RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 31, 2019

Posted by RIA in a Box

Jun 7, 2019 2:09:43 PM

SEC Form CRS passing

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 Securities and Exchange Commission ("SEC") passing their Regulation Best Interest ("Reg BI") proposal, Form CRS, and the SEC's and the North American Securities Administrators Association's ("NASAA") cybersecurity focus. Check back each week for the latest list of top stories.

Here's our top investment adviser compliance articles for the week of May 31th, 2019:

Download the 10 KPIs RIA Firms Should Track Checklist

1. Cheers, Jeers for SEC's New Advice-Standards Rules (Author- Melanie Waddell, ThinkAdvisor)

The SEC’s advice standard package including the introduction of the new Form CRS, or Form ADV Part 3, which was passed on Wednesday by a 3-1 vote is still facing controversy among industry professionals and groups. While the new rules are intended to set a fiduciary standard for all investment professionals, many argue that the package falls short of doing so and imposes complications for firms and investors. Republican lawmaker Senator Mike Crapo of Idaho comments, “The SEC has diligently crafted the appropriate balance to increase transparency in investors’ relationships with investment advisers and broker-dealers, while preserving access to advice relationships and investment products.” On the other hand, democrats are arguing that, “the SEC declined to require broker-dealers and investment advisers to put their clients’ interests ahead of their own,” as stated by Senator Elizabeth Warren.

2. SEC reforms impose new requirements on brokers and advisers, but some argue not enough (Author- Jeff Benjamin, InvestmentNews)

Mark Schoeff Jr. highlights some important changes that will occur for both investment advisers and broker-dealers as a result of Reg BI. New rules for broker-dealers include disclosure of material facts about the broker-client relationship and recommendations and written policies related to conflicts of interest. Both investment advisers and broker-dealers will be required to produce the new Form CRS for their clients and owe them a fiduciary duty with some exclusions for broker-dealers under law. Duane Thompson policy analyst states, "But if you're a broker-dealer, there are still big changes coming when it comes to managing and avoiding conflicts of interest."

3. Best Interest Standard Care for Advisors #8 (Author - Fred Reish, FredReish.com)

Fred Reish provides sample questions from the SEC regarding RIA firms' practices dealing with senior clients. The questions are formulated around policies and procedures regarding beneficiary changes, powers of attorney, and establishing points of contact to name a few. Fred Reish gives his opinion on the matter commenting, “In my view, we are in the early stages of regulation and examination of investment issues related to older investors.  The SEC and FINRA (and other regulators) will be more active in the future and the risk levels for investment advisors are rising.” Reish offers suggestions to advisers for best practices relating to senior clients.

4.  Protecting client data is an ongoing obligation (Author -  InvestmentNews Editorials, InvestmentNews)

With the rise of data breaches, cybersecurity continues to be a hot topic of conversation. Both the SEC and NASAA have made a point to focus on cybersecurity and help people understand the severity of these threats can be. “Assessing and monitoring the cybersecurity practices of their technology providers may seem far outside the comfort zone of financial advisers, but regulators have made it clear that advisory firms need to be on the case.”

5.  SEC Names CIA Veteran Zerrusen to Cybersecurity Post  (Author - Melanie Waddell, ThinkAdvisor)

The SEC announced on Monday that Kevin Zerrusen has been named to serve as Jay Clayton’s senior advisor for cybersecurity policy. Zerrusen is currently chair of the Intelligence National Security Alliance’s Cyber Council, served as managing director at Goldman Sachs, and is a 30-year veteran of the Central Intelligence Agency ("CIA").  Zerrusen and his expertise, “…will coordinate efforts across the agency to address cybersecurity policy, engage with external stakeholders, and help enhance the SEC’s mechanisms for assessing cyber-related risks,” according to Melanie Waddell.

Learn More About Our Cybersecurity Platform

Don't forget to check out last week's top RIA compliance news articles focusing  on the SEC's Reg BI proposal, cybersecurity, and the SEC's focus on compliance programs. 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.

RIA Compliance & Practice Management

Stay up to date on the latest RIA compliance, operations, and technology topics.

Hear from industry experts as they keep you up to date on the latest regulatory developments and practice management topics.

Subscribe to Email Updates

Recent Posts