RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 15th, 2021

Posted by RIA in a Box

Jan 22, 2021 4:29:11 PM

Top RIA Compliance Articles: Paycheck Protection Program, advisor marketing practices, and SEC Whistleblower RulesEach 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 pros and cons of the Securities and Exchange Commission's ("SEC") new ad rule, expected enforcement shift under new SEC leadership, and 2021 technology trends for advisors.


Here's our top investment adviser compliance articles for the week of January 15th, 2021:

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           1. SEC’s New Ad Rule: The Pros and Cons (Author – Melanie Waddell, ThinkAdvisor)

Melanie Waddell discusses the overall reaction to the SEC's updated Marketing Rule from agency commissioners. The amendments and overall structure of the new rule bring the industry into the 21st Century, taking into account social media and the use of client testimonials. However, not all client communication and endorsements can be used for marketing purposes. Commissioner Elad Roisman explains further that “the definition encompasses only communications that “offer” services, explicitly rejecting the inclusion of communications that merely “promote” the adviser or “seek to obtain” new clients.” This will create a sense of accountability amongst advisers and a stronger emphasis on compliance with the new rule moving forward.

         2. SEC Expected to Shift Focus to Advisors, BDs Under Biden (Author – Melanie Waddell, ThinkAdvisor)

With the release of law firm Gibson Dunn’s 2020 Year-End Securities Enforcement Update report, the firm discusses what they expect to see at the SEC under the new administration in the White House. Gibson and Dunn expect a “heightened level of enforcement activity” at the SEC, especially if President Biden’s pick, Gary Gensler, is confirmed by the Senate. The report expands further on Gensler’s background and experience, including his time spent as chairman of the Commodity Futures Trading Commission (“CFTC”), stating that “Gensler oversaw the implementation of an entirely new regime for the regulation of the markets for derivatives as well as the adoption of numerous regulations pursuant to the Dodd-Frank Act,” along with “aggressive enforcement actions against financial institutions.”

       3. 5 Predictions for Policy Changes Affecting Advisors Under Biden (Author – Bernice Napach, ThinkAdvisor)

Bernice Napach discusses what to expect as the new administration takes office and gets to work, citing Aron Szapiro's, head of policy research at Morningstar, recently published report with his top 5 predictions. Szapiro starts with1) Increased enforcement of the SEC's Regulation Best Interest Rule ("Reg BI"), which he expects the Biden administration to "push for more robust policies and procedures on enforcement of the rule. He continues with 2) Delay of the Department of Labor's ("DOL") fiduciary rule; 3) Substantial modification of the DOL's ESG rule; 4) A tougher Consumer Financial Protection Bureau; and 5) A likely increase in the corporate business tax rate.

         4. Biden’s Wall Street Watchdogs Signal New Era of Tough Oversight (Author – Ben Bain, Jennifer Epstein, and Robert Schmidt, FinancialPlanning)

As a new administration enters the White House, President Biden’s picks for top positions at the SEC and the Consumer Financial Protection Bureau are turning heads. Gary Gensler, if confirmed by the Senate, is slated to become SEC Chairman, leading the charge on “a new era of tougher oversight and stricter rules.” Experts in the industry expect Gensler’s top targets will include Chinese companies that are included on U.S. stock exchanges but bypass American regulations, cryptocurrencies and “pushing Corporate America to reveal more about workforce diversity and how climate change impacts bottom lines.”

        5. Fiduciary Advocates Hail Biden's Pick for SEC Chair (Author - Patrick Donachie, WealthManagement)

Upon confirmation of the Senate, Gary Gensler will become the next SEC Chairman, bringing with him a long history of financial experience and public service. Many experts in the industry who support and stand for client advocacy are praising President Biden's choice, and are looking forward to tighter regulations and enforcements. A. Valerie Mirko, partner at Baker McKenzie, expands on Gensler's approach, stating that "he understands the balance of interests, understands how financial institutions work, and understands the cost Reg BI had on the industry in terms of compliance. The SEC is going to have a very deliberate, thoughtful Chair who will want to understand all options and want to be strategic about how to move forward on this."

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Don't forget to check out last week's top RIA compliance news articles that focus on the Paycheck Protection Program ("PPP") reopening, advisor marketing practices, and the Securities' and Exchange Commission's ("SEC") Whistleblower Rules.

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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