News & Events

On April 9, 2021, FINRA issued guidance reminding members of their obligations on customer options accounts. The new alert flows from a reported increase in the opening of self-directed brokerage accounts and a broader risk of whether broker dealers and investment advisers are collecting information and performing adequate due diligence to ensure that options trading is appropriate for their customers. Additionally FINRA highlights compliance obligations on supervision, anti-money laundering and margin for customers seeking to trade options. In this Alert, Bates takes a look at the recently published guidance and what you need to know to stay in compliance.

Bates Group welcomes our new experts and consultants (Pictured from L):

• Ana Suárez - Chief Compliance Officer, BD and IA Compliance, AML and Risk, Policy & Procedures, Regulatory Filings
• Lorraine Lee - Former Regulator, Statutory Disqualification, FINRA Eligibility Proceedings
• Tany Durkee Urbach - Former State Securities Commissioner, Ponzi Scheme, Securities Fraud, IA and BD Regulatory Compliance

Federal and state legislation to legalize cannabis and regulate related businesses moved forward this month with a bipartisan reintroduction of the federal Secure and Fair Enforcement (“SAFE”) Banking Act and the passage of a New York law creating a regulatory licensure and taxation framework for producers, distributors, and retailers of marijuana. The implications of these actions are significant. In this article, we look at the New York law and revisit the bipartisan SAFE Act, two efforts that cover the spectrum on cannabis regulation. Learn how these developments might impact your firm and clients.

The new Anti-Money Laundering Act (AMLA), which became law on January 1, 2021, expanded the Bank Secrecy Act regulatory framework, requiring substantial attention to additional regulator guidance and AMLA-related proposed rulemakings. On April 1, 2021, FinCEN issued an Advance Notice of Proposed Rulemaking (ANPRM) on beneficial ownership reporting. On March 29, 2021, the SEC Division of Examinations issued a risk alert on AML program compliance, and, in particular, red flag areas where broker dealers can improve their suspicious activity monitoring and reporting. In this article, Bates takes a closer look at these two new AML developments and what it means for your firm.

We’re launching our inaugural Bates AML & Financial Crimes: In Brief publication to bring to AML leaders important AML and Financial Crimes news and updates, including spotlights on our AML and Financial Crimes staff and experts, upcoming programs you can attend, and thought leadership resources to support your professional success.

It can be daunting for you and your firm to have to undergo an SEC examination. Join Bates Compliance to learn how to prepare and respond to the SEC during all four key examinations phases.

The SEC’s new marketing and advertising rule will impose considerable oversight, recordkeeping and disclosure requirements affecting “100 percent” of investment advisers when it goes into effect May 4, 2021. The SEC Division of Investment Management staff have made clear that until an adviser chooses to comply fully with the new rule, they must continue to comply with the previous advertising and cash solicitation rules and related staff positions on them. In this Alert, Bates Compliance takes a look at the recently published FAQ on the new marketing and advertising rule and what you need to know to successfully comply with it.

Recent FINRA activity demonstrates the continuous set of demands on the organization to maintain progress on ongoing initiatives (addressing broker misconduct); keep up with market events (risks associated with social media-driven trading); and continue providing services (arbitration and dispute resolution) during unprecedented conditions (the pandemic). Bates takes a look at FINRA’s new rules and guidance in this article.

On March 10, 2021, the SEC published an alert in which the Office of Investor Education and Advocacy cautioned investors to be wary of buying into so-called Special Purpose Acquisition Companies (“SPACs”) on the basis of endorsements by celebrities. That alert came out only three months after the SEC Division of Corporation Finance issued its own disclosure guidance on the investment mechanism. FINRA also recently weighed in on emerging anti-money laundering risks associated with SPACs. These efforts indicate that the regulators are paying close attention to the increasing—some say frenzied—popularity of SPAC investments during the current market volatility. In this article, Bates takes a closer look at the emerging SPAC risks, heightened regulatory concerns, and regulatory guidance.

The Securities and Exchange Commission’s Division of Examinations announced its 2021 examination priorities, focusing on climate-related risks, Regulation Best Interest, fiduciary duty for investment advisers, adequacy of disclosures (including for fees and expenses), and attendant risks relating to information security and FinTech, to name a few. In his leadership message, SEC Division of Examinations Director Peter Driscoll described the regulatory and operational challenges of delivering financial services during the pandemic, emergent risks (including on cybersecurity), and the rollout of Reg BI and Form CRS. Bates takes an in-depth look at this, the Division's 2021 priorities, what they could mean for your firm, and how they compare to previous years in our annual chart.

We are honoring women globally, committing to forge a more inclusive world, and celebrating our Bates Group colleagues, clients, and friends this 2021 International Women's Day.

On February 15, 2021, FINRA issued an alert warning firms to pay attention to risks associated with low-priced securities activities. The Notice highlights the basic compliance tools that should be reviewed to address current concerns, including a review of red flag indicators of suspicious activity, adequacy of monitoring systems, and systems for consistent and accurate reporting. In light of their concern that bad actors, looking to take advantage of market urgencies like the COVID pandemic, will continue to perpetrate “pump and dump” and other schemes that exploit those attributes, FINRA underscores the risks of low-priced security transactions as a compliance priority.

Read the article to learn about FINRA's concerns and recommendations for your practice.

The SEC Division of Examinations announced its 2021 examination priorities today, focusing on climate-related risks, conflicts of interest for brokers (Regulation Best Interest) and investment advisers (fiduciary duty), and attendant risks relating to FinTech in its initiatives and examinations. Stay tuned for our annual commentary, coming soon.

UPDATE: Financial Advisor IQ reports on Feb 25 SIFMA Webinar on SEC Reg BI and Exams, featuring a quote from Bates Compliance Managing Director and panelist Linda Shirkey.

Bates Compliance is a proud Supporting Sponsor of the 2021 IAA Virtual Compliance Conference. Alex Russell (Managing Director, White Collar, Regulatory and Internal Investigations) and Linda Shirkey (Managing Director, Bates Compliance) will be speaking on the GameStop panel at 11 a.m. on Friday, March 5th.

Bates continues to track regulatory developments that have long-term impact. Here, we highlight in brief several ongoing matters that affect regulatory compliance, including:

• FINRA Small Broker Annual Report Filing Extension
• DOL Class Exemption
• Lessons from COVID-19 Pandemic
• FINRA Rule on Registered Member Being Named a Customer Beneficiary
• New York Investment Adviser Registration
• NASAA Model Rule on Continuing Education for IARs