment advisers improve robo-adviser compliance by tightening policies and procedures for automated digital investment advisory services. The regulator gave deficiency letters to “nearly all” of the advisers whose robo-advisory services it recently examined, according to a new SEC risk alert regarding electronic investment advice. “The examinations conducted within the scope of this review resulted in a range of actions,” the SEC stated in the risk alert. “In response to the staff’s observations, some advisers elected to amend disclosures and marketing materials, modify or eliminate performance advertisements, revise compliance policies and procedures, improve data protection practices, […]

SEC Continues to Update Rules for Investment Adviser Marketing

Investment adviser marketing has taken another step into the present now that the SEC has announced it is withdrawing or modifying over 200 staff letters and guidance statements related to the decades-old IA Advertising and Cash Solicitation Rules. Most of the no-action relief letters being withdrawn are related to issues that are now covered in the SEC’s modernized IA Marketing Rule. “It’s no wonder IAs have been so challenged under the old Advertising and Cash Solicitation Rules since they had to manage so many exceptions to the actual rules. It would be helpful if the SEC would share a list […]

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 […]

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. […]

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 […]

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 […]

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