FINRA Introduces New Remote Inspections Pilot Program

Three-Year Pilot Program Seeks to Modernize Inspection Process for OSJs, Branch Offices, and Non-Branch Locations The Financial Industry Regulatory Authority (FINRA) has withdrawn its original remote inspection pilot program from 2022 and proposed a new pilot initiative. This revised program aims to bring the inspection process for Office of Supervisory Jurisdiction (OSJ), branch offices, and non-branch locations into the modern era. The proposed pilot program is currently open for public comment. Risk Assessments and Preaudit Questionnaires The pilot program, which is set to last for three years if approved by the Securities and Exchange Commission (SEC), would require participating firms […]

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Highlights From the SEC Municipal Advisor Risk Alert

The SEC has provided a Risk Alert to remind municipal advisors of their obligations and to raise awareness among Municipal Advisors (“MAs”) of the most often cited deficiencies and weaknesses observed in recent MA examinations.  Many of the same areas were covered in its 2017 Risk Alert, indicating that the SEC continues to note similar deficiencies as it did 5 years ago. Inaccurate or Incomplete Registrations and Filings The SEC found significant overlap in registration and filing deficiencies when compared to those identified in its 2017 Risk Alert.  Among the inaccurate or incomplete information filed on SEC Forms MA and […]

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Securities Enforcement Trends Reflect Regulators’ Concerns for Investors

Securities regulators have stepped up enforcement to protect investors from emerging threats and evolving risks. From Reg BI to crypto to senior fraud, regulators have increased scrutiny and sanctions to punish violators and prevent future infractions. “Restoring trust in our financial markets and institutions requires the use of robust remedies,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said recently, in congressional testimony regarding the regulator’s enforcement priorities and budget request. “In addition to punishing wrongdoers for violations of the securities laws, our remedies must deter those violations from happening in the first place. They must be viewed […]

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Complying with Pay-to-Play Rules in an Election Year

This year’s mid-term elections pose a compliance challenge for registered investment advisory (RIA) firms. When it comes to politics, investment advisers and their covered associates can be as passionate as any voters. But “pay-to-play” rules prohibit advisers from making political donations that many other voters could. SEC Rule 206(4)-5 considers it to be unlawful for investment advisers to provide investment advisory services for compensation to a government entity within two years after a contribution to an ‘official’ of the government entity is made by the investment adviser or any of its covered associates, including a person who becomes a covered […]

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5 SEC Examination Priorities for 2022

The SEC’s Division of Examinations’ exam priorities for fiscal year 2022 include standards of conduct as well as issues related to technology and investment products. “The Division will prioritize examinations of several significant focus areas that pose unique or emerging risks to investors or the markets, as well as examinations of core and perennial risk areas. Their importance to investors and the markets, coupled with the seriousness and frequency of observations in prior years’ examinations, demonstrate the need for the Division to remain vigilant in these areas,” according to the 2022 Examination Priorities report released by the SEC on March […]

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RegEd to Exhibit Next-Generation Agency Contracting Solution at 2022 LIMRA Distribution Conference

Xchange Agency Contracting delivers a single solution for all distribution channels, enabling rapid onboarding of agencies and agents to speed time to market RegEd will present its next-generation Xchange Agency Contracting solution at the 2022 LIMRA Distribution Conference for Financial Services. Developed with input from some of the nation’s largest insurance companies, Xchange Agency Contracting significantly reduces the time to contract and appoint producers while providing a streamlined user experience. “To gain competitive advantage in today’s marketplace, insurance companies must foster strong relationships with their distribution partners,” said Debra Freitag, Chief Strategy Officer at RegEd. “Xchange Agency Contracting improves producer […]

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SEC: Investment Advisers Can ‘Tailor’ Cybersecurity Policies and Procedures to Fit Their Business

Though the SEC has proposed requiring cybersecurity policies and procedures for investment advisers for the first time, it has also provided firms flexibility in addressing the general elements to be covered. “We recognize that there is not a one-size-fits-all approach to addressing cybersecurity risks. As a result, the proposed cybersecurity risk management rules would allow firms to tailor their cybersecurity policies and procedures to fit the nature and scope of their business and address their individual cybersecurity risks,” the SEC wrote in recently proposed cybersecurity risk management rules. Advisers and funds would also have to report any significant cybersecurity incidents […]

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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 […]

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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 […]

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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 […]

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