News - Bates Research

FINRA Issues 2018 Report on Examination Findings

Bates News, Bates Research  |  12-13-18

FINRA Issues 2018 Report on Examination Findings

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.

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Compliance in the Age of Robo Investment Advice

Bates News, Bates Research  |  12-06-18

Compliance in the Age of Robo Investment Advice

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.

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Best Practices When Working with Expert Witnesses

Bates News, Bates Research  |  11-29-18

Best Practices When Working with Expert Witnesses

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.

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The Regulatory Landscape is Changing for Variable Annuity and Life Insurance Contracts

Bates News, Bates Research  |  11-08-18

The Regulatory Landscape is Changing for Variable Annuity and Life Insurance Contracts

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.

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Federal Trade Commission Reports on Senior Consumer Fraud

Bates News, Bates Research  |  10-31-18

Federal Trade Commission Reports on Senior Consumer Fraud

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.

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SEC Finalizes Its Four-Year Strategic Plan

Bates News, Bates Research  |  10-25-18

SEC Finalizes Its Four-Year Strategic Plan

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.

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New York DFS Asserts Itself in National Annuities Standards Debate

Bates News, Bates Research  |  10-18-18

New York DFS Asserts Itself in National Annuities Standards Debate

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.

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NASAA Update: New Leadership, Cybersecurity Model Act for IAs and Heightened Supervision for BDs

Bates News, Bates Research  |  10-04-18

NASAA Update: New Leadership, Cybersecurity Model Act for IAs and Heightened Supervision for BDs

On September 25th, Michael S. Pieciak, Commissioner of the Vermont Department of Financial Regulation, took the reins as the 101st president of the North American Securities Administrators Association (“NASAA”). That same day, NASAA’s Investment Adviser Section proposed a model rule that would require investment advisers to adopt policies and procedures regarding information security. NASAA also published the results of a series of “coordinated examinations of broker-dealer firms” that reviewed the heightened supervision plans of firms for registered representatives. Bates Research takes a closer look at these developments.

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FINRA Report Cites Greater Use of RegTech, Warns of Regulatory Implications

Bates News, Bates Research  |  09-20-18

FINRA Report Cites Greater Use of RegTech, Warns of Regulatory Implications

Despite RegTech’s “potential to fundamentally transform how securities industry participants perform their compliance obligations,” RegTech tools also raise “new challenges and regulatory implications” that affect “supervision, vendor management, data privacy and security.” That is the explicit assumption underlying a new FINRA white paper summarizing the results of the SRO’s extensive outreach on the subject. Bates Research takes a closer look.

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New Education Requirements on the Horizon for Broker Dealers and (Maybe) Investment Advisers

Bates News, Bates Research  |  09-13-18

New Education Requirements on the Horizon for Broker Dealers and (Maybe) Investment Advisers

FINRA is seeking input on proposed changes to the Securities Industry Continuing Education Program just as the SEC is considering responses to its request for comments on whether investment advisers should be subject to similar obligations. IAA President Karen Barr and NASAA President Joseph Borg have both submitted comments to the SEC. Bates Research has the latest developments.

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