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. This week’s recap focuses on the number of Securities and Exchange Commission (“SEC”) enforcement cases, the Department of Labor (“DOL”) fiduciary rule, and the steps to take when starting an RIA firm. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of November 10, 2017:
- SEC Enforcement of Advisers Drops in Trump Era (Author- Ryan W. Neal, InvestmentNews)
Though the SEC continues to increase the volume of investment adviser examinations, actual enforcement regarding advisers across the U.S. has lessened under the current administration, according to a new report released Wednesday. This year, the SEC pursued 16 less cases compared to 2016. Enforcement actions and fees paid out have also decreased. According to Ryan Neal, the co-directors of the SEC enforcement division stated the items they will most pursue include: “protecting the long-term interests of retail investors; pursuing individual wrongdoers; keeping pace with technological change; (and) imposing sanctions on a case-by-case basis.”
- Labor Secretary Mum On Specifics Of DOL Rule Review (Author- Tracey Longo, FA Magazine)
“Labor Secretary Alexander Acosta told a congressional committee that the final notice to delay the fiduciary rule’s implementation to July 1, 2019, will be published ‘soon,’ while the department continues its analysis,” reports Longo. Some in the committee are worried that the rule will never materialize, citing the President’s order to review the rule. Other concerns include the DOL rule’s impact on retirement plan participants. Acosta also bemoaned the fact that the SEC was not an active participant in the original rule planning. While some favor the DOL rule’s delay, the Consumer Federation of America would like it implemented as soon as possible.
- Even as DOL Reviews Fiduciary Rule, It’s Ready to Enforce It (Author- Kenneth Corbin, OnWallStreet)
Corbin writes that according to Secretary Acosta, though the fate of the DOL rule hangs in limbo, the department is fully prepared to enforce the current applicable components of the fiduciary rule with a focus on putting clients interest. The process however is still murky, with Acosta telling committees that he and his department are still reviewing the feedback gathered earlier this year. He applauds the fact that the SEC is now more involved with the editing and review process of the rule, though some lawmakers, he says, may be muddying the waters. Regardless, Acosta vows that whatever happens will be in the best interest of American taxpayers.
- 4 Steps to Take When Launching Your Advisory Business (Author – Angie Herbers, ThinkAdvisor)
Herbers has noticed that owner-advisors she knows have “started their businesses to escape the pressures and conflicts of the ‘financial services industry,’ only to recreate a similar environment in their own firms,” she says. She points out that most larger firms may think profit is their main goal, but Herbers believes retaining quality advisors in the face of pressuring those advisors to make more and more revenue is the bigger obstacle. She states that if you’re going to start your own new RIA firm, there are some things to keep in mind. One is to “forget the business plan”. She says that divesting yourself from an institution-based model of business is the best way to go. There are others less concrete, such as believing in yourself. The basic summation is to do what works best for you.
- Broker Protocol: The Real Story of Its Founding ― and Its Future (Author- Rob Mooney, FinancialPlanning.com)
Being part of the group of lawyers who authored the Protocol for Broker Recruiting, Mooney is an authority on it. Though he worries with Morgan Stanley’s exit from it, the protocol could die, he says it will not stop advisers from going anywhere. Mooney writes, “the regulators, and the SEC in particular, loved the protocol from the get-go because it removed significant impediments to the free movement of clients from one firm to another. It’s remarkable how difficult it can be for a client to move their account when the losing firm has legal protection to delay that transfer. Whether or not today’s regulators feel compelled to respond to the protocol’s potential demise, they should.”
Don’t forget to check out last week’s top RIA compliance news articles on the DOL fiduciary rule, cybersecurity, and the industry definition of “fiduciary”. Be sure to check back next Friday for next week’s top articles!