RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 6th, 2022

Posted by RIA in a Box

May 13, 2022 4:34:56 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 potential anti-money laundering regulation, compliance with the Fiduciary Rule, the Securities and Exchange Commission's ("SEC") comment period before rule making, and a House bill aimed at preventing elder abuse.

Here are our top investment adviser compliance articles for
the week of May 6th, 2022:

Best Practices for Third-Party Vendor Management Compliance

    1. Anti-Money Laundering Rule for Advisors May Be Revived: SEC Roundup (Authors – Nick Morgan & Tom Zaccaro, Think Advisor)

This article highlights current SEC topics covered in the bimonthly video series, "SEC Roundup", by Nick Morgan, Tom Zaccaro, and other industry expert guests. The group discussed the potential revival of the anti-money laundering regulation for SEC registered investment advisers and the private equity sector. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced it is "looking to apply the FinCEN special collection [anti-money laundering] authorities" to support future rule making.  An industry thought leader, Laurel Brown, recommends advisors have AML policies and procedures in place and implement an AML code of conduct to prepare for future regulations.  

    2. Improving PTE 2020-02 Rollover Compliance (Author – Ed McCarthy, Wealth Management)

Ed McCarthy brings attention to the upcoming compliance date, requiring advisors to prepare and deliver disclosure requirements to support their rollover recommendations. According to the Fiduciary Rule, advisors could avoid the new compliance requirements if they provide education on rollovers only. However, McCarthy states that "given rollovers’ prominence in growing firms’ assets, the education-only option looks to have limited applicability." 
Firms must implement new processes to gather information to analyze and compare plan options, and then document the analysis for investors and regulators. Small firms may lack the resources to complete these tasks by the compliance date. 

    3. How to Create Your Own Definition Of Independence (Author – Ryan Shanks, Financial Advisor) 

This article covers the many gray areas of independence between being an RIA and working for a wirehouse. It's important for advisors to fully understand who "owns" the relationship with their clients, as most employees of RIA firms cannot take clients with them when the firm owns the clients. Author, Ryan Shanks, also points out that firms should focus on retaining their advisors by making them feel unique and empowered, with resources for success.

    4. SEC Extends Comment Period on Climate Risk, Private Fund, Exchange Proposals (Author – Mark Scheoff Jr., Investment News)

Earlier this week, the SEC decided to extend the “public comment period on proposed rules regarding climate disclosures, private funds and market structure, responding to widespread pleas that the agency provide more time to give input.” The SEC also decided to extend the comment period for two other proposals – one that would increase regulatory scrutiny of private funds and the other would update the SEC’s definition of exchange and alternative trading systems. Gary Gensler, SEC Chairman, stated that “the SEC benefits greatly from hearing from the public on proposed regulatory changes. Commenters with diverse views have noted that they would benefit from additional time to review these three proposals, and I’m pleased that the public will have additional time to provide thoughtful feedback.”

    5. House Passes Bill to Fund State Efforts to Protect Older Investors (Author – Melanie Waddell, ThinkAdvisor)

On Wednesday, the House passed the Empowering States to Protect Seniors from Bad Actors Act. The bipartisan legislation to create a grant program, implemented by the Securities and Exchange Commission, would work closely with state securities regulators to protect older investors. The bill would move the responsibility for administering the Senior Investor Protection Grant Program established by Section 989A of the Dodd-Frank Wall Street Reform and Consumer Protection Act from the Consumer Financial Protection Bureau to the SEC. The bill would also establish an interdivisional task force within the SEC to review grant applications and oversee the administration of the program. The North American Securities Administrator Association ("NASAA") explained the grant program would "enhance existing efforts by state securities and insurance regulators to protect senior investors and policyholders from financial fraud". Melanie Senter Lubin, Maryland securities commissioner and president of NASAA, said the bill would also "create more opportunities for federal and state securities regulators to communicate and coordinate in their efforts to protect senior investors".

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Don't forget to check out last week's top RIA compliance news articles that focus on compliance guidance for small firms, the Securities and Exchange Commission's ("SEC") proposed Cybersecurity Rule, concerns with compliance with the Marketing Rule, preventing elder abuse, and increased regulatory attention on the cryptocurrency market. 

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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