Sifting through the various industry news publications to find the best articles each week can be a daunting task. That’s why each week, we will be selecting 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 May 30, 2015:
- FINRA Willing to Help With Advisor Exams, but ‘Not Pushing It (Author- Kenneth Corbin, Financial-Planning.com)
Currently, the SEC is only able to examine about 10% of registered investment advisors each year. Kenneth Corbin, Financial Planning Contributor, explores the stance taken by the Financial Industry Regulatory Authority (FINRA) regarding their continued interest in regulating RIA firms. This comes after Representative French Hill (R-Ark.) recently said that he is exploring authoring legislation to grant FINRA authority to examine investment advisory firms. The last time such legislation was introduced by former Representative Spencer Bachus (R-Ala.), it will received little traction in Congress. At RIA in a Box, we continue to believe that shifting more RIA regulation to the state level is a more appealing alternative that needs to be further explored.
- Advisors Beware: What Regulators Are Watching For (Author- Andrew Pavia of Financial Planning)
Andrew Pavia of Financial Planning recaps the RIA regulatory discussion at this week’s Pershing Insite Conference. He notes three hot topics discussed: performance advertising, the importance of getting outside compliance help, and how firms should cooperate with regulators during an audit. We too believe that RIA firms should exercise tremendous caution before advertising investment performance given the regulatory risk that it poses.
- Regulators Say Firms Need ‘Reasonable’ Data Safeguards (Author- Megan Leonhardt of Wealthmanagement.com)
Investment advisory firms are facing enforcement action for not taking reasonable precautions to protect client data. Megan Leonhardt, editor for REP. Magazine and WealthManagement.com, highlights behaviors that may draw SEC scrutiny particularly as it relates to Regulation S-P. We also have discussed cybersecurity issues at length on this blog including our recent post highlighting the information security risks that employees may pose to RIA firms.
- Adviser ordered to pay more than $1 million in SEC fraud cases (Author- Alessandra Malito, InvestmentNews)
A Massachusetts court has reached its decision on the fraud case of a Boston advisory firm. Alessandra Malito of InvestmentNews gives us the details on the case. One of the key issues relates to to the use of wrap fee accounts which remain an RIA compliance area of regulatory focus.
- SIFMA, FSR Propose ‘Uniform Best Interests’ Standards for BDs (Authors- James J. Green and Melanie Waddell, ThinkAdvisor)
Both the Securities Industry and Financial Markets Association (SIFMA) and Financial Services Roundtable (FSR) are proposing new standards for broker-dealers to put investor interests first in the wake of the recent Department of Labor (DOL) proposed fiduciary. It’s safe to expect this ongoing debate and lobbying efforts to continue to escalate in the coming months.
- Is Costly New FINRA Ad Campaign Misleading? (Author- Ann Marsh, Financial Planning Magazine)
Many worry that BrokerCheck is omitting pertinent information and giving Investors a false sense of security. Ann Marsh, Senior Editor at Financial Planning Magazine, breaks down the good and bad of FINRA’s renewed BrokerCheck investor marketing efforts.
- SEC files fraud charges against two advisers for allegedly falsifying credentials (Author- Mark Schoeff Jr., Investment News)
Mark Schoeff, reporter for InvestmentNews, explores two cases of advisors falsifying information. The SEC is urging investors to do background check on advisors and just issued a new investor alert.
- Cyber criminals getting more aggressive and devious (Author- Sheryl Rowling, Investment News)
Cyber criminals continue to target investment advisory firms. Sheryl Rowling of Total Rebalance Expert provides details of a recent fraudulent wire request attempt and the importance of confirming all wire requests verbally over the phone.
Be sure to check back next Friday for next week’s top articles!