RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of April 5th, 2019

Posted by RIA in a Box

Apr 12, 2019 3:54:59 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 Securities and Exchange Commission ("SEC") exam rate, Regulation Best Interest ("Reg BI") progress, and the pros and cons of mandatory arbitration. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of April 5th, 2019:

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1. The SEC's white-hot audit streak shows sign of cooling (Author - GJ King, FinancialPlanning)

Due to the recent government shutdown, the number of RIA exams the SEC will conduct this year will likely not match last year's total. However, this follows an impressive increase in annual audit volume in recent years. However, as RIA in a Box President, GJ King, states, “In a positive for the RIA industry, even as the volume of audits has increased over time, the percentage of firms with compliance issues has been trending lower. The percentage of audits resulting in one or more deficiencies has remained relatively steady of has decreased in recent years.”

2. SEC 'Still Struggling' With Advisor Exam Rate (Author- Melanie Waddell, ThinkAdvisor)

Even with the SEC struggling to meet the bar that was set with last year’s audits, the Office of Compliance Inspections and Examinations (“OCIE”) will still move forward to focus and enforce their priorities. Cybersecurity will be a main topic moving forward with a particular focus on governance and risk assessment and data loss prevention. Due to the partial government shut down causing a hiring freeze at the SEC, Chairman Jay Clayton stated, “commission staffing is down more than 400 authorized positions compared with fiscal year 2016.” Clayton said, “To ensure we can continue to meet our mission objectives, the resources Congress provided the agency for fiscal year 2019 will allow us to life the hiring freeze and add 100 much-needed positions.”

3. SEC member Robert Jackson Jr. calls for 'bipartisan' Regulation Best Interest (Author - Mark Schoeff Jr., InvestmentNews)

With the ongoing revisions to the Regulation Best Interest rule, Robert Jackson Jr. is calling for a united front to get the bill passed. Mr. Jackson stated at the Practising Law Institute’s SEC Speaks conference, “Fundamentally, this can and should be a bipartisan effort of the commission. Political unity is necessary on a final advice rule for it to hold up to legal scrutiny.” Allison H. Lee was nominated last week to be the 5th commissioner and would hold a Democratic seat, providing more of a bipartisan approach when creating the final version of the Reg BI bill.

 4. SEC Chief: Economic Analysis of SEC's Reg BI Will Be 'Robust' (Author- Melanie Waddell, ThinkAdvisor)

The loudest critics of the Regulation Best Interest bill have voiced concerns that the SEC has not properly analyzed the overall advice standards package, in particular the Reg BI rule. SEC Commissioner Robert Jackson said, “the commissions economic analysis was not a serious attempt to understand the effects of the rule, leaving it open to legal attack.” He also stated that even though he had voted to put the package out for comment, he couldn’t support it in its current form.

5. Clash over mandatory arbitration agreements heats up (Author- Kenneth Corbin, FinancialPlanning)

Kenneth Corbin writes, "Industry groups including SIFMA and the U.S. Chamber of Commerce are opposing a new proposal in Congress that would bar brokers and investment advisors from including that fine print in customer agreements." In particular, Tom Quaadman, executive vice president with the Chamber of Commerce, notes, "Arbitration helps lower the cost, it helps for speedier awards." On the other side of the argument, including many regulators, are those that believe arbitration "puts customers at a disadvantage."

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Don't forget to check out last week's top RIA compliance news articles focusing on the SEC regulatory exams, fee disclosures, and fiduciary standards. 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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