RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 7th, 2022

Posted by RIA in a Box

Jan 14, 2022 4:01:06 PM

RIA industry tech, crypto scam threats, and DOL rollovers

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 RIA industry tech and automating compliance tasks, crypto scam threats, and DOL rollover scrutiny for RIAs opting out.



Here are our top investment adviser compliance articles for the week of January 7th, 2022:

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    1. The latest in financial #AdviserTech – January 2022 (Author – Michael Kitces, Investment News) 

After looking back at the biggest AdviserTech events of 2021, Michael Kitces provides a thorough breakdown of the most influential and what that means for the evolution of the industry in this new year. Kitces touches on several mergers and acquisitions throughout 2021 that have highlighted the importance of multi-faceted software offerings and the importance of integrating cybersecurity IT. Examples that demonstrate this importance are ComplySci acquiring both NRS and RIA in a Box, and RIA in a Box acquiring Itegria earlier in the year to “expand even more directly from pure compliance into an adjacent cybersecurity offering”.

    2. Crypto Scams Top Investor Threats for 2022, State Regulators Say (Author – Tracey Longo, Financial Advisor)

Earlier this week, the North American Securities Administrators Association (“NASAA”) announced that, “cryptocurrency and digital asset fraud topped the list of top scams that state regulators predict will be used against retail investors in 2022” as a part of their annual scam rankings. These rankings are meant to serve as an “early warning system” for both the public and those in the industry to know what to keep an eye out for in the coming year. When it comes to cryptocurrency, members of NASAA’s Enforcement Section Committee point to the media attention crypto has received as a main reason it is at the top of the list, as “bad actors grab their scams right out of the headlines to make them more believable.”

    3. Firms Opting Out Of DOL Rollovers Still Face Regulator Scrutiny (Author – Tracey Longo, Financial Advisor)

As the Department of Labor’s (“DOL”) retirement rollover rule is set to go live February 1, firms who have chosen to opt out are still faced with regulatory issues and how to stay compliant. Tracey Longo explains further that firms “can opt out of the rule by avoiding specific rollover investment recommendations and offering only education to prospective clients”, but attorneys are still working through specific language and where the difference between recommendation and education stands. In addition, attorneys warn that any firms registered with the Securities and Exchange Commission (“SEC”) are more likely to have rollover violations turned over to the DOL for investigation.

    4. Lawmakers, trade groups seek more time to comment on SEC proposals (Author – Mark Schoeff Jr., Investment News)

In this article, Mark Schoeff Jr. reports on tension surrounding SEC rule proposal comment periods. Republican lawmakers and a major financial services industry trade group provided a letter Monday to SEC Chairman Gary Gensler, stating rule proposals are being rushed. The lawmakers said most comment periods should last for 60 days and the deadline for complex rules should be 90 or 120 days. Most comment periods under Gensler have been for 45 or 30 days. Proposals that are often more than 100 pages, they argued this can pose a big challenge to financial firms that are responding. One of the big challenges that firms face is deciding which part of the proposal has the biggest impact on their business and addressing their questions. Schoeff says, “The goal is to write a comment that will influence the agency and perhaps be quoted in the final rule, which is argued to require more time to ensure substantive public input.”  The pushback over the short deadlines may be a point of tension between the two parties.

    5. ESG study shared with SEC reveals fund labels are often useless (Author – Tim Quinson , Financial Planning

The SEC has previously said its investigating potential misconduct related to sustainability claims surrounding environmental, social, and governance ("ESG"s) investing. Representatives from As You Sow, a shareholder advocacy group, met with the SEC last week to share analysis and make recommendations based on a study indicating that “one can’t tell the difference between a prospectus for true ESG offerings vs. greenwashing mutual funds and ETFs”.  The nonprofit group spearheaded the study with researchers from the University of California, using data-analytic tools, that found 60 of 94 ESG funds failed to adhere closely to the principles of environmental, social and governance investing. Andrew Behar, the chief executive of As You Sow says the study underscores the need for a common glossary of terms and fund classifications that could help the SEC enforce “truth in labeling” and eliminate “confusion and misleading marketing, fund naming and prospectus language”.

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Don't forget to check out last week's top RIA compliance news articles that focus on the RIA cybersecurity threats and best practices, and the SEC's Marketing Rule. 

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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