It’s fair to say regulators and associated bodies have had an active 12 months. New rules, proposed amendments and additional requirements putting strains on compliance programs and the professionals which uphold them.
While each governing body may have a different focus, the end goal remains the same: to create a safer financial market for all investors.
In COMPLY’s 2023 Regulatory Rundown, we sat down with a few of our expert compliance consultants to discuss their take on the regulators/associations and what their focus means for 2023 and beyond.
John Gebauer on the heightened level of rulemaking in 2022 and 2023
“Past periods of heightened rulemaking have occurred in the aftermath of a crisis or scandal and were meant to correct systemic issues or bad actions that contributed to the calamity. What is truly unprecedented and confounding about the current rulemaking is that there is no progenitor that would justify the magnitude by which regulators are proposing to reshape the US financial markets. Nonetheless, for market participants, the coming few years promise to bring significant regulatory change that will result in increased obligations requiring new resources and supporting technologies to efficiently fulfill.”
– John Gebauer, COMPLY Chief Regulatory Officer
Jason Vinsonhaler on the SEC’s recent rulemaking activity
“The SEC has been in a period of active rulemaking with many new and updated rules being proposed and adopted in recent years. It is critical that firms remain diligent in understanding and applying these rule adoptions to continue operating in a compliant manner. The SEC appears committed to enhancing its oversight of registrants in its jurisdiction.”
– Jason Vinsonhaler, COMPLY Director of Regulatory Research & Content
Ish Manzanares Jr. on FINRA’s focus
“In 2023, FINRA continues to focus on compliance with Regulation Best Interest (Reg BI), due diligence processes, suitability of complex products and firms’ ability to proactively address risks of the increasingly sophisticated cyber threat landscape. Additional areas of concern are the rising use of mobile apps, inadequate supervision of possible manipulative trading, failures to determine fair pricing for fixed income and inadequate supervision of trading in fractional shares.”
– Ismael “Ish” Manzanares Jr., COMPLY Vice President of Advisory Consulting Services
Kelly Igoe on the DOL’s prioritization of client best interest
“While many of the DOL’s regulations affect the financial industry, maybe the most pressing and unknown regulation is the DOL Prohibited Transaction Exemption (PTE), namely the Annual Retrospective Review. Acting as a fiduciary is just one of the key aspects to qualify for the Prohibited Transaction Exemption (PTE). Most financial industry regulators are very focused on ensuring the recommendations made to retirement investors are in the client’s best interest.
The SEC and FINRA began prioritizing examinations of broker-dealers and investment advisers who advise retirement plans and IRAs focusing on rollover recommendation being in the client’s best interest, known as Reg BI. On February 16, 2021, the DOL adopted PTE 2020-02, a new prohibited transaction exemption which allows financial institutions to receive compensation from an otherwise prohibited transaction. The DOL PTE 2020-02 provisions require certain documentation that must be completed in order to avail the firm of the exemption.”
– Kelly Igoe, COMPLY Compliance Director
Bill Carrigan on NASAA’s role in the financial market
“The North American Securities Administrators Association (NASAA) has been representing state and provincial securities regulators in the United States, Canada and Mexico for more than 100 years. Most recently, those efforts have varied from the implementation of continuing education for investment adviser representatives (IAR) to helping to ensure the integrity and efficiency of financial markets. Annually, NASAA leadership lays out their priorities in their Federal Policy Agenda for Congress and is a voice for investors as well as regulators on a national level.”
– Bill Carrigan, COMPLY Compliance Consultant
Ready to learn more about the new rules and regulations impacting the financial landscape? Download the 2023 Regulation Rundown today!
