News & Events

Bates Group is proud to welcome Clay Grumke, our newest litigation, regulatory and internal investigations consultant and expert. Look for Clay at SIFMA's Compliance & Legal Society St. Louis Regional Seminar on June 12th, 2018.

Continuing our coverage of FINRA’s 2018 Annual Conference, regulators and firm compliance professionals participated in discussions in a session titled “Common Examination Findings and Effective Compliance Practices.” The regulators offered a look into problem areas firms continue to face and common examination deficiencies.

The discussion offered insight into FINRA’s evolving approach to regulatory and compliance management. Bates Research has the details.

In a series of significant investigatory and enforcement actions, the North American Securities Administrators Association (NASAA) engaged in a coordinated effort to crackdown on fraudulent cryptocurrency related investment products through “Operation Cryptosweep.” In another important enforcement development, NASAA entered into a cooperation agreement with the Commodity Futures Trading Commission (CFTC) to share information that could be the basis of enforcement actions under federal or state law.

Bates Group Leaders and Experts will be participating in two events coming up Thursday, May 31, 2018. Joseph Thomas, Bates Director and Elder Expert, will be speaking at SIFMA’s Investor Protection Workshop in Minneapolis, MN, while Bates Managing Director Susan Harper will moderate a New York State Bar Association panel discussion on "#MeToo: How to Navigate Sexual Harassment in the Workplace."  Appearing on the panel is Michael Putetti, Bates Group Labor & Employment Consultant and Expert.

FINRA issued a series of significant proposals over the past few weeks that would 1) reinforce certain firm supervisory obligations concerning associated persons with a history of past misconduct, 2) impose new restrictions on member firms that hire or employ high-risk brokers and 3) revise quantitative suitability standards. These proposals have significant implications going forward. Comments are due at the end of June. These and other issues were discussed at FINRA’s 2018 Annual Conference this week in Washington, D.C.

Despite some last minute pushback, the Financial Crimes Enforcment Network’s (FinCEN) long-anticipated Customer Due Diligence Requirements for Financial Institutions (CDD Rule) became fully effective on May 11th. The CDD Rule, which was proposed initially in August 2014, amends Bank Secrecy Act regulations to clarify and strengthen customer due diligence obligations for financial institutions. FINRA stated that the purpose behind the CDD Rule is “to improve financial transparency and prevent criminals and terrorists from misusing companies to disguise their illicit activities and launder their ill-gotten gains.”

Following the recent federal court decision to vacate the fiduciary duty rule, the Department of Labor released a Field Assistance Bulletin setting forth a temporary enforcement policy applicable to investment advice fiduciaries. The new policy is intended to address uncertainty about fiduciary obligations formerly required by the DOL rule, or under the Best Interest Contract Exemption, the Principal Transactions Exemption and certain amended prohibited transaction exemptions (collectively PTEs).

Movement toward a common approach by U.S. regulators on digital currency may be slow (sometimes imperceptible), but new developments are keeping up the momentum. Treasury, CFTC and SEC regulators are speaking about the need to coordinate, courts are recognizing authorities and state attorneys are exerting pressure. Bates Research looks at some new developments.

Join Bates as we co-sponsor the NYC Bar Association’s White Collar Crime kickoff reception, Tuesday, May 8, 2018 at 6:30 PM. Meet Bates CEO Jennifer Stout and Directors Sejal Patel and Beth Finkle to learn about our Financial Crimes Practice.

Bates Group is pleased to announce that William (Bill) A. Johnstone, the immediate past Chairman of D.A. Davidson Companies, has joined the Bates Group Board of Directors.

“We are very excited that Bill has joined our Board,” said Bates Group Chairman Rob Lee. “His leadership and success at growing and managing world-class financial services companies and law firms makes him an ideal Board member for Bates.”

It’s been two weeks since the SEC Best Interest Rule was unveiled, and the three-part proposal is drawing praise, criticism and much scrutiny. As expected, political and industry reaction is coming in from many quarters. Meanwhile, the fate of the DOL fiduciary rule has been decided by the Fifth Circuit Court of Appeals which denied several motions for reconsideration of their decision to vacate the rule. As expected, none of this has slowed states’ actions, as they keep promulgating suitability, fiduciary duty and disclosure standards. Bates has a recap of the latest activity.

The SEC Division of Enforcement issued guidance in the form of Frequently Asked Questions (FAQs) on its Share Class Selection Disclosure Initiative (SCDI). The FAQs, released May 1st, provide detailed answers on questions raised by the initiative, including adviser eligibility and the distribution of funds to clients. Bates Group has been monitoring and reporting on SCDI developments and has closely reviewed this new guidance.

Join Robert Lavigne, Managing Director, Bates Compliance Solutions as he walks us through a 20-minute webinar focusing on the 2018 SEC-OCIE Exam Priorities and what compliance professionals should be focusing on now.

Away from the headlines, federal and state regulators continue to prepare financial institutions for their new anti-money laundering compliance obligations. In the past few weeks, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) and FINRA provided additional guidance to covered institutions on how to comply with rules that are set to go into effect next month. In New York, the certification provisions of the Department of Financial Services (“NYDFS”) BSA/AML rules went into effect. Bates research has the highlights.

The SEC Division of Enforcement announced a "Share Class Selection Disclosure Initiative" intended to protect and reimburse investors from an adviser’s conflict of interest. The new initiative offers an incentive to advisers and related individuals and entities to review and potentially self-report conflicts of interest, as they relate to the adviser’s collection of 12b-1 fees, as well as its disclosure of such fees, that are in violation of fiduciary duties imposed under the Investment Advisers Act. The deadline to conduct this analysis, address these issues, and self-report is Tuesday, June 12th – only seven weeks away.

At an open meeting, the Securities Exchange Commission voted 4-1 to propose a set of rulemakings and interpretations designed to establish clear relationship standards between broker dealers and investment advisers and their retail clients. The SEC prescription comes on the heels of the 5th Circuit Court of Appeals decision to vacate the Labor Department’s stricter “fiduciary duty rule” promulgated under the Obama administration.