RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of June 24th, 2022

Posted by RIA in a Box

Jul 1, 2022 12:14:11 PM

This week's recap focuses on the Securities and Exchange Commission's ("SEC") examination priorities, cryptocurrency, and a recent SEC bulletin emphasizing serving clients' best interest.

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 RIA in a Box's new Continuing Education Program and being in compliance with the Department of Labor's ("DOL") PTE-2020-02


Here are our top investment adviser compliance articles for
the week of June 24th, 2022:

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    1. RIA in a Box Launches Continuing Education Program to Support NASAA Rule (Author – DJ Shaw, Plan Adviser)

Last week, RIA in a Box announced the release of the IAR Continuing Education Program available through the industry leading MyRIACompliance® platform. The comprehensive training courses support the North American Securities Administration Association's ("NASAA") model rule requirements for investment advisers. The new CE rule requires IARs to complete a set of CE credits annually from a NASAA approved course provider. Investment advisers that fail to complete the credits by the end of a reporting period will be “CE inactive.” An investment adviser who is CE inactive is not eligible for IAR registration or renewal of an IAR registration.

    2. DOL’s Rollover Reckoning Opens Doors for Advisors (Author – Dave Goldman, Think Advisor)

As of today, full compliance with the Department of Labor’s ("DOL") Prohibited Transaction Exemption ("PTE") 2020-02 will be enforced for investment advisers. Advisers recommending rollovers for retirement plan participants will be required to provide documentation and disclosures to support their decision-making. The article highlights workarounds that advisers have used in the past to ensure their clients receive a "holistic wealth management" experience, such as storing credentials to place trades on a client's behalf. These strategies, however, come with increased risk and regulatory scrutiny. 

Dave Goldman points out that ERISA's fiduciary rule and PTE-2020-02 will challenge advisers to efficiently analyze plan investment documentation and continuously monitor their recommendations once made.

    3. Staying True to PTE 2020-02 (Author – Stacy Sizemore, Wealth Management)

Stacy Sizemore highlights key compliance tips for advisers to abide by the DOL's PTE-2020-02. Sizemore states that advisers "need to be well-versed" in the new requirements to comply with the final portion that went into effect today. A large part of the requirement deals with proper documentation, as advisers must acknowledge their fiduciary status in their investment management agreements and the Part 2A on the Form ADV. The firm's policies and procedures must be updated to reflect the new requirements and ensure compliance with the Impartial Conduct Standards. Advisers must also provide detailed documentation to support their rollover recommendations. Last on the list, Sizemore reminds compliance teams of their duty to conduct an annual review, which provides the opportunity to detect and prevent violations of PTE-2020-02. 

  4. New DOL Rollover Rules Kick In Friday. Are You Ready? (Author – Melanie Waddell, Think Advisor)

In this article, Melanie Waddell and ERISA attorney Fred Reish, analyze the areas that cause confusion for firms complying with PTE-2020-02. Reish mentions his concern that firms inadvertently missed the compliance date, as they may not fully understand how the rule applies to them or what is entailed in the "specific reasons" requirements. He reminds advisers that the specific reasons need to be individualized to the particular participant or IRA owner, and that generic reasons will not be accepted as “specific.” Firms must implement a process to capture the specific reasons for each individual participant or IRA owner. The analysis needs to be detailed, and depending on the plan, all the information may not be readily available. 

  5. SEC Commissioner Faults Agency's 'Rush Of Radical Rulemakings' (Author – Tracey Longo, Financial Advisor)

SEC Commissioner Hester Pierce comments on the SEC's spring regulatory agenda, calling out the lack of clarity and rule-making on specific critical crypto areas including defining what constitutes digital security and custodial issues. Commissioner Pierce also commended the agency's efforts to update the investment adviser custody rules, data security rules for the Consolidated Audit Trail, and rules to shift from paper to electronic filings. Other issues the Commissioner addressed include short public comment periods and forcing market participants to implement multiple rules simultaneously. 

Learn More About Our IAR Contuining Education Program

Don't forget to check out last week's top RIA compliance news articles that focus on RIA in a Box's new Continuing Education Program, an outlook of the RIA industry, succession planning for investment advisers, and key considerations for joining or starting an RIA firm. 

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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