What’s the latest news in the world of regulatory compliance? Welcome to our biweekly recap, where we are giving you our 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. Today’s recap focuses on the Department of Labor (DOL) Fiduciary Rule, an analysis of the 2024 SEC enforcement priorities, a Supreme Court case involving the SEC and a round up of the fastest growing fee-only RIAs.
Here are our top investment adviser compliance articles as of December 1, 2023:
New DOL Fiduciary Rule Could Rein In Use of Advisor-Like Titles (Author – Melanie Waddell, Think Advisor)
The Labor Department is seeking feedback on potentially regulating titles like financial consultant, financial planner and wealth manager under its new fiduciary rule. The proposed rule aims to address concerns that “that investment advice providers that adopt [these] titles….holding themselves out as acting in positions of trust and confidence while simultaneously disclaiming status as an ERISA fiduciary.””
“Labor is also requesting comment on whether “other types of conduct, communication, representation, and terms of engagement of investment advice providers should merit similar treatment.””
The comment period ends on January 2, with a public hearing on December 12.
31 changes to prohibited transaction exemptions under DOL proposal (Author – Tobias Salinger, Financial Planning)
The Labor Department’s proposed “retirement security rule” seeks significant changes to fiduciary investment advice guidelines, specifically prohibited transaction exemptions. The rulemaking includes altering the definition of “fiduciary” under the Employee Retirement Income Security Act and introduces amendments enforcing new disclosure requirements and applying “best interest” standards to a broader range of transactions.
“The exemptions enable advisors to retirement plans to provide investment advice to participants, so long as they comply with “impartial conduct standards” that require the services to be in the investors’ best interests without any materially misleading statements but allow for the payment of a reasonable amount of compensation.”
Marketing Rule Among 2024 Enforcement Priorities: SEC Roundup (Authors – Nick Morgan and Tom Zaccaro, Think Advisor)
Check out the SEC Roundup, a bimonthly video series featuring former SEC senior trial counsels Nick Morgan and Tom Zaccaro. In this episode, a panel of SEC experts discuss the agency’s 2023 annual enforcement report, and provide insights into the SEC’s direction for 2024, covering various topics like the Marketing Rule, off-channel communications, whistleblowers, gatekeepers and disclosures. The panel highlights specific risk areas and offers advice to navigate potential regulatory issues.
Case questions SEC right to haul advisors before in-house judges (Author – Dan Shaw, Financial Planning)
The U.S. Supreme Court is deliberating a case involving the SEC and a hedge fund manager accused of fraud, potentially impacting the agency’s ability to use in-house tribunals. Attorney Michael McColloch argues that allowing accused financial professionals to choose their defense forum, rather than the SEC directing disputes to in-house administrative law judges, would resolve legal complexities. The case, SEC v. Jarkesy, questions the SEC’s authority, particularly its in-house judges’ power to impose civil penalties. The outcome holds significance for the SEC, which oversees 14,800 investment advisers managing around $128 trillion.
Fastest-Growing Fee-Only RIAs 2023 winners revealed (Author – Investment News)
InvestmentNews has identified 75 top performers based on SEC Form ADV data, honoring the Fastest-Growing Fee-Only RIAs over three years. Destiny Wealth Partners, managing over $805 million with a remarkable 234.8% growth, attributes its success to its culture and the Entrepreneurial Operating System. Brightside Advisory Partners, overseeing $747 million and growing at 284.7%, focuses on specific client categories like entrepreneurs and business owners, among others.
Check out our previous round up, which focused on the DOL Fiduciary Rule, SEC 2023 enforcement actions, the growth of the RIA space and AI.