RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 25th, 2020

Posted by RIA in a Box

Oct 2, 2020 2:26:54 PM

Top_Compliance_Articles_of_the_week-17Each 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 Private Fund Platform released by RIA in a Box, the Securities and Exchange Commission's ("SEC") concerns surrounding credential stuffing, and why registered investment advisors ("RIA") are reluctant to use the term 'fiduciary'. Here's our top investment adviser compliance articles for the week of September 25th, 2020:

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          1. JPMorgan Teams with SAP to Enhance Morgan Money: Tech Roundup (Author – Jeff Berman, ThinkAdvisor)

Jeff Berman provides a run down of the latest financial technology innovations in the industry. J.P. Morgan has integrated with SAP to provide Asset Management’s Morgan Money platform to users of SAP’s Treasury Management platform. RIA in a Box has released a Private Fund Platform to address the “unique regulatory requirements faced by private fund advisors including venture capital, private equity and hedge fund managers”. The platform aims to automate and streamline the compliance process for private fund advisers and offer reassurance that they are meeting all compliance requirements. Capabilities within the platform include Form PF filings, Blue Sky or Form D filings, a private fund inventory, and a tailored policies and procedures manual.

2. Financial Planning Tools: How Software Helps Advisors Remain Confidently in Compliance (Author – Adam Shell, Investor’s Business Daily)

As a financial advisor, the most important thing to portray to your client is accountability. This is where financial planning tools come in. These tools help to set expectations and limit confusion down the road if a dispute with the portfolio comes up, thanks to the paper trail provided within the tools. Furthermore, the process becomes much more black and white because the client can see exactly where their money will be invested, the advisor provides data to back up their decisions, and then both client and advisor sign off on the agreement. With all the information that is available today, the most important part is to show the data behind investment decisions. GJ King, president of RIA in a Box, said, “Prove it and show it. From a regulatory standpoint, the firm must show that it wasn’t asleep at the wheel.”

         3. SEC Warns of ‘Credential Stuffing’ Cyberattacks (Author – Nicole Casperson, InvestmentNews)

The SEC is pushing for advisors to revisit and bolster up their cybersecurity practices, especially password management, according to a recent risk alert distributed by the SEC’s Office of Compliance Inspections and Examinations (“OCIE”). The reason for the risk alert is a new cyberattack tactic known as ‘credential stuffing’, where criminals scour the dark web for login credentials and then use that information to log into firm accounts and access client funds. Amy Lynch, president of FrontLine Compliance and former SEC examiner, said, “Cybersecurity attacks are increasing, especially with many firm employees now working from home. This alert serves as a notification to firms that they need to be aware of this new risk type and take action to update policies and to monitor for it.”

         4. Forget the F-word – RIAs Play down Fiduciary Standard Online (Author – Mark Schoeff Jr., InvestmentNews)

In a recent review of 45 fee-only RIAs by the Institute for the Fiduciary Standard, only 14 of those RIAs mention “fiduciary” on their websites, while 11 of them do not mention the term anywhere on their site. Many believe these findings point to the recent investment-advice regulation, including Knut Rostad, president of the Institute for the Fiduciary Standard. Rostad believes that the SEC's Regulation Best Interest (“Reg BI”) has blurred the line between brokers and RIAs, making it harder for the consumer to understand the difference. “Where this comes into play is the degree to which the SEC has succeeded in convincing investors that there’s not a dime’s worth of difference between brokers and advisers,” Rostad stated.

           5. State Securities Regulators See Spike in Unregistered Advisor Cases (Author – Melanie Waddell, ThinkAdvisor)

Melanie Waddell discusses the findings in the North American Securities Administrators Association’s (“NASAA”) enforcement report and what it means for the industry, highlighting the 15% increase in actions against unregistered firms. “This information is indicative of the measures regulators take to prevent bad actors from entering the market. In many cases, applicants withdraw their candidacy for licenses or registrations due to state investigations or forthcoming actions to deny, suspend or revoke their applications,” NASAA explains. The report also points to the rise in adoption of legislation based on the NASAA’s Model Act to Protect Vulnerable Adults from Financial Exploitation, which requires an agent or representative to report the financial exploitation of an eligible adult that has been attempted or already occurred.

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Don't forget to check out last week's top RIA compliance news articles that focus on the release of the North American Securities Administrators Association's ("NASAA") annual enforcement report, the release of RIA in a Box's Private Fund Platform, and the Securities and Exchange Commission ("SEC") changing the definition of accredited investor.

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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