RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of March 4, 2017

Posted by RIA in a Box

Mar 10, 2017 1:42:55 PM

IAA DOL fiduciary rule delay and 3rd party audits

Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser ("RIA") compliance and regulatory issues. This week's recap focuses on the Department of Labor ("DOL") fiduciary rule delay, more targeted Securities and Exchange Commission ("SEC") exams for RIA firms, and a looming anti-money-laundering ("AML") rule. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of March 4, 2017:

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  1. Ron Rhoades: DOL Fiduciary Rule Is as Good as Dead (for Now)(Author- Jane Wollman Rusoff, Think Advisor)

Think Advisor's Jane Wollman Russoff reports on her interview with Ron Rhoades, fiduciary law expert and one of our top 5 DOL fiduciary rule experts to follow. Rhoades told Think Advisor in the recent interview that "the Labor Department's fiduciary standard rule is as good as dead." In the interview, Rhoades "discusses the challenges faced by advocates of the 'DOL' rule - which addresses FAs advising retirement accounts - in view of the new administration's anti-regulatory stance." In addition Rhoades touches on the future of the DOL rule and "the obstacles to raising awareness about the DOL rule." However, Rhoades does note that "four years from now, in all likelihood, we’ll have another shot at it." 

  1. SEC adviser exams will take a deeper dive into risk (Author- Kenneth Corbin, Financial Planning)

As reported be Kenneth Corbin, "the Securities and Exchange Commission ('SEC') Office of Compliance Inspections and Examinations ("OCIE") has been dramatically retooling its approach to registered investment adviser exams." In order to streamline their efficiency and increase the number of firms examined per year, the SEC has "moved away from the type of practice exam where the examiners would scour all areas of the firm in an exhaustive review. Instead, 'OCIE' has been 'going in with targeted, shorter, more narrow, but deep dives in particular high-risk areas that we're publishing in our priorities," says Peter Driscoll, OCIE's acting director. Due to the increased popularity of the RIA business model, the SEC has had to increase their audit efficiency in order to keep up with the growing number of firms. According to Corbin, "last year, adviser exam staff only reached 11% if the advisers registered with the commission." However, with the ongoing OCIE RIA examination program restructuring, "examiners have already been able to reach substantially more advisers this year than at this same point last year."

  1. Wall Street Cops Reined In as SEC Braces for Trump Budget Cuts (Author- Matt Robinson and Benjamin Bain, Bloomberg)

As reported by Matt Robinson and Benjamin Bain of Bloomberg, the SEC is bracing for deep spending cuts and reductions per President Donald Trump's budget proposal. Several of the current cuts include a 'ban on non-essential travel," an "imposed hiring freeze" and "curbing the use of outside contractors who assist SEC lawyers with cases." However on the contrary, Chris Carofine, a spokesman for the SEC’s acting chairman, Michael Piwowar, denied that the acting chairman had directed any agency division to make budget cuts or curtail spending. The authors note that Piwowar has previously stated that the "SEC should review how it allocates resources, particularly because the agency’s funding might be cut." 

  1. Anti-money laundering rule looms for advisers (Author- Kenneth Corbin, Financial Planning)

Kenneth Corbin reports that "in the current deregulatory environment, investment advisers might expect a reprieve from new federal compliance rules. But one exception is the proposal for an anti-money-laundering regulation, which experts believe is likely to become the law of the land, bringing with it a significant new compliance responsibility." Previously, the Treasury Department proposed "extending the requirement to maintain a formal anti-money-laundering ("AML") program under the Bank Secrecy Act to 'SEC'-registered investment advisers." This formal AML program would require advisers to establish policies and procedures to identify questionable activity. The regulatory freeze imposed by President Donald Trump "held out certain expectations, including emergency situations and areas implicating national security or financial matters" which leaves the Treasury Departments AML program still likely to proceed. 

  1. Quick Action on DOL Fiduciary Rule Unlikely With Acosta Confirmation (Author- Melanie Waddell, Think Advisor)

According to Melanie Waddell of Think Advisor, R. Alexander Acosta is expected to be confirmed as the new secretary of Labor after his confirmation hearing on March 15, 2017. In regards to the impact on the potential future of the DOL fiduciary rule, Steve Saxon, chairman of Groom Law Group, states that "what will be most interesting, and somewhat complicated, is what happens when [Acosta] gets there." Saxon also notes that "delaying the fiduciary rule's compliance date is necessary, so that Labor can respond to President Donald Trump's Feb. 3 order to review the rule, and if it deems appropriate, issue a proposal to revise it." 

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Don't forget to check out last week's top RIA compliance news articles on the DOL fiduciary rule and potential Dodd-Frank rule-making. Be sure to check back next Friday for next week’s top articles! 

Lexington Compliance and RIA in a Box LLC are not law firms, investment advisory firms, or CPA firms. Lexington Compliance and RIA in a Box LLC do not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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