News & Events –

During the current crisis, the challenge for financial firms and investors is to keep on top of the latest communications from regulators, understand what is actionable and what is not, and ensure that compliance and supervision processes are in place to manage the crisis. Here’s a recap of the latest compliance guidance, regulatory assistance and relief offered by the SEC, FINRA, NFA and MSRB.

Bates Group has been tracking regulatory and enforcement developments on senior financial exploitation. Two recent publications and recent sweeping enforcement actions suggest that the phenomenon is becoming better understood and addressed. FinCEN published a strategic analysis after reviewing SARs filings over a six-year period, and NASAA has issued a statement and legislative update based, in part, on an enforcement analysis showing that the Model Act to Protect Vulnerable Adults is gaining traction. The Department of Justice, FBI and Postal Inspector jointly announced the results of “the largest coordinated sweep of elder fraud cases in history.” Bates Research takes a closer look.

If you’ve been in meetings about investor communications, business travel, or other contingency planning over the past few days and weeks, you are not alone. Since the outbreak of the coronavirus (also referred to as COVID-19) and more recently, the precipitous volatility of the financial markets, financial firms have been deluged with questions from just about every stakeholder group about how to respond. Regulators are weighing in as well. Bates looks at some of the efforts to prepare and reassure everyone out there.

As the June 30, 2020, date for compliance with the Regulation Best Interest (“Reg BI”) draws near, federal and state regulators are increasingly vocal in warning market participants about how they should treat client investors. Fortunately, the regulators have provided a constant flow of guidance and resources designed to help firms prepare.

On February 3, 2020, the New York County Lawyers Association hosted its “21st Annual FINRA Listens and Speaks” panel. The panel members discussed recent statistics, proposed regulations, and tips for counsel and arbitrators on the agency’s dispute resolution efforts. Bates takes a closer look at what you need to know. 

On the heels of their 2020 examinations priorities report, OCIE has issued a new report on “Cybersecurity and Resiliency Observations” to reemphasize that cybersecurity is a top examination priority and that registered entities should be assessing their practices and procedures to ensure adequate compliance. Bates Research takes a closer look at what OCIE wants you to know.

Bates Group is alerting counsel that we are seeing cases filed where firms sold private funds issued by GPB Capital Holdings LLC. It is alleged that firms selling these funds were negligent and failed to perform adequate due diligence when approving these funds for sale, misrepresented and omitted material information when recommending and/or selling these funds to their clients, had conflicting interests in selling the GPB Capital Funds, negligently supervised the sale of these funds and breached the fiduciary duty owed to their clients. 

The Treasury Department’s Office of Comptroller of the Currency (OCC) issued an Annual Report to Congress highlighting the past year’s BSA and AML efforts and setting out strategic priorities and policy initiatives for the new year. The Comptroller says he wants to reduce the burden of BSA and AML compliance, while protecting the financial system. Bates Research takes a closer look at the OCC report and other recent AML-related developments.

In his cover note accompanying FINRA’s annual Risk Monitoring and Examination Priorities letter, FINRA President and CEO Robert Cook reminded members of significant enhancements to the examination program going forward. Bates Research has analysis, commentary and highlights of FINRA’s continuing and emerging concerns, along with our 2020 FINRA chart, which keeps track of articulated priorities from year to year.

Understand what Reg BI requires now — and what more you must implement before the final deadline. Download our new white paper: "SEC’s Regulation Best Interest Perspectives on Firm Compliance."

The SEC Office of Compliance Inspections and Examinations ("OCIE") set out their 2020 examinations priorities in an annual report issued last week. The report reminds registered entities that all its priorities are within the SEC’s mandate to protect investors, facilitate capital formation, and maintain fair, orderly and efficient markets. The report is, in effect, a notice to the industry and chief compliance officers to address potential vulnerabilities in compliance programs and practices in order to minimize retail investor and market risks. Bates Research takes a closer look.

FINRA has announced their regulatory and examination priorities for the upcoming year. New for this year is a focus on Regulation Best Interest (Reg BI) and Form CRS (Client Relationship Summary).

Bates Group continues to track a host of issues affected by the adoption of Regulation Best Interest (“Reg BI”), the 2019 package of rules and interpretations from the SEC setting standards of conduct for broker-dealers and independent advisers. These include a variety of state responses to the federal regulation, as well as Reg BI impacts on issuers of other complex financial products sold through brokers and advisers, specifically, recommendations to consumers on transactions involving annuity products. This week, Bates Research takes a look at some of the latest developments by the Massachusetts Securities Division and the National Association of Insurance Commissioners (“NAIC”).

The SEC's Office of Compliance Inspections and Examinations has announced their exam priorities for the upcoming year. Stay tuned to the Bates News page in the upcoming weeks for our expert commentary on the SEC's 2020 objectives

A key to understanding new BSA guidance on the “legal status of commercial growth and production of hemp” can be found in provisions of the Farm Bill signed into law in December of last year. That legislation distinguished and removed hemp (though not marijuana) as a controlled substance under law, and interim rules, issued by the USDA in late October 2019, established a federal licensing approval plan that allows state departments of agriculture and tribal governments to submit plans for monitoring and regulating hemp production. Given this context, the Federal Reserve Board, the FDIC, FinCEN, the OCC and the Conference of State Bank Supervisors issued a statement clarifying BSA obligations under these new USDA interim rules. Bates Research takes a closer look.

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.