News & Events –

In a tally of enforcement actions taken in Fiscal Year 2021 (which ended September 30th), the SEC reported that its efforts “spanned the entire securities waterfront” to address emerging threats. The agency touted many “first-of-their kind enforcement actions” and “record-breaking achievements.” Among the emerging areas of prosecutorial interest, the SEC highlighted enforcement actions involving crypto, decentralized finance, SPACs, the “dark web,” Form CRS compliance, and unregistered electronic trading. The agency also highlighted (and linked to) “impactful” prosecutions against a host of entities.

In a Field Assistance Bulletin issued on October 25, 2021, the Department of Labor extended relief through Jan. 31, 2022 on a Prohibited Transaction Exemption (“PTE”), titled "Improving Investment Advice for Workers and Retirees.” The exemption is offered to registered investment advisers, broker dealers, financial institutions, and insurance companies that “provide fiduciary investment advice to Retirement Investors.”

On October 8, 2021, FINRA urged member firms to review and update their Anti-Money Laundering compliance programs in light of the Financial Crimes Enforcement Network’s recently published priorities on the subject. FinCEN came out with those priorities on June 30, 2021, in accordance with AML Act of 2020, which became law on January 1, 2021.

New FINRA rules for protecting investors from brokers with a significant history of misconduct went into effect on September 1, 2021. The new rules, adopted on March 10, 2021, broaden authority to discipline associated persons, impose stricter supervision on firms, and mandate greater disclosure in various proceedings.

On August 10, 2021, FINRA issued a targeted examination letter alerting firms that the regulator was conducting a review of all activities related to options accounts. In the new examination letter, FINRA requests information on account supervision, communications, and diligence from January 1, 2021, through August 10, 2021 (the date of the letter). Though the due date for the information has not yet been published, firms should begin working to formulate their responses immediately.

The Securities and Exchange Commission announced in a statement yeterday that “21 investment advisers and 6 broker-dealers have agreed to settle charges that they failed to timely file and deliver their client or customer relationship summaries – known as Form CRS – to their retail investors."

The Financial Crimes Enforcement Network (FinCEN) today issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy.

The Securities and Exchange Commission today announced that Gurbir S. Grewal has been appointed Director of the Division of Enforcement, effective July 26, 2021.

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.

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.

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.

In May 2019, Bates Compliance published a review of the supervision, inspection and operational considerations for broker-dealer branch office compliance. Since then, FINRA has broadened its examination priorities, while the COVID-19 pandemic has heightened compliance risks. This updated white paper discusses the responsibilities placed on the supervisors of broker-dealer branches in light of FINRA's broadened priorities and recently updated guidance on remote supervision.

FINRA has announced the publication of the 2021 Report on FINRA's Examination and Risk Monitoring Program. The new Report combines and replaces two previously published annual reports, the Report on Examination Findings and Observations and the Risk Monitoring and Examination Program Priorities Letter.

Just prior to the new year, the SEC finalized significant changes to rules and forms governing advertising and cash solicitations under the Investment Advisers Act, replacing both the prior Advertising Rule and Cash Solicitation Rule with a single, broad, “modernized” marketing rule. The new rule also amends investment adviser registration Form ADV and the books and records rule to reflect the related changes. In this article, we detail key provisions of the new rule and how Bates will help your firm navigate and implement this significant rule change.

On December 15, 2020, the Department of Labor finalized long-considered regulations on investment advice for retirement accounts under ERISA and the Internal Revenue Code. What does this mean for your firm?

FINRA is conducting a targeted review of brokerage firms' systems and procedures for providing customers waivers and rebates available through Rights of Reinstatement (RoR) on mutual fund purchases. As part of this review, FINRA will request each firm that receives this information request respond to certain questions with respect to the period of January 1, 2017 through June 30, 2020.