RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of January 10th, 2020

Posted by RIA in a Box

Jan 17, 2020 4:30:22 PM

Top_Compliance_Articles_of_the_week-17Each 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, changes in the Securities and Exchange Commission ("SEC") Commission, and the future of Regulation Best Interest ("Reg BI").


Here's our top investment adviser compliance articles for the week of January 10th, 2020:

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1. The Latest Cyber Risk You Need to Know About  (Author - Bernice Napach, ThinkAdvisor)

Michael Driscoll, FBI special agent in charge of the Counterintelligence/Cyber Division, spoke at the 2020 Financial Industry Regulatory Authority (“FINRA”) Cybersecurity Conference warning advisors of the different types of cyber risks they should be aware of. Among those risks, business email compromise (“BEC”) poses the greatest threat to businesses, according to Driscoll.  Bernice Napach writes, “These attackers ‘know where to send the email and they know everything about your organization before they send it … using whatever they can, including malware tools and publicly available information, so they can to best place that email and target your system,’ said Driscoll.” Driscoll provides advice on what to do to prevent attacks and what do if your business does get hacked.

2. NASAA's 'Real Life Regulators' Takes Listener Actual Advisor Enforcement Cases  (Tracey Longo, FinancialAdvisor Magazine)

The North American Securities Administrators Association (“NASAA”) released a new podcast series this week titled, “Real Life Regulators.” This podcast features various regulators who share stories of investor fraud investigations. In this week’s episode, “The Advisor and the Widow,” “Connecticut securities regulators and attorneys detail how they zeroed in on an unscrupulous financial advisor who was taking advantage of a widowed client—draining $300,000 from her investment account to keep his firm afloat and purchasing an array of personal luxuries including limo rides, expensive dinners and tickets to sporting events,” according to Tracey Longo. The podcast is available on iTunes, Google Play, and the NASAA website.

         3. FINRA, SEC, Warn of Ongoing Cyber Threats  (Author - Jeff Berman, ThinkAdvisor) 

During the FINRA Cybersecurity Conference held on Tuesday in New York, compliance experts from FINRA, the SEC and National Futures Association warn firms of attacks such as phishing, ransomware, fake websites, data misuse by former employees, and more. According to Jeff Berman, “’We’ve seen the gamut of compromises,’ including phishing and other types of attacks, Salvatore Montemarano, an examiner in the SEC’s Office of Compliance Inspections and Examinations.” The experts on the panel offered advice on how firms can conduct due-diligence and prevent attacks.

         4. SEC Commissioner leaving next month (Author- Bloomberg News Staff, InvestmentNews)

After a few months of speculation, SEC Commissioner Robert Jackson Jr. will stepping down from his position to return to New York University and return to his teaching position. Jackson joined the SEC in January 2018 in a Democratic seat and gained the reputation of Wall Street adversary during his tenure. “Serving on the commission has been the privilege of my lifetime. I will always be proud to have served with my fellow commissioners, Chairman Clayton and especially the commission’s staff, who dedicate their careers to protecting ordinary investors” Jackson recently stated.

           5. If Trump Loses, What Happens to Reg BI? (Author - Patrick Donachie, WealthManagement)

Even though Regulation Best Interest (“Reg BI”) will go into effect at the end of June, the results of the 2020 election may result in a full overhaul of the rule yet again. Knut Rostad, Director of the Institute of the Fiduciary Standard, stated, “The future of the rule depends no on whether a Democrat is elected to the White House but on which Democrat. An Elizabeth Warren or Bernie Sanders presidency could take a significantly different path when it comes to Reg BI than Joseph Biden or Michael Bloomberg.” However, Reg BI isn’t necessarily considered a hot button topic for those outside of the industry, so many candidates have not taken a definitive stance on the rule. Therefore, a change in power at the White House would create “the opportunity to name a new chairman to the SEC, and that individual will have the biggest impact on Reg BI’s future.”

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Don't forget to check out last week's top RIA compliance news articles focusing on how Regulation Best Interest ("Reg BI") violates Dodd-Frank, Massachusetts releasing their own fiduciary standard, and the Financial Industry Regulatory Authority's ("FINRA") 2020 exam priorities.

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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