RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of October 15th, 2021

Posted by RIA in a Box

Oct 22, 2021 2:53:56 PM

RIA Archiving, SEC regulation

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 the interest of state-registered firms' in the Marketing Rule, reasons advisors move to the independent RIA model, anticipated delay for the Fiduciary Rule, and the Securities and Exchange Commission's (SEC) current plans and priorities. 

Here are our top investment adviser compliance articles for the week of October 15th, 2021:

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    1. State-regulated advisers want a piece of testimonial marketing action (Author- Mark Schoeff Jr., InvestmentNews) 

The SEC Marketing Rule is set to allow SEC-registered firms to use new marketing tactics, like client testimonials and endorsements, by November 2022. State-registered firms may be at a disadvantage, as they must wait for their individual state regulators to decide to adopt the rule to incorporate these new strategies into their marketing and compliance plans. The article mentions how state-registered firms are hopeful of using "social proof" to influence and build rapport with potential clients, as larger firms will soon do. 
 
Maryland Securities Commissioner and NASAA President-Elect, Melanie Senter Lubin, commented on the issue by sharing that the organization will monitor how this rule serves firms at the federal level, and later decide if the states should make this a model rule to adopt individually. 
 

    2. Eight Reasons Advisors Leave their Broker-Dealers to Start Their Own RIAs (Author – Colin Falls, Wealth Management)

Colin Falls discusses the main reasons advisors at Broker-Dealers choose to start their own RIA firms. Falls shares that while every advisor's situation is unique, there are key indicators that advisors can use to recognize they may be ready to go independent. The list begins with the desire to become a true fiduciary, which Falls describes as serving clients based on their needs, and without being limited to products influenced by adviser incentives and commissions. In other points throughout the list, there are recurring themes of following the adviser's values and desire to make their own choices which best serve the clients and the brand they wish to create, versus the brand of the enterprise. 

    3. Schwab Regulatory Expert Predicts DOL Will Revisit Defining ‘Fiduciary’ in 2022 (Author– Patrick Donachie, Wealth Management)

In this article, Michael Townsend, Schwab’s managing director of legislative and regulatory affairs, shares that the DOL will likely be "taking further regulatory action" when it comes to the organization's definition of a fiduciary in a retirement context. Townsend also anticipates that the DOL will also likely delay the enforcement date for the Fiduciary Rule, which is currently set for December 20, 2021. The article also mentions other priorities for SEC examiners, including Form CRS compliance, disclosures, ESG recommendations, and crypto currency. 

    4. 5 First-of-Their-Kind SEC Enforcement Actions (Author – Melanie Waddell, Think Advisor)

Think Advisor provides a slideshow to illustrate 5 notable SEC enforcement actions the division has recently taken. Several of the enforcement actions listed revolved around the crypto space, with one action involving securities using decentralized finance "DeFi" technology and another instance of illegal digital asset exchange platforms. Other actions involved the sale of unregistered securities through crowdfunding and a data provider with misleading practices and material misrepresentations. It is also mentioned that the SEC will continue to evolve its focus and enforcement actions over time to best protect investors. 

    5. SEC working to ‘get the best out of’ Reg BI, Gensler says (Author –Tobias Salinger, FinancialPlanning)

Tobias Salinger provides an overview on the latest details involving Regulation Best Interest "Reg BI". SEC Chairman, Gary Gensler recently promised to enforce the existing rule versus discussing plans of an overhaul, echoing past remarks, that regulators have the resources and examinations in place to get the best out of Reg BI. At a virtual panel, Gensler instead focused on discussing other regulatory issues, including new disclosures to investors for publicly traded firms and the SEC's report on the GameStop saga. 

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Don't forget to check out last week's top RIA compliance news articles that focus on the main concepts advisors must know about strategic marketing, Gary Gensler's ambitious agenda for the SEC, and a new rule proposed by the DOL.

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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