RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 17th, 2019

Posted by RIA in a Box

May 24, 2019 3:23:44 PM

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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 the new model cybersecurity rule, the Securities and Exchange Commission ("SEC") finalizing their Regulation Best Interest ("Reg BI") proposal, and the Department of Labor's ("DOL") new fiduciary rule.  Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of May 17th, 2019:

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1. State Regulators Release Model Cybersecurity Rule  (Author- Mark Schoeff Jr., InvestmentNews)

In this world of constant communication and instant information, investment advisers have struggled to protect client data. This past Tuesday, state securities regulators addressed this with the release of the North American Securities Administrators Association ("NASAA") model cybersecurity rule package. The model rule package will be a framework for advisors to reference and create a stronger cybersecurity defense. GJ King, President of RIA in a Box, says “By agreeing on a framework standard rather than prescriptive requirements that may change year-to-year when new technologies or threats evolve, it gives firms guidance that will be relevant today and into the future.” Like the new RIA in a Box cybersecurity platform, the new model rule is designed around the National Institute of Technology ("NIST") cybersecurity framework.

2. SEC Sets June 5 Vote on Regulation Best Interest  (Author- Melanie Waddell, ThinkAdvisor)

Reg BI may be implemented sooner than expected. In addition to voting on Reg BI, the SEC will also decide if RIAs will need to provide a new customer relationship summary, or Form CRS. Melanie Waddell elaborates, “The commission will also decide June 5 whether to adopt new and amended rules and forms to RIAs and registered broker-dealers to provide a brief Form CRS to retail investors, and whether to publish a commission interpretation of the standard of conduct for investment advisors.”

3. DOL Pushes Fiduciary Rulemaking Plan to December  (Author - Tracey Longo, Financial Advisor Magazine)

The DOL's last fiduciary rule was vacated last year in the Fifth Circuit Court of Appeals, and now the agency wants to take another swing at creating a fiduciary rule. However, since the SEC is still working to finalize Reg BI, the DOL will hold off on a new fiduciary rule in order to better coordinate. Either way, push back is expected, “The potential for continued legal challenges from the securities and insurance industries is inevitable. The more the DOL and SEC rules dovetail, the more likely they are both to be waylaid by litigation.”

4.  SEC Urges Advisors to Look Beyond AML  (Author - Melanie Waddell, ThinkAdvisor)

With ever-evolving technology surrounding us, it is important to stay on top of what can be a threat to you and your firm. Pete Driscoll, the SEC exam chief recently stated, “Such financial crimes may be carried out through account intrusions and other cyber-related crimes as well as identity theft.” When the SEC released its examination priorities back in January, the SEC’s Office of Compliance Inspections and Examinations said, “examiners will review firms’ compliance and anti-money laundering requirements, including whether firms are appropriately adapting their Anti-Money Laundering ("AML") programs to address their regulatory obligations.”

5. Monitoring States’ Fiduciary Moves  (Author - Ed McCarthy, Wealth Management)

Many states have taken matters into their own hands during “a regulatory post-DOL fiduciary rule void” while waiting to see what the SEC's Reg BI will entail. However, several observers believe these states may be acting too quickly. Brad Campbell, partner with Drinker Biddle, says, “The reality is the DOL rule was deeply flawed, which is why it was struck down. So, whether you like some of the elements of it or not, it wasn’t really a workable approach. And secondly, the SEC hasn’t actually finished doing what it’s going to do. So, until you’ve seen all those it seems to me it’s premature for the states to be saying there is a void and then stepping into it.”

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Don't forget to check out last week's top RIA compliance news articles focusing on RIA in a Box's new cybersecurity platform and the need to invest in compliance. 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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