News & Events –

Right before the new year, FINRA published a report on specific cybersecurity compliance concerns raised in recent broker-dealer examinations. The report provides important guidance for broker-dealers to ensure that their compliance programs adequately address particular risks. Specifically, FINRA highlights best practices among firms on (i) branch office controls; (ii) limiting phishing attacks; (iii) mitigating insider threats; (iv) testing compliance networks for security weakness; and (v) controlling risks related to mobile devices. In this article, Bates reviews these elements and what they may mean for your compliance program.

Bates is proud to be a Bronze Sponsor of the NY State Bar Association’s Women In Leadership Section Symposium at the 2019 Annual Meeting, Tuesday, January 15 in New York City. Bates Group NY/NJ Managing Director Susan Harper, Esq. will give the welcoming remarks and co-chair a panel. On Wednesday, January 16th, Susan will also participate on the NYSBA Presidential Summit.

The SEC Office of Compliance Inspections and Examinations ("OCIE") will prioritize risks to retail investors in this year’s examinations. That concern is a distinguishing highlight of a new report summarizing OCIE assessments of regulatory issues, market risks and policy developments.

Additional featured priorities include continuing risks and concerns related to fee disclosures, share class, and wrap fee programs, anti-money laundering, cybersecurity, digital assets, FINRA and MSRB operations, and issues of compliance by registrants involved in critical market infrastructure. In this article, we review the new report, contrast this year’s priorities with those of the past few years in our annual Bates year-to-year SEC OCIE priorities chart, and consider some implications so that firms might better prepare and, if necessary, adjust their compliance systems accordingly.

Bates Group Chief Operating Officer Benjamin R. Pappas has been promoted to President of Bates Group LLC, the leading expert witness and consulting firm for the financial services industry. Bates Group CEO Jennifer L. Stout made the announcement on January 2nd, 2019.

In its second annual effort to highlight areas of compliance concern, FINRA published a 2018 Report on Examination Findings. The thorough report details selected observations and findings from broker-dealer firm exams that have “potential significance, frequency and impact on investors and the markets.” The primary areas of focus in this year’s report are suitability for retail customers, private placements, abuse of the authority a client gives to a registered representative, and fixed income mark-up disclosure. This article takes a closer look at these FINRA priorities and additional FINRA findings on compliance issues raised by this year’s examinations.

Investments in robo-offerings have grown, and the application and use of algorithmic programming expanded. A new report cites data that predicts “digital advice users will increase from roughly 2 million to 17 million by 2021.” In this article, Bates Research takes a closer look at existing SEC compliance guidance on robo-advisory services and some of the enforcement concerns in this rapidly expanding marketplace.

Renowned Bates Expert Michael D. Weiner discusses his newly published book, In My Expert Opinion: Becoming an Effective Expert in the Financial Services Industry. Working as an expert witness, he saw "the good, the bad and the ugly" in his counterparts, and from that experience grew a desire to aid both aspiring experts and their counsel. In My Expert Opinion was written to train experts in the positive aspects of expert witness work, to point out the pitfalls, and to provide a roadmap to a successful career.

Your relationship with your consulting or testifying expert is a critical component to your case. Mastering best practices when working with an expert will better support your case.

We recently polled several of Bates’ financial industry experts, many of whom are former general counsels, branch managers and regulators, to summarize best practices when working with consulting and testifying experts. Here's what they had to say.

Bates Group is proud to welcome our new Forensic Accounting team -- Forensic Accounting and Financial Crimes Director Christine Davis, CPA, CFF, CVA, CGMA, and Forensic Accounting Managing Consultant Leonore Ralston, CFE. The team will operate out of Bates' new San Francisco office.

Bates is proud to introduce four new experts and consultants: Jonathan A. Brogaard, Robert B. Spawn, Steven Sutherland, and Steven Valji.

Significant regulatory developments are taking place in the variable annuity and life insurance market that are intended to encourage investors to make more informed decisions about these financial products. Along with the SEC’s announcement of an extensive new rule proposal that would leverage technology and create a “layered disclosure approach” to variable annuities and life insurance contracts, the SEC Office of Investor Education (“OCIE”) issued a Bulletin that offers a basic primer on these instruments. This comes a week after state insurance regulators met to revise the NAIC “Suitability in Annuity Transactions Model Regulation.” Bates Research takes a closer look at these recent developments.

Bates is pleased to introduce the next new mini-interview we are sharing on the occasion of Bates Group President and CEO Jennifer Stout’s 25th anniversary with Bates. In this video segment, Jennifer discusses leadership lessons she has learned over the years that help her connect to clients and support employees and the firm.

In a new report to Congress, the Federal Trade Commission (“FTC”) compiled its latest data on the widespread problem of financial fraud perpetrated against elderly consumers. The agency also highlighted 2017-2018 enforcement actions and described its outreach and education initiatives to combat senior financial abuse. This article highlights the findings in the latest FTC report.

In June, Bates reported on an SEC Draft Strategic Plan for Fiscal Years 2018 - 2022. The development of the plan is required by federal statute as a means to assess “agency performance and improvement.” The issuance of the Draft Plan was immediately followed by the submission of testimony by SEC Chair Jay Clayton before the House Committee on Financial Services. At that hearing, Chair Clayton expounded on the short draft strategy, describing in greater detail the future agenda for the agency. Now, after the required comment period, the agency’s Final Strategic Plan has been released. Chair Clayton describes the 11-page plan as a “forward-looking framework” that focuses “on the most important goals and initiatives” for fulfilling the agency’s mission. Bates Research takes a closer look.

In a few weeks, a working group of the National Association of Insurance Commissioners (NAIC) will meet again in a continuing effort to complete a revision to the organization’s Suitability in Annuity Transactions Model Regulation. The goal of the working group remains a revision of the standards and procedures for providing appropriate recommendations to consumers “that result in transactions involving annuity products.” The group's progress took a detour in July when the New York Department of Financial Services (NYDFS) issued a final regulation establishing its own “best interest” standard of care for recommendations of both annuity products and life insurance products.

Bates Research takes a look at some of the issues as they are playing out with respect to the very real New York requirements on the horizon, and the NAIC’s efforts to revise the standards on annuity products.

Bates is pleased to introduce the first of several new mini-interviews we will be sharing over the coming weeks on the occasion of Bates Group President and CEO Jennifer Stout’s 25th anniversary with Bates. In this video, "The Evolution of Bates," Jennifer discusses driving change to meet client and industry needs.