RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of March 20th, 2020

Posted by RIA in a Box

Mar 27, 2020 3:21:27 PM

Top_Compliance_Articles_of_the_week-17Each 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 the Securities and Exchange Commission's ("SEC") COVID-19 ("coronavirus") relief, increased cybersecurity risks, and compliance challenges related to remote work. 

Here's our top investment adviser compliance articles for the week of March 20th, 2020:

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1. SEC further extends filing deadline; Finra pushes arb hearings back again (Author- Mark Shoeff Jr., InvestmentNews) 

The SEC has further extended the deadline for RIA firms to file the Form ADV to give firms an extra 45 days. The SEC’s Office of Compliance and Inspections (“OCIE”) said that utilizing relief provided by the SEC would not be a “risk factor in determining whether the agency launches an examination,” Mark Schoeff Jr. states. While the agency has offered reassurance, compliance warn advisers of taking advantage of the deadline extension. “As an RIA firm, I would still do all I can to meet the regular filing and delivery deadlines,” RIA in Box President GJ King states. Additionally, Finra extended its suspension of in-person arbitration hearings to May 31st.

2. FINRA Shares ‘Stay Home’ Info From States, Cancels Conference  (Author- Janet Levaux, ThinkAdvisor)

Finra’s annual conference originally scheduled for May 12 through 14th in Washington DC has been cancelled. In addition, Finra has collected information on workplace restrictions per individual states. According to Janet Levaux, “The regulator says a growing number of regions — now more than 30 — are issuing “shelter-in-place” or “stay-at-home” orders, which vary in scope and duration. These rules generally require businesses not considered “essential” to close their physical offices and continue their operations remotely.” Financial institutions, however, may be defined as an essential business. It is noted that the situation continues to develop rapidly and advisory firms should rely on their states’ authorities for the latest information.

         3. Remote oversight could introduce hurdles for advisers, regulators  (Author - Mark Schoeff Jr., InvestmentNews)

In this article, Mark Schoeff Jr. walks through the potential impacts that a remote workforce will have on both regulators and financial advisers. “Although they have been working for years to be more streamlined and targeted in examinations and enforcement activities, doing everything remotely creates logistical complications,” Mark Schoeff Jr. states in reference to the SEC. Examples of challenges include document retrieval, interviews, and a missing “human element.” Former regulators weighed in on the topic complimenting the SEC’s ability to adapt to a remote work environment.

         4. Avoiding Compliance Pitfalls During the Coronavirus Pandemic (Author- Patrick Donachie, Wealth Management)

In this article, Patrick Donachie walks through common compliance mistakes that advisory firms may make as result of adopting to a remote workforce. Compliance vulnerabilities that may arise involve cybersecurity, client communications, advertising, internal electronic communication, archiving, and more. While technology allows for firms to overcome these challenges, the article notes that implementing technology too quickly can be problematic. “There’s good archiving technology. It’s there, but you’re asking people to dramatically and quickly adopt new tech. It’s a recipe for things to go wrong,” states GJ King, President of RIA in a Box.

           5. Scammers Using Coronavirus To Prey On Consumers, Regulators Say (Author - Karen Demasters, Financial Advisor Magazine)

Coronavirus continues to lead to new scams targeted at consumers. Finra, the SEC and the North American Securities Administrators Association (NASAA), have all issued warnings about these scams. Karen Demasters provides examples of scams including vaccines in exchange for payment and fake offers of public assistance. “We know con artists are opportunistic and use current events to cloak their schemes with an air of immediacy and legitimacy. Never make an investment decision without understanding what you are investing in, who you are doing business with, where your money is going, how it will be used, and how you can get it back,” said Christopher Gerold, NASAA president and chief of the New Jersey Securities Bureau.

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Don't forget to check out last week's top RIA compliance news articles focusing on cybersecurity threats amid COVID-19, the SEC postponing Form ADV submissions, and succession planning.

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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