RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 20, 2017

Posted by RIA in a Box

May 26, 2017 3:03:40 PM

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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 latest on the Department of Labor ("DOL") fiduciary rule and the continued cybersecurity risks advisors face. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of May 20, 2017:

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  1. DOL Declines to Pursue Delay of Fiduciary Rule (Author- Jason C. Roberts, Esq., AIFA, LinkedIn)

Jason C. Roberts, Esq., composed this LinkedIn article on what the DOL has decided to do with the fiduciary rule and what exactly will be required on the June 9 applicability date. Roberts writes, "if advice causes the advisor/firm/affiliate to receive additional compensation and/or third-party payments, then a PTE will be required to avoid disgorgement, excise taxes, restoration of losses, etc.." This part of the law will go into effect on June 9. Roberts explains in his article detailed information on the Best Interests Contract Exemption ("BICE") and records that will be needed to prove all advice is given in the best interest of the clients. "Firms should continue to prepare for the changes," Roberts ultimately cautions.

  1. Interesting Angles on the DOL's Fiduciary Rule #47 (Author- Fred Reish, Fredreish.com)

Fred Reish, one of our top 5 DOL fiduciary rule experts to follow, published his 47th article about his observations on the DOL fiduciary rule. In this particular article, he clarifies the requirements of the fiduciary rule and the related exemptions. Reish divides his discussion into two categories: the "transition rules" related to the Impartial Conduct Standards, which are applicable during the period from June 9 to December 31, 2017, and the final set of the regulation and exemptions which go into effect on January 1, 2018.

  1. Firms Aren't Doing Enough to Monitor Mobile Text Messaging (Author- Ryan W. Neal, Wealth Management)

According to Wealth Management's Ryan W. Neal, the finance industry has a noticeable weakness when it comes to archiving and supervising mobile communication, especially in regards to SMS and text messaging. Smarsh conducted a study of 119 people with compliance responsibilities and concludes only about half of firms that utilize text messaging have an archiving or supervision solution. Neal informs, "47 percent of those surveyed by Smarsh said they were examined the last year, and 21 percent of those who were examiners asked for mobile device communications." Smarsh's director of product marketing, Mike Pagani, provides some valuable insight on this topic in Neal's article.

  1. A 7-Point Checklist for Advisors to Protect Against CyberAttacks (Author- Bernice Napach, ThinkAdvisor)

Michael Chertoff is the former U.S. secretary of Homeland Security, and now executive chairman of the Chertoff Group, which counsels companies and governments on cybersecurity and other security issues. When the WannaCry malware attack struck, he claims he was not surprised. He addressed at the 2017 Cyber Investing Summit noting, "literally every week we have more and more developments in the area of cybersecurity." In Bernice Napach's ThinkAdvisor article, a 7-point checklist is revealed on how financial companies can protect themselves against cyberattacks and how the protection impacts their systems should a breach occur.

  1. Cybersecurity Looms as Adviser Business Threat (Author- Liz Skinner, Investment News)

Investment News reporter Liz Skinner shares insight on the importance of cybersecurity and how "cybercrime is one of the greatest threats facing the nation." She discusses the impact technology has on preventing cyber breaches just as much as proper employee training impacts the odds of a breach occurring. Investment News' senior research analyst believes, "advisers should be prepared to spend larger sums on cybersecurity systems in the years to come and to approach any new technology investment and system change with an emphasis on cybersecurity considerations." Skinner encourages, "all firms need to have strict policies and procedures about handling data, as well as specific encryption and password rules."

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Don't forget to check out last week's top RIA compliance news articles on the DOL fiduciary rule and the SEC risk alert on the recent ransomware attack. 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.

Topics: RIA Compliance

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