Category Compliance newsflash

Compliance Newsflash for January 8, 2020 – SEC Proposes to Update Accredited Investor Definition to Increase Access to Investments

On December 18, 2019, the SEC voted to propose amendments to the definition of accredited investor, one of the principal tests for who is eligible to participate in our private capital markets. The proposal seeks to update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in our private capital markets.

Compliance Newsflash for January 8, 2020 – SEC Office of Compliance Inspections and Examinations Announces 2020 Examination Priorities

On January 7, 2020, the SEC's Office of Compliance Inspections and Examinations (OCIE) announced its 2020 examination priorities. OCIE publishes its examination priorities annually to enhance the transparency of its examination program and to provide insights into its risk-based approach, including the areas it believes present potential risks to investors and the integrity of the U.S. capital markets.

Compliance Newsflash for December 11th, 2019 – States with Fiduciary Rules Will Drive Brokerage Businesses Away

On December 6, 2019, Financial Advisor IQ spoke to Sifma president and CEO Kenneth Bentsen who gave a media briefing saying that states pursuing fiduciary rules for broker-dealers run the risk of driving brokerage businesses away from their jurisdictions, ultimately hurting retail investors. Meanwhile, broker-dealer firms are busy preparing to comply with the SEC's Regulation Best Interest package and the costs are running into the "eight-figure" range for some firms, he said. Bentsen quoted "What's going to happen and what firms have reported to us is that rather than create multi-state compliance models and take on additional compliance liability, they will just go to the common denominator, which in many cases will just be: 'We just won't do brokerage in that state,'".

Compliance Newsflash for December 4th, 2019 – SEC Approves Amendments to FINRA New Issue and Anti-Spinning Rules

On November 5, 2019, the SEC approved amendments to the Financial Industry Regulatory Authority New Issue Rule (Rule 5130) and Anti-Spinning Rule (Rule 5131). FINRA will shortly publish a Regulatory Notice announcing that the Amendments will become effective no later than January 31, 2020. Absent an exemption, FINRA Rule 5130 prohibits securities industry insiders - such as broker-dealers, registered representatives, owners of broker-dealers, portfolio managers and finders and fiduciaries from purchasing new issues through any account in which they have a "beneficial interest." FINRA Rule 5131 prohibits the allocation of new issues to accounts in which executive officers or directors of a public company or a "covered non-public company" have a beneficial interest.

Compliance Newsflash for December 4th, 2019 – SEC Proposes Significant Amendments to Investment Adviser Advertising Rule

On November 4, 2019, the SEC approved the publication of a substantial release proposing significant amendments to the rules under the Investment Advisers Act of 1940 that govern advertising by investment advisers and the solicitation of advisory and fund investments, as well as related recordkeeping and SEC Form ADV disclosure requirements. This memorandum provides a summary of the proposed amendments to the advertising rule and related recordkeeping requirements; a separate memorandum addresses the proposed amendments to the solicitation rule.

Compliance Newsflash for November 26th, 2019 – SEC’s Avakian Details Next 12b-1 Fee Crackdown

On November 26, 2019, ThinkAdvisor reported that industry officials are finding a new compliance chore on their plate as the SEC plans a crackdown on 12b-1 fees as they relate to advisor disclosures and conflicts associated with bank deposit sweep programs. Stephanie Avakian, co-director of the SEC's enforcement division, signaled in a recent speech where the agency is headed with the BDSP initiative: "Cash in advisory accounts is often automatically swept into a money market mutual fund or a bank deposit sweep program," she said. "A dually registered adviser or an adviser with an affiliated broker-dealer may have a financial interest, a conflict, in recommending one cash investment over another," she warned.

Compliance Newsflash for November 26th, 2019 – SEC Releases FAQ on Form CRS

On November 26, 2019, the SEC released an FAQ on the agency's Customer Relationship Summary, or Form CRS, part of the four-pronged advice standards package. The securities regulator's divisions of Investment Management and Trading and Markets said the Form CRS FAQ does not constitute a rule and that the industry can expect updates from the divisions as additional questions come in.

Compliance Newsflash for November 6th, 2019 – SEC Proposes to Modernize the Advertising and Cash Solicitation Rules for Investment Advisers

Washington D.C., Nov. 4, 2019 — The Securities and Exchange Commission today announced that it has voted to propose amendments to modernize the rules under the Investment Advisers Act addressing investment adviser advertisements and payments to solicitors. The proposed amendments are intended to update these rules to reflect changes in technology, the expectations of investors seeking advisory services, and the evolution of industry practices.