Welcome to our biweekly recap, where we curate the top compliance articles, news, and insights from various industry publications. We have selected the most relevant and important updates related to regulatory compliance, industry news, and critical updates.
Today’s recap focuses on the impact of the election, a NASAA proposal, an SEC warning on AI, potential regulatory challenges to come for the SEC, and the results of the FCA and Practitioner Panel survey.
Here are our top compliance articles as of November 8, 2024:
Donald Trump will shape these 9 areas of wealth management (Author – Tobias Salinger, Financial Planning)
“For financial advisors, wealth management firms and their hundreds of millions of clients across the country, the end of the election marked the beginning of preparing for the next presidential administration — simply the latest historical event to guide clients through with a focus on avoiding common behavioral mistakes that hurt portfolios or sever customer relationships.”
Areas likely to face significant impact include:
- Artificial intelligence
- Department of Labor retirement advice rule
- Investment strategy
- And more
NASAA wants to limit who can call themselves ‘advisors’ (Author – Dan Shaw, Financial Planning)
NASAA has put forth a new proposal which, if adopted, would place restrictions on using the term “advisor” or “adviser.” Per the regulator, “it’s trying to prevent confusion in the public mind between wealth managers who are operating as brokers and those operating as advisors.”
Additionally, the regulator is proposing their own version of Reg BI for state, which would enable state regulators to match the requirements of the SEC. However, some have said this proposal imposes “certain provisions would go far beyond the restrictions laid out in Reg BI.”
The comment period for this proposal ends December 19.
SEC warns firms to get their AI house in order (Author – Dan Shaw, Financial Planning)
“Regarding artificial intelligence, the SEC said its enforcement division will be checking the accuracy of firms’ public statements about their reliance on AI and similar systems. Regulators have warned in recent years of a type of misportrayal known as “AI-washing” — or making exaggerated claims about the uses for artificial intelligence — and have cracked down on firms that couldn’t back up their promises.”
SEC Needs to Prepare for More Regulatory Challenges, Agency Watchdog Says (Author – Mengqi Sun, Wall Street Journal)
In a recent report put out by the SEC Office of Inspector General, the SEC was warned to “prepare for more legal challenges to its rule making by developing a thorough administrative process.”
Highlighted in the report was the fact that the SEC has proposed 55 rules and followed through with 41 since 2021, and now currently faces increasing scrutiny.
Following the verdict on the Chevron Defense, the report states the SEC is likely to face “additional judicial scrutiny.”
“The watchdog also noted potential issues stemming from a Supreme Court decision in June that curbed the SEC’s enforcement powers by limiting its ability to impose monetary penalties through special in-house tribunals.”
The FCA and Practitioner Panel 2023/24 survey findings
The FCA and Practitioner Panel have published their 2023/2024 findings, which provide “valuable feedback on how firms feel about the FCA’s performance.”
Overall, the finding skewed positive, however noted areas of improvement included:
- doing more to facilitate growth and competitiveness
- ensuring we act proportionately when introducing new initiatives and requests on firms
- improving the data collections process to reduce the regulatory burden on firms, demonstrating how we are using the data firms provide
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