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Top RIA Compliance News Articles for the Week of June 21st, 2019

Posted by RIA in a Box

Jun 28, 2019 3:10:10 PM

SEC Robare case use of the word may in Form ADV

Each 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 risks, reactions to Regulation Best Interest ("Reg BI"), and technology focusing on compliance. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of June 21st, 2019. 

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1. SEC Advice Rule Brings Tech Focus Back to Compliance (Author- Ryan W. Neal, InvestmentNews)

As the SEC implements new rules and reforms, advisers are starting to rethink how they invest in technology. Adam Holt, SEC of Asset-Map, stated, “At top of mind is ensuring that the technology can help demonstrate to regulators the reasoning behind investment recommendations. Best interest advice gets sticky when the financial advisers get questions as to how they came to their recommendation.”  According to Mr. Holt, “Reg BI is pushing compliance back to the forefront of firm conversations about technology.” Since the downfall of the Department of Labor’s (“DOL”) fiduciary rule, compliance was put on the back burner to make way for new marketing and client experience tools.

2. Fiduciary FAQ: New Rules Could Transform Advisors' Business (Author- Andrew Welsch, FinancialPlanning)

Amid the confusion of Regulation Best Interest (“Reg BI”) and Form CRS, new fiduciary rules are making a comeback as well. There are many questions being asked about what it all means and what firms should consider moving forward. Andrew Welsch has put together a Fiduciary FAQ for firms to help make the transition smoother. Welsch addresses the differences between Reg BI and the state’s who have created their own fiduciary standard, where certain states are in the process, and what it all means for firms and advisers across the country.

3. Advisor's Guide to The SEC's Final Regulation Best Interest and Form CRS (Author- Michael Kitces, kitces.com)

With the final release of the SEC’s Reg BI rule earlier this month, outlining what will be expected when an adviser or broker-dealer makes an investment recommendation. The recommendation will be based on these four obligations – Disclosure, Care, Conflicts of Interest, and Compliance. To summarize, Michael Kitces states, “Ultimately, the SEC emphasized that its goal in creating Regulation Best Interest was deliberately to not harmonize broker-dealers and RIAs, recognizing instead that each fulfill separate functions for consumers and should remain separate choices for consumers, while recognizing in the modern era that consumers often so rely upon the recommendation of a broker-dealer that such recommendations should be made in the “best interests of the retail investor,” similar to the fiduciary best-interests standard that already applies to RIAs in an advice relationship with a client.”

 4. Cybersecurity Risks Are Threatening Deals, Industry Survey Shows (Author- Derek Hall, Financial Advisor Magazine)

Derek Hall details the results of a recent survey conducted by Forescout Technologies Inc. of information technology and business decision makers and the impact that cybersecurity issues have on mergers and acquisitions (M&A). The survey concluded that over half of respondents, “reported that their organization had encountered a critical cybersecurity incident that put an M&A deal in jeopardy. Futhermore, “65% of respondents said they experienced buyers’ remorse because of cybersecurity concerns after closing a deal.” Information security experts offer their advice on performing thorough assessments of potential deals and offers examples of large corporations affected by cybersecurity breaches as part of their M&A deals.

5. House Votes to Halt SEC Regulation Best Interest (Author- Melanie Waddell, ThinkAdvisor)

On Wednesday, the House approved Maxine Waters’ amendment to block the SEC from enforcing RegBI at a 227-200 vote. This vote also approved a package of changes to HR3351, the Financial Services and General Government Appropriations Act. According to Melanie Waddell, “The provision would prevent the SEC from proceeding to implement, administer, enforce or publicize Reg BI.” The Insured Retirement Institute is disappointed by the vote and argues that, ““Congress should allow the implementation of Reg BI to move forward and it should be given time to work.”

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Don't forget to check out last week's top RIA compliance news articles focusing on Form CRS, expansion of the definition of an "accredited investor", and new Massachusetts and New Jersey fiduciary rule proposals. Be sure to check back next Friday for next week’s top articles! 


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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