RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of February 26th, 2021

Posted by RIA in a Box

Mar 5, 2021 2:15:35 PM

Top RIA compliance articles focus on New York registration rules, state regulators' subscription fee concerns, and e-communication regulatory risks.

Each week we are 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’s (SEC) 2021 examination priorities, the SEC’s ad rule, and the SEC’s new ESG task force.

Here's our top investment adviser compliance articles for the week of February 26th, 2021:

How an RIA Firm Can Create a Culture of Compliance Checklist

       1. SEC Ad Rule Published in Federal Register, Setting Effective Date (Author – Melanie Waddell, Think Advisor)

On March 5, 2021, the SEC officially published the Ad Rule, setting the effective date as May 4th, 2021. This rule has been a frequent topic of discussion since it was passed in late December. Melanie Waddell informs readers that RIA firms will have 18 months to comply with the new Ad rule.

        2. SEC’s Top 6 Exam Priorities for 2021 (Author – Melanie Waddell, Think Advisor)

This article includes a slideshow summarizing the SEC’s top six examination priorities for 2021, which were issued on Wednesday, March 3rd. The priorities reviewed include the following: 1) The London Inter-Bank Offered Rate (“LIBOR”) transition; 2) Anti-money laundering (“AML”) programs; 3) Fintech and innovation, including digital assets; 4) Information Security and operational resiliency; 5) Focus areas of compliance programs; 6) Fiduciary duty, Form CRS, and Reg BI compliance.

Melanie Waddell also discusses the increase of RIA’s registered with the SEC over the past five years, from about 12,000 firms to more than 13,900 firms, and assets under management increased from about $67 trillion to $97 trillion.

         3. Big firms likely to benefit from SEC ad rule update (Author – Kenneth Corbin, FinancialPlanning)

Kenneth Corbin highlights the divide of opportunity between small and large firms as a result of the SEC’s advertising rule released in December 2020. The article discusses how firms with more resources will likely shift away from referral only business development and put resources towards direct marketing efforts, such as social media and sharing testimonials. Moreover, firms that adopt new marketing strategies will need to account for the time and resources included in updating their compliance programs accordingly, which involves sorting through the 430-page rule. Stacey Sizemore, the CCO at tru Independence, mentions the “considerable compliance training” her firm will need to go through if they implement new marketing efforts.

         4. Internet scams are top threat to investors, NASAA says (Author - InvestmentNews)

InvestmentNews shares findings from a survey completed by the North American Securities Administrators Association “NASAA” regarding internet threats. Such threats include investment schemes involving precious metals, cryptocurrencies, promissory notes, and foreign exchange markets.

In particular, the survey results indicate that 82% of state and provincial regulator participants believe bad actors will try to illegally sell securities by leveraging investors fears related to changes in the financial market due to the pandemic.

        5. SEC Creates New ESG Enforcement Task Force (Author - Patrick Donachie, Wealth Management)

Following the release of the 2021 examination priorities, Patrick Donachie provides an overview on the announcement of the SEC’s new initiative focused on environmental, social and governance “ESG” and climate-related risks. SEC Acting Deputy Director of Enforcement, Kelly Gibson, states that “proactively addressing emerging disclosure gaps that threaten investors and the market has always been core to the SEC’s mission”. Industry professionals are also mentioned with similar views to Kelly Gibson’s statement, suggesting that the SEC has been focused on ESG-related screenings for several years, and that the initiative is aligned with the growth of ESG-related products and strategies.

Download Our Free RIA Cybersecurity Compliance Checklist

Don't forget to check out last week's top RIA compliance news articles that focus on New York's latest registration rules, state regulators' concerns regarding RIA subscription fees, and increased regulatory risks that come with e-communications.

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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