Regulatory Updates Archives

DOL Fiduciary Rule Back in Play as Industry Preps for PTE 2020-02

New federal regulations for retirement advisers may not last long. Though the US Department of Labor’s exemption for investment advice fiduciaries has taken effect as planned and is expected to be enforced in December as scheduled, the agency has since signaled its intent to revisit its fiduciary regulation on a broader scale. The DOL recently announced its intent to amend the definition of the term “fiduciary” by including it as an item on its spring regulatory agenda. The agency revised the definition previously but it did not stick because a federal court vacated the DOL fiduciary rule that contained the […]

State Appeals Overturning of New York Regulation 187

New York’s Department of Financial Services is taking its fight for NY Regulation 187 to the state’s highest court. As expected, the DFS has appealed a lower court’s decision overturning NY Reg 187 to the New York Court of Appeals, InsuranceNews.Net reported. The Supreme Court Appellate Division struck down the controversial best-interest standard for the sales of life insurance and annuities in April. The DFS implemented the best-interest standards for annuity sales on Aug. 1, 2019, and for life insurance sales on Feb. 1, 2020. But insurance industry associations, an insurance agency, and a registered representative sought to overturn the […]

FINRA Annual Conference 2021: 4 Key Takeaways

Perhaps SEC Chairman Gary Gensler summed up the predominant theme of the recently concluded 2021 FINRA Annual Conference best in the comments he made in the event’s final session. “We need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently,” Gensler said in his remarks at this year’s conference, which ran virtually from May 18-20. Traditionally one of the financial services industry’s largest events, the FINRA annual conference, gathers practitioners, peers, and regulators to exchange ideas on timely compliance and regulatory topics. This year’s […]

NY Reg 187 Could Reach State’s Highest Court After Being Struck Down

A controversial best interest standard for sales of life insurance and annuities in New York may be headed to the state’s highest court now that it has been deemed unconstitutional by an appellate court. The New York Court of Appeals would be the last stop within the state’s court system should regulators appeal the Supreme Court Appellate Division’s April 29 unanimous decision that the amended New York Regulation 187 is unconstitutional. “It appears likely that the decision will be appealed to the state’s highest court and, if the appeal is filed, a stay of the appellate court decision will be […]

NASAA Investment Adviser Report Highlights New Model Rules for CE and Policies and Procedures

The North American Securities Administrators Association (NASAA) recently released its annual report on the state-registered investment adviser industry and the related regulatory activities of state securities regulators. NASAA’s 2021 Investment Adviser Section Annual Report includes an updated snapshot of the investment adviser population in the United States, an updated profile of the average state-registered investment adviser, and a recap of the work of the Investment Adviser Section over the past year. It also includes suggestions for compliance areas that state-registered investment advisers should consider in handling the remote working environments that have become common due to the COVID-19 pandemic. “State […]

SEC Addresses Compliance Concerns in ESG Risk Alert

The SEC wants investment advisers to strengthen compliance practices related to environmental, social, and governance (ESG) investing, which is increasingly popular. “This rapid growth in demand, increasing number of ESG products and services, and lack of standardized and precise ESG definitions present certain risks,” the SEC’s Division of Examinations wrote in a risk alert for ESG investing that examiners released on April 9. “For instance, the variability and imprecision of industry ESG definitions and terms can create confusion among investors if investment advisers and funds have not clearly and consistently articulated how they define ESG and how they use ESG-related […]

CFPB Becomes More Vigilant about Abusive Practices as it Strengthens Consumer Protections

The Consumer Financial Protection Bureau has signaled that it will be more aggressive in policing abusive acts or practices as part of a broader shift in priorities under the direction of the Biden administration. Under the leadership of acting director Dave Uejio, who assumed the position after Biden took office in January, the CFPB recently rescinded a year-old policy that it had implemented during the Trump administration. In rescinding the policy, in which the CFPB had focused on achieving compliance with regulations prohibiting abusive acts or practices through supervisory measures rather than enforcement actions, the CFPB aligned itself with Biden’s […]

SEC Issues AML Risk Alert for Compliance Issues Related to Suspicious Activity Monitoring and Reporting at Broker-Dealers

The SEC has warned broker-dealers to watch for compliance issues related to suspicious activity monitoring and reporting. Seeking to improve compliance with federal anti-money laundering (AML) rules and regulations, the Division of Examinations encouraged firms “to review and strengthen their applicable policies, procedures, and internal controls” in an AML risk alert for broker-dealers. “The SEC encourages broker-dealers to strengthen their policies and procedures for identifying and reporting suspicious activity as examiners have seen that many firms are not fulfilling their obligations under the law,” said Margie Webber, director of regulatory compliance for RegEd. The Examination Division has noticed several deficiencies […]

SEC’s Examination Priorities for 2021 Reflect Continued Concern for Retail Investors

The SEC’s Division of Examinations will continue to emphasize protection for retail investors in the coming year, particularly for seniors and individuals saving for retirement. The Examination Division will evaluate whether registered investment advisers (RIAs) meet standards of conduct and will examine whether firms appropriately mitigate and disclose conflicts, regulators recently announced in releasing the SEC’s Examination Priorities for 2021. Examiners will also probe sales of retail investment products. The priorities are a continuation of the SEC’s efforts to protect retail investors. In the fiscal year 2020, the Division of Examinations: Issued more than 2,000 deficiency letters, which prompted many […]

Modernized Marketing Rule for Investment Advisers Takes Effect on May 4

The countdown to the implementation of the modernized marketing rule for investment advisers has begun. After years in the making, the sweeping changes that the SEC made in modernizing marketing rules for investment advisers will finally take effect on May 4, 2021, 60 days after being published in the Federal Register on March 5. Firms will have 18 months, until Nov. 4, 2022, to comply with the rules, Karen Barr, president and CEO of the Investment Adviser Association, told ThinkAdvisor for a story about the effective date for the changes. A New Era in Compliance for Investment Advisers “The marketing […]

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