RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 6th, 2019

Posted by RIA in a Box

Sep 13, 2019 3:00:39 PM

Capital One data breach impact to RIA firms

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 increasing emphasis from state regulators on cybersecurity, a new lawsuit against the Securities and Exchange Commission ("SEC") in an attempt to block Regulation Best Interest ("Reg BI"), and what to consider when naming your RIA firm.

Here's our top investment adviser compliance articles for the week of September 6th, 2019: 

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1. Small advice firms show increase in cyber-related issues (Author - Mark Schoeff Jr., InvestmentNews)

This week the North American Securities Administrators Association (“NASAA”) released their biennial investment adviser examination report of investment advisers. According to the latest report, "regulators found cybersecurity problems in 26% of the reviews, compared to 23% in 2017, the last time coordinated exams were conducted." Given the fact cybersecurity wasn't even a category in NASAA's 2015 exams, it is clear state regulators are putting increasing emphasis on cybersecurity. Michael S. Pieciak, NASAA president, said in a statement, “Smaller companies are the low hanging fruit for cybercriminals, and when you consider that more than three-fourths of the nearly 18,000 state-registered investment advisers are 1- to 2-person shops, it is clear how important cybersecurity should be for these small businesses as well.” Of the 1,078 examinations conducted between January and June of this year, 292 were being reviewed for the first time.

2. NASAA: State Enforcement Rate Against Advisors Nearly Doubled in 2018 (Author - Tracey Longo, Financial Advisor Magazine)

The end of 2018 marked a five-year high of enforcement actions involving investment advisor firms. "States reported 17% of their enforcement actions involved investment advisor firms," almost doubling the number of enforcement's against investment advisers since 2014. Tracy Longo goes on to explain, “State regulators also reported a record $1 billion in monetary relief ordered and 1,753 years of criminal relief as a result of their enforcement actions. Bad actors charged by state regulators received 1,048 years of incarceration and 705 years of probation.” NASAA made a statement regarding the results, “Overall, state securities regulators continued to take strong steps to prevent bad actors from operating within the licensed securities industry, and to limit the activity of licensees and registrants.”

           3. Seven States Sue SEC to Block Reg BI Rules (Author - Erik Larson, Financial Advisor Magazine)

Many states are finding issue with the SEC regarding Reg BI, with seven states recently filing a lawsuit against the SEC. These states are accusing the SEC of not properly executing a final regulation under the Dodd-Frank Act, even though this new regulation will take effect Tuesday. Letitia James, New York Attorney General, states “Instead of adopting the investor protections of Dodd-Frank, this watered-down rule puts brokers first. The SEC is now promulgating a rule that fails to address the confusion felt by consumers and fails to remedy the conflicting advice that motivated Congress to act in the first place.”

4. RIA in a Box’s MyRIACompliace Software Integreates With Cloud-Based Docupace  (Author - Jeff Berman, ThinkAdvisor)

Earlier this week, RIA in a Box announced their latest MyRIACompliace® software integration with cloud-based document storage provider, Docupace. The latest integration now allows joint MyRIACompliance® and Docupace subscribers to have single sign-on access to Docupace. Mike Lubansky, Director of Product at RIA in a Box, stated, “Through the integration with Docupace, advisors can seamlessly access and store their client documents containing Non-Public Information.” Richard Thoeny, vice president of product management at Docupace, expanded, "Secure, digital storage of sensitive documents and information is paramount and one of the highest priority issues facing many advisors today.”

5. The dos and don’ts of naming an RIA  (Author - Gordon Abel, Financial Planning)

When deciding what to name your firm, it is important to consider your brand and overall culture that is projected to the public. Article author Gordon Abel gives an example, “A common practice is using a surname or initials, or those of your partners, which conveys the importance of the key executives. This makes the relations very specific, with the level of trust personal and heightened.” Abel also suggests, “…to pursue an evocative name. This is a word or combination of words that evokes the brand positioning of your firm on either an emotional or intellectual level.”

Download our Infographic Outlining the 5 Form CRS Requirements

Don't forget to check out last week's top RIA compliance news articles focusing on on a recent SEC risk alert on principal trading, elder abuse legislation, and starting an RIA firm.


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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