Compliance Newsflash – December 6, 2017

December 6, 2017

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Delay of DOL Fiduciary Rule Enforcement Mechanisms Now Final
On November 27, 2017, InvestmentNews.com reported that the Department of Labor released a final rule that would delay implementation of the enforcement mechanisms of its fiduciary duty regulation until the middle of 2019. The rule would postpone from Jan. 1, 2018, to July 1, 2019, the applicability of a legally binding contract between brokers and retirement-account clients that requires brokers to act in their best interests, among other disclosure provisions and prohibited-transaction exemptions being pushed back. The DOL said it needs the extra time to conduct a reassessment of the rule’s impact on retirement advice that was ordered by President Donald J. Trump in a Feb. 3 memo. Two provisions of the rule – one that expands the number of financial advisers who are deemed fiduciaries and another that sets impartial conduct standards – were implemented in June. “The department is granting the delay because of its concern that, without delay in the applicability dates, consumers may face significant confusion, and regulated parties may incur undue expense to comply with the conditions or requirements that the department ultimately determines to revise or repeal,” the DOL stated in the text of the final rule, which is published in the Federal Register. An advocate for the rule asserted that delay means death for the regulation.
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FINRA Agrees to Give Greater Clarity on Broker-Dealer Firm Exam Findings
On November 30, 2017, FinancialAdvisorIQ.com reported that FINRA has revealed that within a matter of weeks it will publish a new report on examination findings that will – for the first time – let broker-dealer firms review the findings of industry-wide examinations conducted by the regulator, according to FINRA CEO Robert Cook.
Presently, when FINRA conducts an examination of a broker-dealer firm, “only that firm” sees the results, Cook says in a video Q&A conducted by FINRA’s head of communications, Josh Drobnyk, and published online. With the new report, broker-dealer firms will be able to see what FINRA is seeing, “generally,” Cook says, noting that broker-dealer firms believe they will be able to extract examination information that’s relevant to their own firms and “can get ahead” of compliance requirements.
Cook says the new report format is “a little bit of an experiment,” but FINRA’s intention is to publish it annually.
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