News - Bates Research

Bates News, Bates Research  |  02-21-19

Latest Developments in Variable Annuities and Life Insurance

In our last review of developments concerning variable annuities and life insurance, Bates discussed the SEC’s issuance of a comprehensive new rule proposal intended to create a “layered disclosure approach” for regulating these products. That proposal was issued against the backdrop of an ongoing debate among state insurance regulators on revising model legislation on “Suitability in Annuity Transactions.” The National Association of Insurance Commissioners (NAIC) remains determined to create these standards and procedures for providing suitable recommendations to consumers, despite the likely impact and continuing uncertainty created by the unresolved SEC proposed Best Interest rulemaking.  

In this article, we update the most recent SEC action on variable contract disclosure as well as some important private sector activity, notably Ohio National Financial Services’ (“Ohio National”) strategic decision to pull out of the market for variable annuities.

Bates News, Bates Research, Compliance and Regulatory Alerts  |  02-13-19

The State of Play on Cryptocurrency Regulation

For legislators and regulators, writing rules for crypto-related assets requires balancing the tension between innovation and entrepreneurship, and between sound markets and investor protection. Bates Research has previously described some of the definitional challenges which directly affect which agencies govern crypto assets. In this article, we review recent developments in the ongoing debate over regulating crypto, including legislative proposals, and regulatory activity by leadership at the SEC, the CFTC and FINRA.

Bates News, Bates Research  |  02-07-19

New Congress, New Priorities for Financial Services in 2019

The priorities of the congressional committees that oversee financial services are changing. The contours of that change are beginning to take shape as Democrats take control in the House of Representatives and leadership from both parties announce committee assignments. This article takes a look at the agendas of Representative Maxine Waters (D-CA), the new Chair of the House Financial Services Committee, and Senator Mike Crapo (R-Idaho), Chair of the Senate Banking Committee. Their dynamic will set the stage for potential political confrontation, possible bipartisan legislation, and certain administrative and regulatory oversight impacting the financial services industry.

Bates News, Bates Research  |  01-24-19

FINRA Highlights Online Platforms, Mark-Up Disclosure & Compliance, RegTech in 2019 Exam Priorities

In his latest annual priorities letter to members, FINRA Chief Executive Officer Robert Cook emphasized that FINRA will be monitoring firm developments “to identify risks and assess their prevalence and impact.” He noted that the 2019 letter highlights new areas of focus that will allow member firms to determine whether certain issues “are relevant to their businesses” and how they might be best addressed. In addition, Mr. Cook explicitly stated that these highlighted areas do not affect the ongoing monitoring and enforcement efforts detailed in previous priorities letters. In this article, Bates will review the highlights from FINRA’s newly released 2019 Risk Monitoring and Examination Priorities Letter. We once again list and compare the new priorities to preceding years in the attached Bates’ 2019 FINRA Chart.

Bates News, Bates Research  |  01-22-19

FINRA Announces 2019 Regulatory and Examination Priorities

FINRA has announced their regulatory and examination priorities letter for 2019.

Bates News, Bates Research  |  01-17-19

New FINRA Report Details Effective Practices for Broker-Dealer Cybersecurity Compliance

Right before the new year, FINRA published a report on specific cybersecurity compliance concerns raised in recent broker-dealer examinations. The report provides important guidance for broker-dealers to ensure that their compliance programs adequately address particular risks. Specifically, FINRA highlights best practices among firms on (i) branch office controls; (ii) limiting phishing attacks; (iii) mitigating insider threats; (iv) testing compliance networks for security weakness; and (v) controlling risks related to mobile devices. In this article, Bates reviews these elements and what they may mean for your compliance program.

Bates News, Bates Research  |  01-03-19

OCIE to Prioritize Protection of Retail Investors in 2019 Examinations

The SEC Office of Compliance Inspections and Examinations ("OCIE") will prioritize risks to retail investors in this year’s examinations. That concern is a distinguishing highlight of a new report summarizing OCIE assessments of regulatory issues, market risks and policy developments.

Additional featured priorities include continuing risks and concerns related to fee disclosures, share class, and wrap fee programs, anti-money laundering, cybersecurity, digital assets, FINRA and MSRB operations, and issues of compliance by registrants involved in critical market infrastructure. In this article, we review the new report, contrast this year’s priorities with those of the past few years in our annual Bates year-to-year SEC OCIE priorities chart, and consider some implications so that firms might better prepare and, if necessary, adjust their compliance systems accordingly.

Bates Research  |  12-21-18

SEC Office of Compliance Inspections and Examinations Announces 2019 Examination Priorities

SEC Office of Compliance Inspections and Examinations (OCIE) has announced their exam priorities for the upcoming year. You can read the press release here.

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.

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.