RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of April 26th, 2019

Posted by RIA in a Box

May 3, 2019 3:25:04 PM

SEC Robare case use of the word may in Form ADV

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 Securities and Exchange Commission ("SEC") Regulation Best Interest ("Reg BI") proposal, malware attacks, and the importance of Form ADV disclosures. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of April 26th, 2019

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1. Clayton hints Reg BI may be out earlier than expected (Author- Mark Schoeff Jr., InvestmentNews)

On Thursday, during a discussion with reporters at an Investment Company Institute annual meeting, SEC Chairman Jay Clayton hinted that the final Regulation Best Interest rule may be released soon.  In response to a question regarding how Reg BI would address mitigation of broker conflicts of interest, Clayton commented “"Wait and see. You won't have to wait long." The timeline for the rule's final release is dependent on Clayton’s decision on the number of votes secured in the commission.

2. DOL to Issue New Rules on Fiduciary Duties: Acosta (Author- Melanie Waddell, ThinkAdvisor)

During an oversight hearing held by the House Education and Labor Committee on Wednesday, Representative Marcia Fudge questioned the Department of Labor’s ("DOL") plan to protect those planning for retirement. Labor Secretary Alexander Acosta revealed that the DOL is actively working with the SEC and will likely release new fiduciary rule for retirement advisors. According to Melanie Waddell, “Acosta replied: ‘The Department of Labor is working with the SEC; the SEC was asked by Congress to come up with appropriate responses to protect these individuals; we are communicating with them [the SEC] and based on our collaborative work, we will be issuing new rules in this area.’”

3. 1 in 4 Malware Attacks Targets Financial Services Firms: Report (Author- Michael S. Fischer, ThinkAdvisor)

Threat intelligence company IntSights released a report on Monday revealing some alarming statistics around cybersecurity attacks targeting financial services companies. Among the 27 industries reported, the financial services sector remains at the top of list in number of attacks. The report lays out 2018 statistics and trends of compromised credit cards, credential leaks, malicious applications and more. According to Michael Fischer, “’Threat actors are using tactics like social media impersonation, malicious mobile applications and phishing schemes to circumvent corporate networks and leverage organizations’ brands to trick users and run scams,’ Hadar Rosenberg, threat intelligence research analyst at IntSights, said in a statement.” The report offers five recommendations for cyber defense.

 4.  Robare Group Decision Highlights Importance of Form ADV Disclosures (Author- Melanie Waddell, ThinkAdvisor)

On Tuesday, U.S. Court of Appeals for the D.C. Circuit reached a decision involving The Robare Group in Houston which emphasizes the importance of Form ADV disclosures. Chris Stanley, founding principal at Beach Street Legal says, “Though the Court of Appeals agreed with Robare that there was no willful violation of law or intent to defraud its clients, it still agreed with the SEC’s view that Robare negligently failed to provide full and fair conflicts of interest disclosure in its Form ADV.” Considering the results of the case, RIA firms need to be focused on providing full and clear detail related to conflict of interest disclosures.

5. States Tell SEC To Stay Out Of Their Fiduciary Rulemaking  (Author- Tracey Longo, FinancialAdvisor)

While individual states and the SEC are creating and finalizing their fiduciary rules, state regulators are asking that the SEC steer clear of their decision-making. According to Tracey Longo, “In a new letter, the North American Securities Administrators Association ("NASAA") told the U.S. Securities and Exchange Commission that the argument that the SEC can preempt state rulemaking is ‘fundamentally flawed.’” SIFMA, a securities interest group, argues however, that the SEC should use Reg BI to assert fiduciary regulation over state authorities based on the National Securities Markets Improvements Act of 1996 ("NSMIA").

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Don't forget to check out last week's top RIA compliance news articles focusing on the use of word "may" in the Form ADV, revisions to the Securities and Exchange Commission ("SEC") Regulation Best Interest ("Reg BI") proposal, and the Financial Industry Regulatory Authority Inc. ("FINRA") focusing on technological innovation. Be sure to check back next Friday for next week’s top articles! 


Topics: RIA Operations, RIA Compliance, RIA Technology

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does 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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