RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of June 11th, 2021

Posted by RIA in a Box

Jun 18, 2021 2:41:57 PM

Top RIA compliance articles focus on the SEC's scheduled rule reviews, tips for remote exams, and possible anti-money laundering policy plans for RIAs. 

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 Security and Exchange Commission's ("SEC") Ad Rule, a new program on elder financial abuse for financial professionals, new legislation regarding Environmental, Social, and Governance ("ESG") disclosures, and the upcoming rule-making on the Department of Labor's ("DOL") Fiduciary Rule. 

Here's our top investment adviser compliance articles for the week of June 11th, 2021:

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     1. Be Careful With Testimonials, Endorsements Under the SEC’s New Ad Rule (Author – Melanie Waddell, Think Advisor)

With the SEC’s new Ad Rule in effect as of May 2021, compliance experts are warning advisers about the risks involved with using testimonials and endorsements before their firm’s have fully updated their compliance programs. Melanie Waddell reminds readers’ that the official compliance date is not until November 2022, and until then, firm’s must choose to comply with either the old rule or the new one – there is no in between. The article suggests the SEC examiners will be targeting firms that choose to implement these new marketing strategies before the official compliance date. Several industry experts agree on the importance for advisers to tread carefully with new marketing strategies and to ensure their firm’s compliance department are fully on board with any plans to move forward with testimonials and endorsements.

     2. Regulators Launch Elder Financial Abuse Prevention Training Program (Author – Tracey Longo, Financial Advisor

This week, a new educational program for financial professionals on elder financial abuse was released by the Securities and Exchange Commission (“SEC”), the North American Securities Administrators Association (“NASAA”) and the Financial Industry Regulatory Authority (“FINRA”). The program, titled “Addressing and Reporting Financial Exploitation of Senior and Vulnerable Adult Investors,” was designed to educate financial professionals on how to identify, prevent, and report suspected fraud.

The program was also created to protect financial professionals from barriers such as civil or administrative proceedings when they report a case of suspected exploitation or fraud of a senior citizen.

   3. House approves legislation requiring ESG disclosures (Author – Mark Schoeff Jr., InvestmentNews)

After a very close vote, the U.S. House of representatives approved a set of ESG related bills including the Corporate Governance Improvement and Investor Protection Act. This means public companies will have to provide disclosures of environmental, social, and governance factors related to their businesses to investors. Additionally, a key element of the set of bills requires the SEC to issue rules within two years requiring companies to provide detailed reports on their climate metrics, climate-risk mitigation plans, and assessments of the impact of climate change on valuation.

    4. Fiduciary rule's third iteration could come with sharp regulatory teeth (Author – Dina Hampton, FinancialPlanning)

In this article, Dina Hampton discusses the DOL’s upcoming changes to the fiduciary rule as part of its Spring 2021 Regulatory Agenda. Ron Rhoades, a fiduciary advocate, suggests that the DOL’s new ruling will greatly expand the number of advisors considered as fiduciaries under ERISA. Other industry experts share the opinion that the expected ruling will come add strength and “regulatory teeth” to the current rule. The article concludes with a consensus that revisions to Reg BI will likely be the next regulatory task to be checked off.

     5. DOL to Redefine 'Fiduciary' in New Rule (Author – Melanie Waddell, Think Advisor)

Melanie Waddell covers the recent development regarding the DOL’s plan to release a revised definition of a fiduciary. The highly anticipated release of the rulemaking redefining the five-part fiduciary rule is currently said to be expected in December 2021. The DOL announced that the rulemaking would “more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries within the meaning of section 3(21) of ERISA and section 4975(e)(3) of the Internal Revenue Code.”

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Don't forget to check out last week's top RIA compliance news articles that focus on technology announcements in the RIA industry, a call for increased funding and staffing within the SEC, and responses to industry questions related to moving to the RIA model. 

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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