Each week, we are 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. This week’s recap focuses on compliance with the Securities and Exchange Commission’s (“SEC”) Marketing Rule, the inaugural ComplyConnect Conference & Expo, and federal regulation on environmental, social, and governance (“ESG”) investments. Here are our top investment adviser compliance articles for the week of July 1st, 2022:
1. Advisers Must Weigh Whether to Be First to Use Testimonials for Marketing (Author – Mark Schoeff Jr., Investment News)
This article highlights the compliance challenges investment advisers face if they choose to implement new marketing strategies, such as testimonials. These new marketing tactics and compliance requirements have been outlined in the SEC’s Marketing Rule, which will go into effect in Novemeber 2022. A recent report highlights that the marketing rule is one of the most popular compliance topics among advisers. Advisers must explore whether they’d like to be at the forefront of implementing the new marketing strategies, or wait it out to see how other firms approach the new rule. The article also points out the lack of clarity on how the SEC interprets “fair and balanced” marketing, and advisers are recommended to seek help from compliance professionals if they do not already have them on their teams.
2. SEC’s Marketing Rule Remains Top RIA Compliance Concern (Author – Patrick Donachie, Wealth Management)
For the second year in a row, advertising and compliance are at the top of the list of compliance concerns for advisers. The results from the 2022 Investment Management Compliance Testing Survey showed 78% of respondents placed the topic as the most pressing concern, above all other topics, and 70% expect their firms to meet the compliance requirements set by the SEC’s Marketing Rule in November 2022. Cybersecurity and ESG also ranked in the top three “hottest” topics for compliance. This article also highlights other key findings and results from the survey conducted on compliance professionals at 424 different firms.
3. 6 Cybersecurity Steps to Take Now to Prevent an Attack (Author – Raghu Valipireddy, FinancialPlanning)
Raghu Valipireddy spells out six practical steps for advisers to take to protect their firms from cyber attacks and data breaches. With intensified urgency due to sophisticated attacks targeting the financial industry and anticipated regulatory scrutiny around cybersecurity risk management, advisers must begin to take action to improve their cybersecurity policies and procedures. A recent survey shows firms plan to boost their cybersecurity budgets. Valipireddy recommends advisers conduct staff training, test IT systems regularly, establish an incident response plan, back up regularly, use multi factor authentication (“MFA”), and monitor vendors’ cyber practices.
4. Inaugural ComplyConnect Conference & Expo Brings Together Industry Experts, Examines Top Compliance and Regulatory Issues (PR Newswire)
Yahoo Finance shares the announcement of the inaugural ComplyConnect Conference & Expo, hosted by regulatory technology and compliance provider, ComplySci. The event, scheduled to take place over three days, provides an educational and networking opportunity for regulatory and compliance professionals, industry leaders and technology experts. In the press release, ComplySci CEO Amy Kadomatsu discusses building on the success of the long-standing NRS compliance conferences with this new conference and expo. The conference will feature an industry awards session for leading compliance professionals to be commemorated for their success and leadership.
5. Supreme Court Ruling Clouds SEC’s Climate Change Disclosure Rules (Author – Tracey Longo, Financial Advisor)
Tracey Longo discusses whether the Supreme Court’s decision to limit the Environmental Protection Agency’s (“EPA”) power to regulate greenhouse gas emissions could influence the SEC’s rule-making on ESG disclosures. Former SEC attorney Walé Oriola, counsel at Faegre Drinker, mentions how the disclosure requirements are financially material, which could be interpreted as giving the SEC authority to set requirements “necessary or appropriate in the public interest or for the protection of investors.” Without a doubt, the SEC’s approach to ESG disclosures is controversial, and the industry will continue to speculate whether the federal regulator has the authority to set the climate-change rule as currently proposed.
Don’t forget to check out last week’s top RIA compliance news articles that focus on RIA in a Box’s Continuing Education Program and compliance with the Department of Labor’s (“DOL”) PTE-2020-02.