News - Compliance and Regulatory Alerts

BCS Alert: FINRA’s Susan Schroeder Previews 2019 Enforcement Priorities

Compliance and Regulatory Alerts  |  11-30-18

BCS Alert: FINRA’s Susan Schroeder Previews 2019 Enforcement Priorities

At the November 2018 SIFMA C&L New York Regional Seminar, Susan Schroeder, FINRA’s Executive Vice President and Head of Enforcement, discussed some of FINRA’s enforcement priorities heading into 2019. You can expect these to be included when the official list comes out in January. Read the full alert to preview FINRA's 2019 priorities.

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Risk Alert: OCIE to Conduct Exams on Mutual Funds and ETFs, Review Oversight of Boards of Directors

Compliance and Regulatory Alerts  |  11-14-18

Risk Alert: OCIE to Conduct Exams on Mutual Funds and ETFs, Review Oversight of Boards of Directors

Staff members at the SEC Office of Compliance Inspections and Examinations ("OCIE") issued a Risk Alert November 8th informing market participants that they will be conducting a series of examination initiatives on regulatory compliance of mutual funds and exchange-traded funds. The OCIE listed and described the categories of funds and advisers for examination and highlighted certain areas for review.

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Alert: OCIE Recommends IAs Review Compliance Procedures on Cash-Based 3rd-Party Client Solicitation

Compliance and Regulatory Alerts  |  11-02-18

Alert: OCIE Recommends IAs Review Compliance Procedures on Cash-Based 3rd-Party Client Solicitation

On October 31st, the SEC Office of Compliance Inspections and Examinations issued a Risk Alert informing investment advisers, investors and other market participants of the most common compliance deficiencies related to the so-called Cash Solicitation Rule (Investment Advisers Act, Rule 206(4)-3).

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Alert: FINRA Consolidating Exam and Risk Monitoring Programs

Compliance and Regulatory Alerts  |  10-11-18

Alert: FINRA Consolidating Exam and Risk Monitoring Programs

On October 1, FINRA announced that it will consolidate its Examination and Risk Monitoring Programs under a single structure. When completed in 2019, the move will incorporate business conduct, financial compliance and trading compliance under one unified framework. 

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Compliance & Regulatory Update:  More FINRA UIT Warnings and Enforcement

Compliance and Regulatory Alerts  |  07-23-18

Compliance & Regulatory Update:  More FINRA UIT Warnings and Enforcement

In a recent Bates Group article covering FINRA’s 2018 Annual Conference, we reported that Michael Solomon, FINRA’s Senior Regional Director, warned of specific exam deficiencies that may trigger compliance scrutiny. In particular, he urged firms to protect investors against representatives attempting to “gam[e] the system” by trading Short Term Unit Investment Trusts (“UITs”). FINRA has put teeth into that warning by bringing enforcement actions against firms in connection with their representatives’ “offending” UIT client sales activity.

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Alert: Common “Best Execution” Deficiencies in Recent Examinations

Compliance and Regulatory Alerts  |  07-19-18

Alert: Common “Best Execution” Deficiencies in Recent Examinations

The SEC has highlighted frequent “best execution” deficiencies found in some recent examinations of investment advisers. As described in a new Office of Compliance Inspections and Examinations (“OCIE”) Risk Alert, investment advisers have a fiduciary obligation to seek “best execution” of client transactions. 

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Update: Customer Due Diligence Rule Now in Effect

Compliance and Regulatory Alerts  |  05-23-18

Update: Customer Due Diligence Rule Now in Effect

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.”

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Update: DOL Issues Non-Enforcement Policy on Fiduciary Rule

Compliance and Regulatory Alerts  |  05-22-18

Update: DOL Issues Non-Enforcement Policy on Fiduciary Rule

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).

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Update: SEC Releases Share Class Selection Disclosure Initiative FAQs

Compliance and Regulatory Alerts  |  05-02-18

Update: SEC Releases Share Class Selection Disclosure Initiative FAQs

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.

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Update: SEC Mutual Fund Share Class Disclosures

Compliance and Regulatory Alerts  |  04-23-18

Update: SEC Mutual Fund Share Class Disclosures

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.

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