RIA Compliance and Practice Management Blog

Top RIA Compliance News Articles for the Week of September 3rd, 2021

Posted by RIA in a Box

Sep 10, 2021 5:27:43 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 compliance with the fiduciary rule, the Securities and Exchange Commission's ("SEC") marketing rule, cybersecurity best practices, and practices for labeling environmental, social, and governance "ESG" funds. 

Here's our top investment adviser compliance articles for the week of September 3rd, 2021:

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     1. Half Of Firms Admit They're Just Getting Started On Fiduciary Rule Compliance (Author – Tracey Longo, Financial Advisor)

The “Improving Investment Advice for Workers & Retirees” exemption, also know as the fiduciary rule, will be enforced on December 20, 2021. This article shares the findings from a recent poll, indicating that 50% of broker-dealer and RIA firms are only in the early stages of planning to meet the requirements. The other half of the responding firms said they “are almost there” in terms of meeting the fiduciary rule requirements.

The article points out that many investment advisors may not yet realize the impact of the new compliance requirements and they may be taken by surprise by unexpected examinations. InvesterCom is quoted in a statement expressing the importance for RIA firms to assess their current “compliance deficit and determine what they will need to implement to meet their regulatory obligations in full.”

    2. SEC marketing rule causes advisers most compliance concerns (Author – Mark Schoeff Jr., InvestmentNews)

Among the various current issues surrounding compliance for investment advisers, the SEC Marketing Rule is ranked as the hottest topic in the 2021 Investment Adviser Compliance Testing Survey. The official rule went into effect on May 4th, 2021, with a compliance deadline of November 4, 2022. Firms planning to take advantage of new marketing tactics such as displaying testimonials have the crucial task of ensuring their compliance policies and procedures have been carefully updated and implemented.

Other top-ranking matters from the survey of 350 compliance professionals at RIA firms, included cybersecurity, ESG investments, business continuity related to the pandemic, and digital assets.

    3. SEC Cyber Violations a 'Guessing Game,' Say Observers (Patrick Donachie, Wealth Management)

In this article, Patrick Donachie explores the regulatory expectations of reasonable cybersecurity policies and procedures within RIA firms. Industry experts suggest the SEC should give clearer guidelines on what defines “reasonable” when it comes to cybersecurity protection. The article stresses the importance of employing multifactor authentication “MFA” for emails for employees and contractors as a best practice. Data security continues to be a crucial and challenging area of concern for financial firms, as they need to protect their client’s non-public information.

     4. Fund managers feel heat in SEC crackdown on overblown ESG labels (Authors – Ben Bain & Saijel Kishan, FinancialPlanning)

Ben Bain and Saijel Kishan collaborate to discuss industry standards for environmental, social, and governance “ESG” labels on funds. They point out that the SEC has been continuously vocal about prioritizing increased ESG enforcement to reduce and eliminate instances of “greenwashing” or mislabeling funds. The SEC is currently conducting reviews on ESG matters. The article points out that the findings of misconduct in such reviews can lead to policy changes, further investigation, and potential fines.

     5. Marketing, Advertising Top 2021 Concern for Firms’ Compliance Officers (Author – Patrick Donachie, Wealth Management)

Findings from the 2021 Investment Management Compliance Testing Survey demonstrate that the SEC marketing rule has reached the top of the list of compliance officers' top priorities. In the category “hot compliance topics”, advertising/marketing has increased 33 percentage points from 2020.

Cybersecurity, digital assets, and business continuity plans related to the pandemic were also listed as hot topics. On the topic if cybersecurity, the survey results indicated that firms would like federal regulators to create a “national data breach notification regime” to simplify cybersecurity compliance.


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Don't forget to check out last week's top RIA compliance news articles that focus on new Security and Exchange Commission ("SEC") hires, an SEC public comment request, and Environmental, Social, and Governance ("ESG") investments. 

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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