Education, training and industry insight came together last week at the 2022 ComplyConnect Conference & Expo. The inaugural compliance conference, designed to educate compliance professionals serving the financial services industry, included sessions devoted to small and large investment advisers, broker-dealers, dual registrants and private funds. Attendees heard directly from renowned industry leaders and regulatory authorities as they discussed topics like investment adviser compliance, the new marketing rules, the Securities and Exchange Commission’s (SEC) ever-evolving regulations, how their firms can adapt to these changes and more.
Weren’t able to attend this year? Here are the top takeaways we heard from our industry-leading speakers:
Top Takeaways from the 2022 ComplyConnect regulatory compliance conference:
1.Cybersecurity risk and compliance
Smarsh Senior Solutions Engineer Gary Tullier and itsSynergy CEO Cocanower, spoke in-depth about the heightened cybersecurity risk firms are facing in today’s digital financial landscape. Panelists drew attention to the fact that your employees are your greatest risk to your cybersecurity compliance…but also one of your best lines of defense. The best way to mitigate cybersecurity risk is through:
- Creating thorough cybersecurity compliance policies and procedures.
- Regularly training employees on cybersecurity risk and your cybersecurity compliance protocols.
- Employing phishing tests.
2. Preparing for regulatory examinations
Richard Best, director of the Securities and Exchange Commission’s (SEC) examinations division, outlined some of the cyber deficiencies the SEC has seen in examinations over the years. These include:
- A lack of cybersecurity policies and procedures.
- Employees not following cybersecurity policies and procedures if they do exist.
- Allowing too many exceptions to multifactor authentication.
- Failing to train staff.
- Top firm officials failing to reiterate the importance of cybersecurity.
3. SEC regulation changes
Kirkland & Elis LLP Partner Investment Funds Marian Fowler and Eversheds Sutherland (US) LLP Partner John Walsh dug into the plethora of regulations coming out of D.C. In so doing, they highlighted the role the most recent midterm election will play in the coming months for the SEC’s agenda.
While both political parties have their own perspective on the role of the SEC, our panelists noted, whatever the result of the election, the SEC and Chair Gensler, will likely remain under a microscope. Additionally, the panelists highlighted key SEC enforcement themes including: the economic reality, high impact cases and accountability.
4. Regulation Best Interest (Reg BI)
The SEC recently shared one of its priorities over the next four years will be to enforce a best-interest approach to investment advice, also known as Reg BI. In so doing, the agency hopes to protect “working families against fraud manipulation and misconduct,” one of its three goals for fiscal years 2022-2026.
5. Cryptocurrencies
As a compliance professional, you need to not only understand if and when a digital asset is a security – you need to know the circumstances under which these novel (and potentially risky) investments can be offered to clients in a manner consistent with your duties to said client. At the ComplyConnect conference, attendees learned a few pointers on how to ensure they are protecting their firms’ clients against cryptocurrency misuse:
- Ensure due diligence and suitability are considered before any digital asset is considered for a client’s account.
- Expand your understanding of regulatory initiatives for digital assets.
- Develop due diligence and suitability criteria for recommending cryptocurrency.
- Help senior management determine whether, and under what circumstances, your firm should offer these assets.
Already looking forward to next year? Follow ComplyConnect on LinkedIn to stay in the loop for the 2023 compliance conference.