RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of March 19th, 2021

Posted by RIA in a Box

Mar 26, 2021 4:18:29 PM

Top RIA compliance articles focus on NSecurities and Exchange Commission’s (“SEC”) ad rule, Form CRS, and a Paycheck Protection Plan (“PPP”) extension act

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’s (“SEC”) ad rule guidance, cybersecurity risks for RIA firms, and regulatory and legislative rules for advisors due to the administration change. 

Here's our top investment adviser compliance articles for the week of March 19th, 2021:

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      1. SEC Warns Advisors on Ad Rule Compliance (Author – Melanie Waddell, Think Advisor)

The SEC’s Division of Investment Management staff released guidance in the form of a FAQ page in response to questions about when advisors should start complying with the new marketing rule. Melanie Waddell discusses the key takeaways from this release as; 1) investments advisors need to comply with the previous rules until they transition to the amended rule, 2) the new rule replaces the rules on advertising and cash solicitation entirely and 3) advisors may not transition to the new rule and still rely on previous cash solicitation rule.

      2. Failure to overhaul cybersecurity for remote work creates regulatory risks (Author – Stephen Marsh and Sid Yenamandra, InvestmentNews)

In this article, authors Stephen Marsh and Sid Yenamandra deem the most critical cybersecurity and compliance concerns in a remote environment to be device security, software vulnerabilities, and data privacy. As they discuss each of the three cybersecurity risks, the authors also highlight solutions to mitigate such threats. It is suggested for firms to set clear device and usage policies, install remote-work controls, and implement employee cybersecurity training. Firms that do not implement cybersecurity policies and procedures will be vulnerable to threats and compliance risks. 

      3. Legislative, Regulatory Maneuvers in Play (Author – Melanie Waddell, Think Advisor)

Melanie Waddell discusses the shift in activity related to regulatory and legislative rules for advisors, due to the administration change. The priorities mentioned include market volatility, cryptocurrencies, and Form CRS. Additionally, in reference Gary Gensler’s nomination to lead the SEC, Amy Lynch, president of FrontLine Compliance commented that the “the list of priorities for exams may very well change”.

      4. SEC To Scrutinize Advisors, Brokers Who Buy Crypto, Attorneys Say (Author – Tracey Longo, Financial Advisor)

The rise of investor’s interested in crypto currencies comes with the SEC scrutiny on advisors that offer crypto-related ETFs for their customers. This article indicates that advisors should expect the SEC to assess their knowledge of digital assets as well as how they are meeting their fiduciary obligations. Furthermore, an attorney with Eversheds Sutherland suggests for advisors to prepare for the SEC to focus on disclosures related to price volatility, liquidity, and valuation methods.

      5. How to build the best practice website — without paying $20,000 (Author – Tobias Salinger, FinancialPlanning)

Tobias Salinger discusses the importance for advisory firms to have websites and mentions various strategies to go about building a compliant site. One approach mentioned, is for firms to create a main page and several “microsites” to increase lead generation. Salinger emphasizes the value for advisory firms to have an updated website, with modern capabilities such as a tool to book appointments. He notes that price aside, the best sites demonstrate personality and expertise of the advisors.

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Don't forget to check out last week's top RIA compliance news articles that focus on the SEC's environmental, social, and governance “ESG” disclosure policy, cybersecurity risks for retirement participants, and how the pandemic influences how advisors use technology.

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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