Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.
Stay up-to-date and in the know on everything happening in the compliance world as of Apr. 14, 2023.
FINRA tightens work-from-home rule plan for brokers – Author Melanie Waddell
The Financial Industry Regulatory Authority (FINRA) has refiled a proposal with the Securities and Exchange Commission (SEC) to make changes to FINRA Rule 3110, which would allow a home office to be considered a non-branch “residential supervisory location” (RSL) under certain conditions. The SEC had a statutory deadline to respond to the proposal by the end of March, but FINRA said it would rework the plan after industry pushback. The revised plan tightens eligibility rules and enhances the conditions for RSL designation. The SEC has 240 days to approve or deny FINRA’s plan. The RSL plan has been controversial, with some groups claiming it leaves considerable opportunity for advisers working from home to skirt the rules.
UK FCA Business Plan 2023/24: prioritizing ‘critical commitments’ in uncertain times – Author Hogan Lovells
The UK Financial Conduct Authority (FCA) has announced its business plan, which identifies four areas of focus for 2023: putting consumers first, preparing financial services for the future, strengthening the UK’s position in global wholesale markets and reducing and preventing financial crime. Among the plans is a focus on targeted multi-firm work to identify, supervise and enforce against activities that undermine effective competition and consumer outcomes. The FCA also plans to increase its assessments of firms’ anti-money laundering systems and controls.
The FCA has also shared its strategy for 2022-2025 to accomplish the objectives of its business plan. The strategy outlines three themes: reducing and preventing serious harm, setting and testing higher standards and promoting competition and positive change.
Why the metaverse, for wealth management, is still a big maybe – Author Justin L. Mack
The metaverse has been a hot topic in recent years, with many industries considering its potential applications. Wealth management is one such industry which could potentially benefit from the metaverse, but it remains uncertain whether or not it will actually come to fruition. Some of the potential benefits of the metaverse in wealth management include increased accessibility to financial services and more personalized experiences for clients. However, there are also concerns about data privacy and security, as well as the potential for virtual assets to be subject to market volatility.
Ultimately, the success of the metaverse in wealth management will depend on how well these issues are addressed and whether or not clients are receptive to the concept.
Custody, compliance and tech lay the foundation for going independent – Author Jeff Benjamin
As more brokers move toward independence, the network of products and services designed to help them has never been more expansive, according to a recent panel discussion hosted by goRIA from InvestmentNews. The discussion covered some of the planning and early moves related to leaving a brokerage firm and joining or establishing a registered investment advisory firm.
The panel agreed RIAs should plan to spend $20,000 to $30,000 to get the basic components of a tech stack. When it comes to compliance, there are different ways to cover your bases, including outsourcing. For regulatory purposes, meeting the $100 million threshold to qualify for registration with the SEC was preferable to state-level registration. Another area of universal agreement among the panelists was the importance of owning your client data, regardless of which service providers and platforms you partner with or how you partner with them.
SEC approves FINRA expungement reform proposal – Author Mark Schoeff, Jr.
The SEC has approved a rule proposed by FINRA which tightens the procedures for brokers seeking expungement of customer disputes from their records. The rule establishes a special roster of arbitrators to hear expungement requests, which must be filed within two years of the closing of a customer arbitration or civil litigation, or within three years of a customer complaint being filed in the Central Registration Depository system. The rule also requires earlier notification of customers and state regulators when brokers seek expungement and allows state regulators to participate in expungement proceedings. The Public Investors Advocate Bar Association expressed optimism about the reform, which could reduce the approval rate for expungement requests that FINRA arbitrators currently grant 90% of the time.