RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of August 16th, 2019

Posted by RIA in a Box

Aug 23, 2019 3:07:24 PM

Capital One data breach impact to RIA firms

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 cybersecurity, impacts of the Securities and Exchange Commission's Regulation Best Interest ("Reg BI"), and new legislation protecting senior investors.


Here's our top investment adviser compliance articles for the week of August 16th, 2019: 

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1. RIA in a Box Offers Cybersecurity Tips for Advisors  (Author- Jeff Berman,ThinkAdvisor)

Jeff Berman breaks down key cybersecurity topics and tips for RIA firms discussed on Wednesday during a cybersecurity webinar hosted by RIA in a Box. Oriana DeRose, Senior Vice President of Sales of RIA in a Box, emphasized the importance of staff cybersecurity training by stating, “Your employees can be your greatest cyber defense or your greatest weakness.” In addition, DeRose details common cybersecurity attacks RIA firms face and offers tips on protecting your RIA firm following the U.S. Department of Commerce’s National Institute of Standards and Technology ("NIST") framework. Regarding the impact of cybersecurity on compliance, DeRose details the SEC’s regulations including Regulation S-P and Regulation S-ID.

2. SEC affirms its authority over proxy advisory firms that CEOs hate  (Author- Benjamin Bain, Bloomberg News)

On Wednesday, SEC commissioners voted 3-2 to issue guidelines in dealing with proxy advisory firms who are hired by shareholders to give advice on voting their shares. Proponents of the new guidance include Republican commissioner Elad Roisman, who states, “The investors I believe in today’s recommendations aim to protect are the ultimate retail investors who may have their life savings invested in our stock markets.” On the other hand, opponents like Democratic commissioner Robert Jackson, Jr, “said he was voting against the guidance out of concern that it could cause smaller investors to vote less and make it harder for new firms to enter the market,” according to Bloomberg News.

           3. New Hampshire Law Empowers Advisors To Protect Senior Clients From Financial Fraud (Author-  Jaqueline Sergeant, Financial Advisor Magazine)

New Hampshire law makers passed a bill that will aim to protect senior investors from financial exploitation. The bill, based on model legislation by the North American Securities Administrator’s Association (“NASAA”), according to Jacqueline Sergeant will, “’permit broker dealers and investment advisors to delay disbursements from accounts of eligible individuals when such broker dealers and investment advisors, or other qualified individuals, reasonably believe that the requested disbursement may result in financial exploitation.’” Members of the Financial Planning Association (“FPA”) joined in the conversation emphasizing the organization’s priority of protecting senior investors.

 4.  Kitces: After Reg BI, how should RIAs differentiate?  (Author- Michael Kitces, FinancialPlanning)

Historically, RIAs have differentiated themselves from broker dealers on the fact they are held to a fiduciary standard and obligated to act in the best interest of their clients. Today, the recently passed Regulation Best Interest (“Reg BI”) rule that places broker dealers on a similar suitability standard makes it harder for RIA firms to differentiate themselves. Recognizing the marketing challenges that this poses for firms, Michael Kitces offers a detailed overview of the changing landscape of RIA firms and broker-dealers, the impact of Reg BI on both RIA firms and broker dealers, and the future of fiduciary standards across the financial services space.

5.Will SEC Use Reg BI To Ensnare RIAs' Ancillary Businesses? (Author- Tracey Longo, Financial Advisor Magazine)

Tracey Longo addresses speculation of the SEC using Reg BI to regulate and hold firm’s outside business’ to a fiduciary standard. Aware of this, Stephen Galletto, partner with Stark & Stark’s Investment Management Practice Group helps his clients guard against this. According to Tracey Longo, “Galletto said he and his partners are working to anticipate where the SEC may go in terms of the application of the new standards. ‘We are debating how specific we want to get in terms of describing the depth and breadth and fees of services that are fiduciary services for contract purposes and those that are excluded. We are just trying to get ahead of where the SEC may go in terms of ancillary services that might be held to a fiduciary standard.’”

Schedule a Demo of the MyRIACompliance Cybersecurity Platform

Don't forget to check out last week's top RIA compliance news articles focusing on the first steps to creating a succession plan, the growing popularity of paid bloggers, and a further breakdown of RegBI.


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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