RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of June 3rd, 2022

Posted by RIA in a Box

Jun 10, 2022 4:51:42 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 the Securities and Exchange Commission ("SEC") proposed rules for RIA cybersecurity, the North American Securities Administrators Association ("NASAA") arbitration model rule, and exploring the future of cryptocurrency regulation.

Here are our top investment adviser compliance articles for
the week of June 3rd, 2022:

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    1. Reassessing cybersecurity in a changing world (Author – Wes Stillman, Investment News)

This article highlights the steps RIAs can take now to strengthen their cybersecurity programs, as the industry awaits final cybersecurity rules to be published by the SEC. The significant increase in cyber events paired with the anticipated rise in regulatory enforcement will likely cause RIAs to improve their IT budgets. Firms should be readily prepared to defend against wrongful entry to the firm's core knowledge and functions, particularly in this evolution of working remotely.  It's recommended to implement tools like multifactor authentication, encrypted passwords, and to ensure the firm is properly documenting all cybersecurity measures taken. 

    2. Is It Possible to Disclose a Cyberattack in 4 Days? — SEC Roundup (Authors – Nick Morgan and Tom Zaccaro, Think Advisor)

A recent episode of SEC Roundup by Nick Morgan and Tom Zaccaro focuses on the SEC's proposed new rules on cybersecurity. John Reed Stark, former chief and founder of the SEC’s Office of Internet Enforcement, joined the pair in discussing the proposed requirement to disclose cybersecurity incidents within four days. Firms would need to disclose key information on the cyber event, including what happened, how it was discovered, when it happened, if the attack is ongoing or stopped, and if it resulted in any material data breach. The three industry experts point out the challenges and complications related to this rule, such as potentially revealing strategic information to other hackers. 

    3. Leading state regulator sees arbitration reform gaining momentum (Author – Mark Schoeff Jr., Investment News)

The recent approval ofc makes it unethical for an investment adviser not to pay an investment-related arbitration award to a customer. NASAA President, Melanie Senter Lubin, expects many individual states to adopt the rule due to the power it gives state regulators to tackle the ongoing problem of unpaid arbitration awards. Since regulators can prevent firms from practicing until the awards are paid, it's easy to assume advisers will be incentivized to pay promptly. The article points out that the extent to which the rule solves the problem of unpaid arbitration awards will be determined in later months, depending on how many states adopt it. 

    4. New Bill Would Bar DOL From Constraining 401(k) Investments (Author – Melanie Waddell, Think Advisor)

This article covers a recently introduced bill aimed to prevent constraints on the range or type of investments offered to participants and beneficiaries of retirement accounts. The bill would impact individual accounts in retirement plans, like 401(k)s, regulated under the Employee Retirement Income Security Act (ERISA). According to Ed Slott of Ed Slott & Co, the Financial Freedom Act of 2002 would give fiduciaries more leeway, considering the DOL's pronounced viewpoint on cryptocurrency investments in 401(k) plans. 

    5. What's the Crypto Regulation Endgame? (Author – Kenneth Rogoff, Financial Advisor)

Kenneth Rogoff explores the future of regulation for cryptocurrencies around the globe. Rogoff probes the question, "what will happen when governments finally get serious about regulating Bitcoin and its brethren?" Currently, cryptocurrency transactions are traceable through the blockchain ledger, but users commonly operate under pseudonyms, making it difficult to reveal their identity. Rogoff suggests advanced-economy governments will likely need to ban digital currencies that do not reveal a user's identity, which would certainly have to extend to financial institutions and businesses. Read this article for more of Rogoff's take on how regulation will impact the cryptocurrency market. 

Schedule a Demo of the RolloverAnalyzer

Don't forget to check out last week's top RIA compliance news articles that focus on the release of the RolloverAnalyzer by InvestorCOM and RIA in a Box, the DOL's PTE 2020-02, and the SEC's proposed rules for environmental, social, and governance ("ESG") investments. 

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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