News - Bates Research

Do The SEC Enforcement Directors’ 2019 Successes Preview Their 2020 Priorities?

Bates Research  |  12-05-19

Do The SEC Enforcement Directors’ 2019 Successes Preview Their 2020 Priorities?

Despite “significant headwinds,” including “adverse” holdings in Supreme Court cases and a significant disruption in Congressional funding in the beginning of the year, Co-Directors of the SEC Enforcement Division Stephanie Avakian and Steven Peikin announced that their efforts in FY 2019 have been successful. In a recently published Annual Report, the Directors described enforcement actions that held wrongdoers accountable, removed bad actors, stopped frauds and prevented losses. Bates Research looks at some key takeaways from their report.

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SEC Zeroes in on Investment Adviser Compensation Conflicts

Bates Research  |  11-21-19

SEC Zeroes in on Investment Adviser Compensation Conflicts

On October 18th, 2019, more than a year after the launch of the SEC Share Class Disclosure Initiative and targeted enforcement activity, the SEC Division of Investment Management issued information clarifying conflicts of interest raised by different types of investment adviser compensation. In a new set of FAQs, SEC staff reviewed general conflicts of interest disclosure requirements and offered insight on the “material facts” that need to be disclosed concerning mutual fund share classes and an adviser’s receipt of revenue-sharing payments. Bates Research takes a closer look.

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FINRA Issues 2019 Report On Exam Findings

Bates Research  |  10-31-19

FINRA Issues 2019 Report On Exam Findings

FINRA issued its annual Report on Examination Findings and Observations on October 16, 2019. Like last year’s Report, the 2019 version highlights selected firm compliance violations and provides “observations” on how firms can improve their programs and address “perceived weaknesses that elevate risk.” Bates Research takes a closer look at FINRA's 2019 priorities and additional compliance concerns raised in the Report.

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New Federal Legislation Progressing on BSA, Beneficial Ownership and Cannabis Financing

Bates Research  |  10-25-19

New Federal Legislation Progressing on BSA, Beneficial Ownership and Cannabis Financing

On September 26, a bipartisan group of Senators introduced a bill to strengthen the authority of the Financial Crimes Enforcement Network (FinCEN) to fight money laundering. Called the ILLICIT CASH Act, the legislation would establish federal reporting requirements for beneficial ownership information. A similar bill, sponsored by Congresswoman Carolyn Maloney, titled the Corporate Transparency Act, passed a vote in the House of Representatives this week. The House also passed its version of the SAFE Banking Act to remove legal uncertainty for regulated banks and credit unions that provide banking services to cannabis businesses. These bills have the potential to significantly impact AML/BSA compliance programs. In this article, Bates Research takes a closer look at their potential impact.

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FinCEN Leaders Highlight Innovation, Identity Information and “Culture” as Keys to AML Approach

Bates Research  |  10-10-19

FinCEN Leaders Highlight Innovation, Identity Information and “Culture” as Keys to AML Approach

In two speeches delivered in September 2019, leaders of the Financial Crimes Enforcement Network (FinCEN) laid out their thinking behind the agency’s current regulatory approach to combatting money laundering and terrorist financing. FinCEN Deputy Director Jamal El-Hindi focused on the future of the BSA and emphasized compliance for NBFIs, while FinCEN Director Kenneth Blanco described the use of financial data to fight money laundering and the abuse of personally identifiable information by bad actors. In this article, Bates Research takes a closer look at FinCEN’s message.

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NASAA Enforcement Report Shows Increased Investment Adviser Actions, Focus on Crypto, Senior Fraud

Bates Research  |  09-26-19

NASAA Enforcement Report Shows Increased Investment Adviser Actions, Focus on Crypto, Senior Fraud

In its 2019 annual enforcement report, the North American Securities Administrators Association ("NASAA") highlighted statistics from its 2018 state enforcement activities. The data show that the state securities regulators secured more than $1 billion in restitution and fines as well as significant criminal penalties. The report also notes that state regulators nearly doubled enforcement actions against investment adviser firms. Here, Bates Research takes a closer look.

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FINRA Requests Feedback on Senior Financial Protection Rules

Bates Research  |  09-19-19

FINRA Requests Feedback on Senior Financial Protection Rules

In a new Regulatory Notice, FINRA is asking its members a series of questions about the utility of rules and processes to curb financial exploitation of senior investors. According to FINRA, the rules under review provide a way for member firms to deal with situations where there is “a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted or will be attempted.”

Bates Research closely follows regulatory and enforcement developments on senior financial fraud. In this article, we recap those rules and consider the questions posed by FINRA in its latest Notice.

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States Sue SEC in Latest Challenge to Reg BI

Bates Research  |  09-12-19

States Sue SEC in Latest Challenge to Reg BI

The SEC’s adoption of the Regulation Best Interest (“Reg BI”) package in June was a defining moment in the long-running debate over the standard of care for broker-dealers and investment advisers. It triggered compliance schedules and required registered broker-dealers and advisory firms to develop internal policies and procedures in order to satisfy the new standards. The passage of Reg BI, however, did not quell the ongoing controversies over the appropriateness and adequacy of standards and investor protections. This week, Reg BI suffered another state challenge, this time in the form of a lawsuit filed against the SEC by seven State Attorneys General. Bates Research takes a closer look.

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NASAA Roundup: Crypto Crackdown, Reg BI, New Warnings on Complex Products

Bates Research  |  08-15-19

NASAA Roundup: Crypto Crackdown, Reg BI, New Warnings on Complex Products

The past few months have been a particularly busy time for state financial regulators and enforcement officials. At almost every turn, the complicated and overlapping relationship between federal and state officials is being tested. A review of recent activities by the North American Securities Administrators Association (NASAA) provides several examples. In this article, Bates recaps recent NASAA developments on cryptocurrency, fraud enforcement, Regulation Best Interest (Reg BI), and supervision of complex financial products (i.e. non-traditional Exchange Traded Funds).

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Variable Annuities Regulatory Update: Will NY’s Reg. 187 Victory Impact SEC, NAIC Proposals?

Bates Research  |  08-08-19

Variable Annuities Regulatory Update: Will NY’s Reg. 187 Victory Impact SEC, NAIC Proposals?

Last week, the New York Supreme Court upheld the “Suitability and Best Interest in Life Insurance and Annuity Transactions” regulation (a/k/a Regulation 187) in the face of legal challenges brought by several associations and insurance agent groups. In this article we take a look at what the decision means, recent developments in both the SEC and NAIC efforts to rewrite standards, and we update you on the latest in the legal battle over commission trails for brokers selling variable annuities.

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