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News & Events – Compliance and Regulatory Alerts

Are Your Firm’s Policies and Procedures Working as Intended for Rights of Reinstatement?

11-16-22

Are Your Firm’s Policies and Procedures Working as Intended for Rights of Reinstatement?

FINRA has remained focused on ensuring that eligible customers received Rights of Reinstatement (“ROR”) benefits where appropriate. Just recently, we were retained by another large firm looking to leverage the depth of our experience gained through many engagements assisting our clients with Rights of Reinstatement issues since the targeted examination announcement in 2020. Contact Bates today if you are facing a FINRA inquiry or other action or need to update your policies and procedures.

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Newly Proposed SEC Rule Would Impose New Requirements on IAs to Oversee Outsourced Providers

11-07-22

Newly Proposed SEC Rule Would Impose New Requirements on IAs to Oversee Outsourced Providers

Under a proposed new rule, the SEC would require investment advisers to conduct due diligence and monitor “covered services” outsourced to third-party providers. The Commission said it recognizes that investment advisers are increasingly relying on outsourced sources to perform many functions in support of advisory services and, as a result, “more needs to be done to protect investors.” Bates breaks down what you need to know.

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SEC Proposes Amendments to ESG Disclosure Rules and Forms

05-31-22

SEC Proposes Amendments to ESG Disclosure Rules and Forms

The SEC last week issued a proposal to require “registered investment advisers, certain advisers exempt from registration, registered investment companies, and business development companies” to disclose information on environmental, social and governance (“ESG”) investment practices and strategies in fund registration statements, prospectuses, annual reports, and adviser brochures. The 362-page proposal contains new disclosure requirements and would amend numerous Forms for funds and advisers.

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SEC Exams Division Warns Firms to Tighten Up Compliance on the Misuse of Material Non-Public Information

05-05-22

SEC Exams Division Warns Firms to Tighten Up Compliance on the Misuse of Material Non-Public Information

On April 26, 2022, the SEC Division of Examinations urged investment advisers to revisit their compliance policies, practices, and procedures concerning the misuse of non-public information (MNPI). In the Risk Alert, the SEC (i) reviewed the applicable Investment Adviser Act rules and ethical code considerations and (ii) described compliance deficiencies observed by the Division during its recent examinations.

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SEC Proposes New Disclosure Rules on Climate Change

04-12-22

SEC Proposes New Disclosure Rules on Climate Change

In a broad new rule proposal, the Securities and Exchange Commission would require both domestic and foreign registrants to provide climate-related information in their filings and periodic reports. The deadline for comments is May 20, 2022. Read the full alert for details.

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FINRA Clarifies and Cautions Firms on Potential Supervisory Liability of Chief Compliance Officers

04-07-22

FINRA Clarifies and Cautions Firms on Potential Supervisory Liability of Chief Compliance Officers

In a reminder to (i) firm management on their supervisory obligations under FINRA Rules, and (ii) Chief Compliance Officers on their potential liability within a firm’s supervisory system, FINRA distinguished between the two in a recent Notice and detailed how it would make liability determinations on an enforcement action against a CCO for a failure to reasonably supervise. Read our Alert for details on FINRA's new guidance on CCO supervisory liability and what it could mean for your firm and clients.

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SEC Division of Examinations Announces 2022 Examination Priorities
Image © [Kristina Blokhin] /Adobe Stock

03-30-22

SEC Division of Examinations Announces 2022 Examination Priorities

The SEC Division of Examinations has just released its 2022 examination priorities report, focusing on Private Funds, ESG Investing, Standards of Conduct (including Regulation Best Interest, Fiduciary Duty, and Form CRS), Information Security and Operational Resiliency, and Emerging Technologies and Crypto-Assets. Stay tuned for our annual commentary, coming soon.

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SEC Targets More Firms for Form CRS Failings: Is Your Firm Next?

02-28-22

SEC Targets More Firms for Form CRS Failings: Is Your Firm Next?

In a press release touting twelve additional enforcement actions against firms for failing to provide complete information on, file, or deliver Form CRS to retail investors, the SEC announced settlements against six investment advisers and six broker-dealers. That message underscores the agency’s intention to hold firms accountable for making these disclosures. Read our Alert for details on the SEC's findings, the settlements, and what they could mean for your firm and clients.

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SEC Exam Division Issues Alerts on Robo-Advisory Services and IA Fee Calculations Upon Finding Deficiencies

12-02-21

SEC Exam Division Issues Alerts on Robo-Advisory Services and IA Fee Calculations Upon Finding Deficiencies

This month, the SEC Division of Examinations issued two alerts based on staff findings from recent examination initiatives. The first concerned advisers that offer automated digital investment services to their clients. The initiative was based on increases in the number of advisers operating, recommending or sponsoring discretionary robo-investment services. The targeted examination revealed widespread disclosure and supervisory deficiencies in these services. The second risk alert was a follow-up to previously issued guidance on fee-related deficiencies, compliance and disclosure issues. This new alert is based on a national exam initiative focusing on the calculation of advisory fees charged to retail clients and the adequacy of fee disclosures.

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SEC FY2021 Enforcement Division Recap: Regulators Tout Expanded Scope and Impacts, Including “First-of-Their-Kind” Prosecutions

11-23-21

SEC FY2021 Enforcement Division Recap: Regulators Tout Expanded Scope and Impacts, Including “First-of-Their-Kind” Prosecutions

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.

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DOL Extends Non-Enforcement Compliance Relief for Certain Prohibited Transaction Exemptions

11-04-21

DOL Extends Non-Enforcement Compliance Relief for Certain Prohibited Transaction Exemptions

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.”

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FINRA Warns Firms to Pay Attention to FinCEN AML Priorities

10-21-21

FINRA Warns Firms to Pay Attention to FinCEN AML Priorities

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.

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Contact Bates Group

Bates Group is with you every step of the way. Contact us today for more information on how our End-to-End Solutions can help your firm.