Whitepapers

The Ins and Outs of Outsourcing Compliance

Compliance is one extremely important element of operating a registered investment adviser (RIA) or broker-dealer, and many financial services professionals fall short in this area. For that reason, firms should decide whether outsourcing compliance is worthy of consideration. As they make this decision, firms should recognize that there are many options available, not just outsourcing the chief compliance officer (CCO) position. In this excerpt from Modern Compliance Volume II: Best Practices For Securities & Finance, Mark Alcaide explores how outsourcing can benefit RIAs and broker-dealers.

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Ignore the SEC’s Advertising Risk Alert at Your Own Risk

The SEC periodically publishes Risk Alerts to highlight compliance problems identified by its Office of Compliance Inspections and Examinations (“OCIE”). Registered Investment Advisers (“RIAs”) should take note of these risks as they strengthen their compliance policies and procedures. On September 14, 2017, OCIE released a Risk Alert, which identified the most frequent Advertising Rule compliance issues uncovered by examiners during their examinations.

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What Are a FINOP’s Real Duties?

Most people think that a Financial and Operations Principal (“FINOP”) deals only with filing FOCUS reports and/or computing net capital, but a FINOP is so much more. Rule 10221 requires that all broker-dealers have a FINOP and sets forth the registration requirements for persons in this role. In addition, rules relative to the registration of certain officers of a firm state that the broker-dealer must designate a Chief Financial Officer (“CFO”) and that the CFO must hold a FINOP registration.

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SEC Announces Initiative to Fight Cyber Threats and Protect Retail Investors

On October 26, 2017, Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, gave a speech which discussed the Commission’s initiative related to retail investor protection and cybersecurity. The speech gave an overview of how the SEC is allocating resources to further address two of its more critical priorities, protecting retail investors and combating cyber threats.

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Article: Cyber SAR – Does the Securities and Futures Industry Get It?

In October, 2016, Department of Treasury’s Financial Crimes Enforcement Network (FINCEN) published an advisory (the “October Advisory”) directing financial institutions to start reporting “cyber-enabled crime and cyber-events” through SARs, making the reporting of those connections mandatory. The significance of the “cyber-enabled crime” restatement for firms is its guidance on what cyber-crime related data must be included in the SAR: the broadening of the reporting requirement to include “cyber-events.”

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The DOL’s Fiduciary Rule: Impact on Financial Advisers

On April 8, 2016, the Department of Labor (“DOL”) released the final version of its regulation that defines who is a fiduciary under the Employee Retirement Income Security Act of 1974 (“ERISA”).  The “Conflict of Interest Rule” broadens the scope of retirement investment professionals who are deemed ERISA fiduciaries and broadens the categories of service providers who will become ERISA fiduciaries with respect to employee benefit plans and Individual Retirement Accounts (“IRAs”), as defined under the Internal Revenue Code of 1986 (the “Code”).

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The Diligent CCO: What to Do When the Firm Disagrees

As Featured in Investment Management Consultants (IMCA) Newsletter, January/February 2016 The Securities and Exchange Commission (SEC or Commission) Office of Compliance Inspections and Examinations (OCIE) staff recently summarized its views regarding the qualities investment advisors should expect in a chief...

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Successful Breakaway Requires Planning

by Rita Dew, Esq., Co-CEO and Founder and Alan Foxman, Esq., Senior Consultant The financial turmoil of the last decade, and particularly the 2008 financial crisis, have left many financial advisers questioning whether working for a traditional Wall Street brokerage...

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Do CCOs, IARs, and RIAs Have Targets on their Backs?

by Les Abromovitz, Senior Consultant It should not take an enforcement action for Registered Investment Advisers (“RIAs”), Investment Adviser Representatives (“IARs”), and Chief Compliance Officers (“CCOs”), to learn that certain misconduct will be dealt with harshly by securities regulators. When...

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Liability Exposure of Chief Compliance Officers

by Rita Dew, Esq., Co-CEO and Founder Chief Compliance Officers (“CCOs”) for Registered Investment Advisers (“RIAs”) take on an enormous amount of responsibility. Compliance missteps can expose CCOs to liability, regulatory sanctions, and serious damage to their careers. CCOs can also...

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SEC’s Never-Before Examined (NBE) RIA Compliance Outreach Program

by Alan Foxman, Esq., Senior Consultant The Securities and Exchange Commission’s (SEC or Commission) Office of Compliance Inspections and Examinations (OCIE) has launched a compliance initiative directed at investment advisers that have never been examined (NBE), focusing primarily on those...

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Weighing the Benefits of Outsourcing Compliance

by Rita Dew, Esq., Co-CEO and Founder To many, the word “outsourcing” evokes the negative image of jobs shipped overseas. Yet a growing trend of outsourcing compliance greatly benefits Registered Investment Advisers (RIAs). Outsourcing permits RIAs and Investment Adviser Representatives (IARs)...

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Five Warning Signs of an SEC Audit

by Rita Dew, Esq., Co-CEO and Founder Merely mentioning the words “compliance exam” is enough to frighten the owners of registered investment advisory firms and their compliance officers. Discussing the exam process can trigger nightmares of compliance deficiencies, regulatory fines, disciplinary...

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RIA Registration

This summary was designed by NCS Regulatory Compliance to assist you with some of the issues involved when making your decision as to whether you need to become registered as an investment adviser. This summary will briefly describe the RIA registration process,...

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