There is an old saying that a picture is worth a thousand words. Unfortunately, pictures can convey noncompliant messages that will cause compliance problems for Registered Investment Advisers (“RIAs”). Among other prohibitions, the Advertising Rule prohibits testimonials and content that is false or misleading in any way.
Read MoreOn May 22, DOL Secretary Alexander Acosta announced that the components of the Fiduciary Rule scheduled to go into effect on June 9th will go effective on that date without further delay.
Effective June 9, 2017, advisers providing advice to traditional and defined contribution plans, such as 401(k) plans, as well as to plan participants and to those who save through IRAs, will be treated as fiduciaries under the Fiduciary Rule and have an obligation to adhere to “Impartial Conduct Standards”.
The Impartial Conduct Standards consist of three components:
NCS Regulatory Compliance has made available a Rollover Suitability Form to assist firms with complying with the Impartial Conduct Standards, which is found in the Library of NCS-Connect (under DOL Fiduciary Rule). Compliance with the remaining conditions in the exemptions provided under the Rule (including the Best Interest Contract exemption), such as requirements to make specific written disclosures and representations of fiduciary compliance in communications with investors, are not required until Jan. 1, 2018.
Although written policies and procedures are not required under the Rule for most RIAs, NCS Regulatory Compliance recommends that RIAs impacted by the Rule adopt policies and procedures as a best practice to help ensure compliance with the Rule. NCS Regulatory Compliance will be providing updates to ERISA policies and procedures to clients impacted by the Rule. In the meantime, if you have specific questions or concerns relating to the Fiduciary Rule, please contact your NCS Regulatory Compliance Consultant.
The DOL will continue their review of the Fiduciary Rule beyond the June 9th effective date and the possibility remains that modifications could be adopted prior to the Rule’s full implementation on January 1, 2018. We will continue to monitor the status of the DOL’s Fiduciary Rule and keep you informed of any developments.
Read MoreOversight of Registered Investment Advisers (“RIAs”) and broker-dealers is a huge undertaking.
Read the full article from the March 2017 issue of NSCP Currents by Les Abromovitz.
Read MoreIn February, 2017, the SEC provided guidance regarding robo-advisers, a term that refers to an automated digital investment advisory program. The guidance is important to all Registered Investment Advisers (“RIAs”), even if they are not incorporating a digital platform in their business model.
Read MoreThere is an investment adage that says “The trend is your friend.” Investment advisers sometimes look at trend activity as part of their analysis of which securities to trade. Compliance trends can also be your friend if a Registered Investment Adviser (“RIA”) is attempting to enhance its compliance program. RIAs should take note of compliance trends to ensure their firms are compliant. A recent Risk Alert from the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) highlighted five compliance topics that were most frequently cited by examiners in deficiency letters sent to RIAs after their examinations.
Read MoreOn February 7, 2017, OCIE published a Risk Alert, which lists the five compliance topics that were identified most frequently in deficiency letters sent to RIAs. OCIE’s list was compiled from more than one thousand deficiency letters involving RIAs registered with the Commission. These deficiency letters related to examinations conducted during the previous two years. The problems most frequently encountered by examiners pertained to the compliance topics detailed in this alert.
Read MoreOversight of Registered Investment Advisers (“RIAs”) and broker-dealers is a huge undertaking. When the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its 2017 priorities, the publication noted that OCIE oversees more than 4,000 broker-dealers, including roughly 162,000 branch offices and 640,000 registered representatives. OCIE also oversees more than 12,000 investment advisers with a growing number of branch offices.
Read MoreFINRA released last week their annual Examination Priorities Letter for 2017. We put together a brief synopsis for you to get a better understanding of the priorities and what they mean to your Firm and your business. Again this year, Sales Practices dominate their priorities. http://www.finra.org/sites/default/files/2017-regulatory-and-examination-priorities-letter.pdf
Read MoreIn November, 2016, the SEC’s Division of Investment Management staff published guidance regarding Registered Investment Adviser (“RIA”) reliance on a predecessor’s registration. The guidance addressed situations where an RIA may be able to rely on the special registration provisions afforded to successors.
Read MoreThe Dodd-Frank Act established a whistleblower program that authorizes the SEC to reward individuals who voluntarily provide the Commission with original information about a violation of federal securities laws. Before the Dodd-Frank Act was passed, the SEC’s authority to compensate whistleblowers was limited to insider trading cases. A whistleblower is defined as any individual who provides the SEC with original information related to a possible violation of federal securities law that has occurred, is about to occur, or is ongoing.
Read MoreDelray Beach, Fl – November, 2016 – When the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its priorities for 2016, the Commission warned that higher-risk Registered Investment Advisers (“RIAs”) were more likely to be examined. Focusing on high-risk firms enables the SEC and state securities regulators to make the most effective use of their resources. Firms that pose the greatest threat to retail investors and individuals saving for retirement are likely to be on the SEC’s radar.
Read MoreDelray Beach, Fl – October, 2016 – On August 25, 2016, the SEC announced penalties against thirteen Registered Investment Advisers (“RIAs”) that violated securities laws by disseminating false performance claims made by F-Squared Investments, an investment management firm. The SEC conducted an enforcement sweep of RIAs and found that these thirteen firms did not question F-Squared’s claims that its AlphaSector strategy had outperformed the S&P 500 index for a number of years. The firms passed along the performance claims made by F-Squared to investors without substantiating the results.
