RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of May 7th, 2021

Posted by RIA in a Box

May 14, 2021 10:46:39 AM

Top RIA compliance articles focus on the SEC's scheduled rule reviews, tips for remote exams, and possible anti-money laundering policy plans for RIAs. 

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 Gary Gensler's start as Chairman for the Security and Exchange Commission ("SEC"), the Secure Act 2.0, and the Department of Labor's (DOL) fiduciary exemption. 

Here's our top investment adviser compliance articles for the week of Mat 7th, 2021:

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     1. Gary Gensler uses political savvy for strong start at SEC (Author – Mark Schoeff Jr., Investment News)

The newly confirmed SEC Chairman, Gary Gensler spent nearly four hours answering questions with lawmakers during a congressional hearing last week. Mark Schoeff Jr. highlights the issues covered such as the GameStop frenzy and Reg BI. Schoeff Jr. comments the new Chairman handled the questions "deftly", and his answers were interpreted favorable by both side of the debate on Reg BI.

Gensler stated his intentions to monitor the effectiveness of Reg BI as well as how the rule is fully complied with, through examinations, enforcement, and guidance.

     2. Secure Act 2.0 Rules Leave Ed Slott, Advisors Puzzled (Author – Melanie Waddell, Think Advisor)

In this article, Melanie Waddell provides an overview on the recently passed Secure Act 2.0 and discusses the reactions from the wealth management industry. As part of the Act, one provision raises the required minimum distribution (“RMD”) age from 72 to 75 over the span of 10 years. Several industry experts are at a consensus, applauding the non-controversial provisions of the act and the House Ways and Means Committee’s “bipartisan work”.

The article points out that advisors have commented on the good intentions of the provision allowing investors to save more money for retirement, but they have also shared speculation on the potential confusion for investors due to the numerous rules in Act.

     3. Investor Advocates Urge DOL To 'Fix' Retirement Plan Advisor Rule (Author – Tracey Longo, Financial Advisor)

Last week, a letter was sent to DOL Acting Assistant Secretary, Ali Khawar, called “How to Fix the Advice Rule”, collectively written by over 40 groups including investor attorneys, investor advocacy groups and employee organizations

This letter detailed the strong opposition of the DOL’s fiduciary exemption and called for changes to be made including the following: 1) clarify the meaning of “best interest.”, 2) lose remaining loopholes in the definition of fiduciary investment advice, 3) strengthen the core duty of loyalty, 4) impose a duty to monitor on firms, 5) strengthen the disclosure requirements through testing and improved timing, 6) eliminate the self-correction provision for firms that discover violations and make investors whole, and 7) strengthen advice rules with regard to IRA investors.

     4. New Legislation To Require Annuities In Retirement Plans (Author – Tracey Longo, Financial Advisor)

Tracey Longo covers the proposed legislation concerning annuities in retirement plans. The new legislation, being drafted by the House Ways and Means Committee, would mandate “most retirement plans to make available a guaranteed lifetime income option such as an annuity for at least 50% of employees’ vested account balances.” Former Department of Labor Assistant Secretary, Preston Rutledge addresses the fact that while employers may be required to offer these lifetime income options, employees will not be required to purchase or opt into them. Rutledge also comments that the legislation could appear as a bi-partisan bill later in the year or possibly be a handled in reconciliation, which would require 50 votes from the Senate.

     5. SEC Warns of Bitcoin Futures Risks in Mutual Fund Investments (Author – Ben Bain, Wealth Management)

The SEC’s division of investment management made a statement pertaining to bitcoin investments: “Be aware of the risks”. SEC staff also made their intentions clear that assessing firm’s compliance with these funds is going to be top priority. In addition SEC staff announced they will be taking the following actions: 1) scrutinize the Bitcoin futures market to judge whether it “appropriately” supports mutual fund investments in the derivatives, 2) look at funds’ ability to liquidate their derivatives in the cryptocurrency, and 3) review funds’ valuations of holdings.

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Don't forget to check out last week's top RIA compliance news articles that focus on the Itegria acquisition by RIA in a Box, Think Advisors tech round up, and the Department of Labor’s (“DOL”) withdrawal of the independent contractor rule.

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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