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. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of November 12, 2016:
- SEC Chair to Step Down, Clearing Path for Trump to Eliminate Tough Wall Street Regulations (Author- Renae Merle, The Washington Post)
On Monday, Chairwoman of the Securities and Exchange Commission (“SEC”), Mary Jo White, announced she will step down in January before her term ends. Renae Merle writes that, “(Donald) Trump has already indicated he would usher in a period of deregulation, including dismantling 2010’s financial reform legislation, known as the Dodd-Frank Act.” Ms. White was known for her “no-nonsense style” and an increase in the agency’s enforcement efforts. In addition to filling the seat vacated by Ms. White, President-Elect Trump will also need to fill two additional SEC commissioner seats which are presently vacant. Merle further speculates that, “Trump could also choose to ignore the more than 20-year-old tradition of allowing the opposing political party to pick its own representative on the commission, one industry official said, further bolstering his influence over the agency.”
- Head of Trump’s SEC Transition May Not Have to Look Far for a New Chairperson (Author- Mark Schoeff Jr., Investment News)
Mark Schoeff writes that, Paul Atkins, a former Securities and Exchange Commissioner (SEC) who is now chief executive of compliance consultant Patomak Global Partners, “could select from among his coworkers or even recommend himself” as the next chairman of the SEC. In particular, there is speculation that Atkins could recommend former SEC member Daniel Gallagher Jr. who is currently the president of Patomak Global Partners. In regards to RIA regulation, it’s interesting to note that third-party audits were an approach previously endorsed by Gallagher. However, Norm Champ, former director of the SEC Division of Investment Management, emphasizes that, “The SEC is not subject to a wholesale turnover like Treasury is.” Thus, it’s possible that many of the existing policies would continue to be pushed forward by the SEC staff that is likely to experience less turnover.
- The Fiduciary Standard Likely Stalls in D.C., But New Directions Are Possible (Author- Ron A. Rhoades, Scholarly Financial Planner)
Ron Rhoades, one of our top 5 Department of Labor (“DOL”) fiduciary rule experts, discusses three developments likely to occur due to President-elect Donald Trump “shifting the landscape for regulatory initiatives.” First, Rhoades speculates that it is highly likely there will be a delay and eventual repeal of the DOL fiduciary rule and related exemptions. Secondly, there will be renewed attempt by FINRA to oversee registered investment advisers which is particularly troubling to Rhoades. Lastly Congress’ will attempt to repeal the Dodd Frank Act of 2010. Rhoades then goes on to describe four steps that do not involve federal or state legislation or agency rule making that “we can pursue to advance our emerging profession.”
- Election Results May Not Trump the DOL Rule (Author- Christopher Robbins, Financial Advisor Magazine)
To provide a different perspective on the future of the DOL fiduciary rule, Christopher Robbins writes that, “supporters of the DOL rule say that eliminating the fiduciary rule and the legislation it is based upon is easier said than done.” Knut Rostad, the president of the Institute for the Fiduciary Standard, also notes this in regards to President-Elect Trump: “He is no party loyalist. His instinct, as the world has witnessed, is more to challenge the Republican party than to go along with it. So, why it should be assumed that Trump will sign off on any or all GOP measures to remove financial regulations?” Joe Duran, CEO of United Capital Financial Advisors, shares that, “it’s hard to imagine that he’s going to get to the DOL before it’s implemented, I think his No. 1 line of attack is going to be the Affordable Care Act.”
- New Fintech Tools for DOL Fiduciary Rule Launched Despite Questions of a Trump Delay (Author- Liz Skinner, Investment News)
Although it is unclear whether the DOL fiduciary rule will be amended or repealed, financial technology companies are continuing to release new tools to help meet its potential requirements. Even if the rule does get delayed, executives at financial technology firms suggest advisers should still prepare to comply with the rule since the movement towards putting clients’ interests first is not going away anytime soon. Daniel Satchkov, president of RiXtrema argues that, “Fiduciary best practices are here to stay.” However, it’s important that advisors also listen to Angela Pecoraro, Advicent’s chief operating officer, who states that, “technology is only a piece of this picture and it’s only as strong as the workflow and execution that surrounds it.”
Don’t forget to check out last week’s top RIA compliance news articles on how the election of Donald Trump may impact RIA regulation. Be sure to check back next Friday for next week’s top articles!