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 August 13, 2016:
- What’s Next in the Crosshairs for SEC Enforcement Chief? (Author- Ann Marsh, Financial Planning)
According to Andrew Ceresney, director of the Securities and Exchange Commission(SEC) Division of Enforcement, the SEC’s enforcement capabilities have greatly evolved since the financial crisis in 2008. In this exclusive interview, Ceresney notes the SEC has “increased its data analytic skills and built cooperative relationships with criminal authorities around the country to bring more cases.” He also flags private equity fund disclosure of fees and expenses, performance advertising, and failure to disclose all sources of revenue as areas of continued regulatory focus. Be sure to check out the full interview.
- SEC Enforcement Actions Trail Last Year’s Record Numbers: Study (Author- Mark Schoeff Jr., InvestmentNews)
The SEC has reported to have a decrease in enforcement actions from previous years. 508 enforcement actions have been filed through the first three quarters of this year which equates to a 8% decrease from last year. In the third quarter of 2015, the agency had 238 cases compared to 160 cases this year. Typically enforcement action increases in the fourth quarter, but Sara Gilley, principal at Cornerstone Research, believes it is unlikely this year’s final numbers will match last year’s and “it would really be an unprecedented quarter of activity.”
- 3 Significant Anomalies in the DOL’s New Fiduciary Rule (Author- Phil Troyer, InvestmentNews)
In this article, Phil Troyer highlights three topics from the Department of Labor (DOL) fiduciary rule that he believes are not receiving enough attention. The first one is “Say goodbye to solicitors agreements–at least with regard to accounts subject to ERISA.” This new rule implies a solicitor who receives compensation for recommending a certain adviser becomes conflicted investment advice. As a result, the arrangements will become prohibited transactions under ERISA. The second topic discussed how the rules are going to create problems for dually-registered advisers. Such firms have to supervise their investment advisory services even when it is provided through a separate RIA. Troyer brings up a few key questions advisers may have in this section of the article. Lastly, retirement plan advisers are facing conflicting requirements if they receive levelized 12b-1 fees as compensation. He believes it is unclear which disclosures will be required for this topic of conversation.
- Tools and Technologies to Implement DOL Fiduciary Compliance (Author- Sheryl Rowling, InvestmentNews)
Sheryl Rowling believes advisers should consider utilizing several applicable tools and technologies to assist in complying with the new DOL fiduciary rule. In the pre-investing category, some tools that can be helpful include risk-tolerance assessment, asset allocation modeling, financial planning, and proposal generation. In the investing phase, tools and technologies that can be of assistance include portfolio accounting and reporting, rebalancing software, data aggregation, and investment analysis. As for the advice category, it must be in the best interest to the clients and stay compliant with industry standards. Check out this article to read about the tools and technologies in more detail and how they can assist advisers in approaching compliance and documentation with the new rule.
- FINRA Shifts an Unwelcome Spotlight Away From Itself–By Training it on the Brokers it Oversees (Author- Irwin Stein, RIABiz)
A link to the BrokerCheck website is now required on the websites of all broker-dealer firms. The Financial Industry Regulatory Authority (FINRA) launched a $3.5 million advertising campaign to promote the BrokerCheck site in June 2015. However, there have been various opinions on BrokerCheck and the requirement to have it front and center on a broker dealer firm’s website. Check out this latest article to learn more.
Don’t forget to check out last week’s top RIA compliance news articles on investment adviser advertising rules and information security. Be sure to check back next Friday for next week’s top articles!