RIA Compliance and Practice Management Blog

Top RIA compliance news articles for the week of September 9th, 2022

Posted by RIA in a Box

Sep 16, 2022 3:04:31 PM

This weeks recap focuses on Securities and Exchange Commission (SEC) audits, the Department of Labor's Rollover Rule, and the SEC's recently drafted strategic plan.

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 Securities and Exchange Commission's (SEC) focus on compliance with the Marketing Rule, cryptocurrency regulation, and anticipated amendments related to client fees and the Custody Rule. 

Here are our top investment adviser compliance articles for the week of September 9th, 2022:

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    1. SEC 12b-1 Fee, Custody Rules Likely Out by Year-End (Author – Melanie Waddell, Think Advisor)

This article discusses industry anticipation for the SEC's next move on amendments or rule-making related to the Custody Rule and 12b-1 Fees. The SEC recently announced that efforts are underway to amend regulations around the custody of funds or investments of clients by RIAs, and carried out a series of enforcement actions for custody rule violations. Karen Barr, the president and CEO of the Investment Adviser Association (IAA), shares that it is possible the agency will publish the new rule by October or November. 

Following changes to the Custody Rule, the industry can expect the SEC to address how firms should approach fund fees, likely with a focus on providing clear and consistent disclosures to shareholders regarding all fees charged. 

    2. Move Now on SEC Marketing Rule Compliance, Pros Warn (Author – Melanie Waddell, Think Advisor)

As firms prepare for 2023 examinations, they need to be aware of the regulatory focus on compliance with the Marketing Rule given the November 4, compliance date. Firms should prepare by not only updating their policies and procedures, but also reviewing marketing materials and solicitation practices. Melanie Waddell discusses the areas of uncertainty within the new rule, such as the replacement of the solicitation rules. Waddell also shares how the SEC will likely use deficiency letters and risk alerts to address key areas of concern post-examination, instead of starting with enforcement actions. 

    3. Can Compliance Be a Revenue Generator? (Author – Diana Britton, Wealth Management)

Diana Britton explores how strong compliance and cybersecurity programs can be a selling point for firms to their clients, prospects, and investors, therefore acting as a revenue generator. Industry professionals discussed the value of compliance processes at the recent Future Proof wealth festival and how software is used to increase operational efficiencies. Although staying ahead of regulatory compliance is necessary for every firm, this article demonstrates how firms with strong compliance culture and effective compliance infrastructures typically perform better in their investments. 

   4. SEC Exams Will Focus On Reg-BI Compliance, Agency Officials Say (Author - Tracey Longo, Financial Advisor)

Firms should expect upcoming regulatory examinations to focus on compliance with Reg-BI standards, specifically the two staff bulletins published this year. The first bulletin covered standards of conduct for account recommendations, including rollover recommendations and recommendations of different account types. The second bulletin addressed conflicts of interest with retail customers. SEC Chairman Gary Gensler discusses the agencies efforts to ensure that investors' best interests are protected, including enforcement actions and continued guidance. 

   5. Toomey To Gensler: Congress Should 'Step In' On Crypto Regs (Author – Patrick Donachie, Wealth Management)

Patrick Donachie highlights SEC Chairman Gary Gensler's recent testimony regarding cryptocurrency oversight, before the Senate Banking Committee. The article points out that many professionals within the wealth management industry are waiting for clear guidance from the federal regulator before they will offer cryptocurrency investments. The interest in cryptocurrency investments is high among investors under the age of 35, with a majority currently using online platforms versus a wealth manager. Donachie also touches on Gensler's request for increased funding to support regulatory enforcement, and notes the recent increase in jury trials, examinations, and private funds managed by RIAs.

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Don't forget to check out last week's top RIA compliance news articles that focus on the DOL's model rule for continuing education, the SEC's stance on cryptocurrency regulation, and recent compliance violations related to client fees, Form ADV, and the Custody 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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