Read MoreDelray Beach, Fl – September, 2016 – An Olympic swimmer recently admitted that he “over-exaggerated” his story about being robbed after a night of celebration in Rio. “Over-exaggeration,” or any exaggeration for that matter, is just one of many misstatements that can cause an investment adviser’s advertisements to be noncompliant.
Read MoreDelray Beach, Fl – August, 2016 – The Form ADV Part 2 disclosure brochure is a narrative that must be written in plain English. The disclosure brochure describes a firm’s advisory services, compensation, experience, conflicts of interest, investment strategy, and a wealth of other important information. Recent enforcement actions demonstrate that the SEC will sanction Registered Investment Advisers (“RIAs”) that fail to make full and accurate disclosure in their firms’ Form ADV.
Read MoreDelray Beach, Fl – July, 2016 – The late New York Yankee legend, Yogi Berra, said that “baseball is 90 percent mental, and the other half is physical.” Registered Investment Advisers (“RIAs”) are required to be much more precise with their calculations, especially in regard to advisory fees. Miscalculating those fees is likely to cause problems with clients and examiners.
Read MoreDelray Beach, Fl – June, 2016 – Recent speeches and public statements made by SEC officials indicate that the Commission is still focused on cybersecurity. Registered Investment Advisers (“RIAs”) and broker-dealers would be wise to take note of those pronouncements and should make certain they are using their best efforts to defend their firms against cyber-attacks.
Read MoreDelray Beach, Fl – May 2016 – As Registered Investment Advisers (“RIAs”) attempt to grow their business, they often consider whether to use solicitors. RIAs should be aware of the compliance obligations they will face if they choose to use solicitors. These compliance requirements are dependent upon where the RIA and the solicitor are located, as well as the particular facts and circumstances surrounding their relationship.
Read MoreDelray Beach, Fl – May, 2016 – Issuers are often bewildered by the myriad “Dos” and Don’ts” of raising equity capital for their young firms. Their attention span does not last far into an explanation of the rules and how and why they came about. Often the first mention of the ’33 Act loses their interest. Title III of the JOBS Act required the SEC to come up with a solution to allow issuers and investors to come together under less onerous and modern terms. The SEC’s answer is Regulation CF.
Read MoreDelray Beach, Fl – Apr. 2016 – The final version of the Department of Labor’s fiduciary rule was released on April 6, 2016. According to Labor Secretary Thomas Perez, the final version of the 1,028 – page rule was streamlined. Though the final version of the fiduciary rule was revised in response to industry concerns, it is still likely to have a dramatic impact on Registered Investment Advisers (“RIAs”), broker – dealers, insurance agents, and financial institutions.
Read MoreDelray Beach, Fl – Mar. 2016 – On January 14, 2016, the SEC announced that it had settled an enforcement action against an Ohio-based Registered Investment Adviser (“RIA”) and two of its officers who were licensed registered representatives of a broker-dealer. The SEC alleged that the RIA violated sections 204, 206(2), 206(4) and 207 of the Investment Advisers Act, as well as Rules 204(a), 204-3(b)(1) and (2), and 206(4)-7 thereunder. The RIA’s president and majority owner, as well as its Chief Operating Officer and minority owner, were accused of violating or causing these violations of the Investment Advisers Act and its rules.
Read MoreDelray Beach, Fl – Feb. 2016 – The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) revealed its 2016 examination priorities on January 11, 2016. These examination priorities affect a number of financial institutions, including Registered Investment Advisers (“RIAs”), broker-dealers, transfer agents, and clearing agencies.
Read MoreDelray Beach, Fl – Jan. 2016 – The new year is a perfect time for resolutions and not just the standard pledge to lose weight or exercise more. Chief Compliance Officers (“CCOs”) should consider making resolutions that will help their firms to stay compliant.
Read MoreDelray Beach, Fl – Dec. 2015 – The SEC and other securities regulators know they cannot catch every noncompliant activity that might harm investors. Enforcement actions help securities regulators send a message to Registered Investment Advisers (“RIAs”), Chief Compliance Officers (“CCOs”), and Broker-Dealers (“BDs”) that noncompliance and recidivist violations will not be tolerated.
Read MoreWashington, D.C. – Nov. 9, 2015 – NCS and Regulatory Compliance employ a comprehensive compliance process with Outsourced CCO clients, including frequent communication and onsite visits, which are designed to address the SEC staff observations regarding effective outsourced CCOs.
Read MoreWashington, D.C. – Nov. 4, 2015 – NCS and Regulatory Compliance exhibited and spoke at the recent 2015 NSCP conference where Director, Division of Enforcement for the SEC, Andrew Ceresney, gave a keynote address discussing the Enforcement’s perspective on compliance officers and how enforcement cases that touch compliance personnel are approached.
Read MoreNew York – Oct. 27, 2015 – National Compliance Services Inc. (NCS) and Regulatory Compliance LLC, two of the nation’s longest-serving regulatory compliance consulting leaders, announced today they have signed a definitive agreement to merge. This strategic combination creates a single source of compliance consulting services and solutions for registered investment advisers (RIAs), broker-dealers (BDs), hedge funds and other financial services clients.
Each with 20+ years of experience in the registration and compliance consulting space, the two privately held companies have enjoyed strong growth in recent years, fueled by an increasingly demanding regulatory environment and the trend toward investment advisory independence.
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