RIA Compliance and Practice Management Blog

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

Posted by RIA in a Box

Jul 17, 2020 3:21:39 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 the Securities and Exchange Commission's ("SEC") latest risk alert, the Financial Industry Regulatory Authority ("FINRA") moves to online testing for Series exams, and Oklahoma no longer requiring state-registered advisors to complete the client relationship summary ("Form CRS").

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

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          1. SEC Issues Ransomware Alert (Author - Melanie Waddell, ThinkAdvisor)

The Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) has released a risk alert “warning advisors and broker-dealers to immediately review their cybersecurity controls, as phishing and ransomware attacks are on the rise.” Moving forward, the OCIE is advising all SEC registrants to “monitor the cybersecurity alerts published by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”), including the updated alert published on June 30 relating to recent ransomware attacks.”

2. Tech Is an Ally, Not a Threat  (Author - Eileen Kane, Wealth Management) 

Eileen Kane discusses the increasing need advisors have for technology amid the COVID-19 pandemic. “During the coronavirus crisis, clients drove a 66% uptick in SMS texting, according to data by Hearsay Systems, and a 500% increase in videoconferencing data traffic for advisors, according to Kentik. Amid increased client engagement, the right tech can enable advisors to serve more clients without increasing headcount,” stated Kane. As the industry evolves, advisors who are able to keep up with the times will land on top with Kane pointing out, “67% of investors choose their financial advisor partly for access to advanced investment tools such as online investment capabilities and interactive modeling”.

         3. FINRA’s Series 7 Testing Goes Virtual –  (Author - Diana Britton, Wealth Management)

The Financial Industry Regulatory Authority (“FINRA”) and North American Securities Administrators Association (“NASAA”) are currently taking appointments for the new online testing for the Securities Industry Essentials (“SIE”), Series 7,6,63,65, and 66 exams. Those who are eligible to take the virtual exam must provide a 360-degree view of their desk or workplace and the surrounding environment. They must also complete a visual person check, which consists of checking their sleeves, pockets, and glasses.

         4. Oklahoma pulls back Form CRS mandate for state-registered advisers - (Author - Mark Schoeff Jr., InvestmentNews)

After receiving major pushback from advisors and industry representatives, Oklahoma has decided it will no longer require state-registered advisors to complete the Securities and Exchange Commission’s (“SEC”) mandated client relationship summary (“Form CRS”). The Form CRS consists of a firm disclosing their services, fees, conflicts of interest, standard of conduct and disciplinary history in a two-page document that is then provided to currently and new clients. Oklahoma was one of only two states who initially required the completion of Form CRS, but now that the rule is in full effect other states may revisit requiring the document. “There’s good information in here. This, to me, is more plain-English type of stuff. I don’t think it’s an onerous request for IAs, and it’s helpful for clients,” Don DeFedele, associate director for securities and commercial licensing at Rhode Island’s Department of Business Regulation stated.

           5. Many fund managers could keep trades secret under SEC plan (Author - Hema Parmar, FinancialPlanning

Last week, the Securities and Exchange Commission (“SEC”) issued a proposal to update the 13F reporting threshold for money managers for the first time in over 40 years. A 13F is a form that hedge funds, mutual funds and other money managers must complete to reveal equity investments and a fund’s holdings in stocks that trade on U.S. exchanges, among other information. SEC Chairman Jay Clayton stated, “Today’s proposal will update, for the first time in over 40 years, the 13F reporting threshold to a level that furthers the statutory goal of enabling the SEC to monitor holdings of larger investment managers while reducing unnecessary burdens on smaller managers.”

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Don't forget to check out last week's top RIA compliance news articles that focus on a new rule model proposed by state regulators to align with the SEC's rules, RIA in a Box's Path to Independence partnership, and the short Department of Labor ("DOL") fiduciary rule comment period.

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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