Category Compliance newsflash

Compliance Newsflash for November 6th, 2019 – Wall Street Gets 3-Year Reprieve From SEC on MiFID Compliance

Wall Street is getting a three-year reprieve from the Securities and Exchange Commission on Europe’s tough investment research rules, as the U.S. regulator said it needs additional time to evaluate sweeping changes affecting the brokerage industry. The SEC announced the extension in a Monday statement, saying American securities firms can adhere to a European requirement that brokers charge clients separately for analysis until at least 2023 and not run the risk of getting sued by the U.S. regulator. Relief that the SEC had granted the industry in 2017 was set to expire in July of next year.

Compliance Newsflash for October 30th, 2019 – SEC Official Pushes Back Against Criticism of Share-Class Crackdown

A Securities and Exchange Commission official said Wednesday he doesn't understand why the agency is catching flak from some in the financial industry over its crackdown on inadequate disclosure of mutual fund fees. For more than a year, the SEC has been conducting an enforcement program focused on investment advisers who do not properly disclose recommending high-cost share classes — those that pay them 12b-1 and other fees — when less expensive classes of the same fund are available.

Compliance Newsflash for October 30th, 2019 – Is the SEC up to its $84-trillion RIA challenge?

The SEC is examining more RIAs than it has at any point in the past decade. Even so, the thinned agency is struggling to oversee the more than 13,200 firms managing $84 trillion under its purview. Agency officials have said as much: The SEC’s latest annual performance review cites the notable rise in the share of RIAs receiving exams but also two missed goals around enforcement. This month, the agency’s inspector general took it to task over those findings.

Compliance Newsflash for October 24th, 2019 – FINRA Publishes 2019 Report on Examination Findings and Observations

FINRA today published its 2019 Report on FINRA Examination Findings and Observations. The report reflects key findings and observations identified in recent examinations, and contains effective practices that could help firms improve their compliance and risk management programs. It summarizes findings and observations across a range of topics, including supervision, cybersecurity, best execution, segregation of client assets, and Uniform Transfers to Minors Act (UTMA) and Uniform Grants to Minors Act (UGMA) accounts.

Compliance Newsflash for October 24th, 2019 – Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation

FINRA today published its 2019 Report on FINRA Examination Findings and Observations. The report reflects key findings and observations identified in recent examinations, and contains effective practices that could help firms improve their compliance and risk management programs. It summarizes findings and observations across a range of topics, including supervision, cybersecurity, best execution, segregation of client assets, and Uniform Transfers to Minors Act (UTMA) and Uniform Grants to Minors Act (UGMA) accounts.

Compliance Newsflash for October 16th, 2019 – Cybersecurity Alert: Cloud-Based Email Account Takeovers

Several member firms recently notified FINRA that they have experienced email account takeovers (ATOs) while using cloud-based email platforms, including Microsoft Office 365 (O365). Attackers used compromised email accounts to defraud member firms by requesting fraudulent wire requests or stealing confidential firm information or non-public personally identifiable information (PII). This Notice outlines the attackers’ tactics in executing ATOs, as well as steps taken by member firms to address ATO risks when using cloud-based email systems.

Compliance Newsflash for October 16th, 2019 – FINRA Provides New Reg BI and Form CRS Resources to Assist Member Firms in Complying with SEC Rules by June 30, 2020

FINRA today announced it has made available new resources to assist member firms in their efforts to comply with the Securities and Exchange Commission (SEC) Regulation Best Interest (Reg BI) and Form CRS by the rules’ compliance date of June 30, 2020. FINRA is assisting members in a variety of ways including by providing a new Reg BI and Form CRS Checklist – available on FINRA’s Reg BI webpage along with a number of other resources – and by hosting several FINRA Reg BI events in the coming months.

Compliance Newsflash for September 25th, 2019 – A First Strike On Proxy Advisory Firms? Sec Interpretive Guidance On Proxy Advisory Firms And Proxy Voting Responsibilities Of Investment Advisers

As part of its overall review of how the federal proxy rules apply to proxy voting advice by proxy advisory firms, the Securities and Exchange Commission (SEC) published two interpretive releases in August 2019, aimed at proxy advisory firms and investment advisers that use their services when voting proxies of securities held in client accounts.

Compliance Newsflash for September 25th, 2019 – In tune with the SEC – Staff Continues Dialogue on Harmonizing Private Exemptions

On June 18, 2019, the Securities and Exchange Commission (the “SEC”) issued a concept release (the “Release”) on ways to “simplify, harmonize, and improve the exempt offering framework to expand investment opportunities while maintaining appropriate investor protections and to promote capital formation.”1 The Release notes, among other things, that in light of the increased amounts of capital currently being raised through exempt offerings, the SEC is asking for comment regarding if it should consider rule changes to make exempt offerings available to a wider swath of investors. The current exempt offering framework has been developed over the years through various legislative action, including the Securities Act of 1933 (the “Securities Act”) and the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), as well as through exemptions adopted by the SEC.

Compliance Newsflash for September 18th, 2019 – SEC Releases Small Entity Compliance Guide for Regulation Best Interest and Form CRS

By Susan Light, Michael T. Foley & Adam P. Haft on September 13, 2019 Katten Muchin Rosenman LLP On September 9, the Securities and Exchange Commission (SEC) released two small entity compliance guides to assist broker-dealers and investment advisers in complying with the recently adopted Regulation Best Interest (Reg BI) and Form CRS.