What’s the latest news in the world of regulatory compliance? Welcome to our biweekly recap, where we are giving you our 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. Today’s recap focuses on updates to Form CRS FAQs, a deeper looking into the DOL’s proposed rule, COMPLY’s recent Digital Asset Trade Monitoring launch, and how panelists think the SEC should address AI conflicts.
Here are our top investment adviser compliance articles as of December 15, 2023:
What’s next with the DOL rule proposal? Here’s what to expect (Author Tobias Salinger, FinancialPlanning)
The Labor Department’s proposed retirement advice rule is a focal point in wealth management, with a public hearing next week featuring over three dozen stakeholders. The rule aims to redefine “fiduciary,” intensifying scrutiny on advice for 401(k) plan participants and others, addressing transactions like rollovers and certain annuity sales. Backers assert it closes loopholes, while critics argue it imposes unnecessary burdens. The Labor Department anticipates finalizing the rule by late Q2 or early Q3 in 2024. The 60-day comment period faces scrutiny, with some requesting an extension. The rule could reshape industry dynamics, prompting preparations by major firms.
Panel suggests SEC use existing rules to address advisor AI conflicts (Author Mark Schoeff Jr., Investment News)
A panel of experts has recommended that the SEC employ existing rules to manage potential conflicts arising from the use of artificial intelligence (AI) by financial advisers. The panel suggests leveraging the SEC’s existing regulatory framework to address concerns related to AI, rather than creating new rules. Existing regulations, such as those on disclosure, client communications, and fiduciary duty, can be adapted to cover AI applications. The experts emphasize the importance of transparency and disclosure in ensuring investors are informed about the use of AI and its potential impact on advisory services.
Would New DOL Fiduciary Rule Curtail Advice Access? No Way, Consumer Groups Testify (Author – Melanie Waddell, ThinkAdvisor)
The Consumer Federation of America dismissed claims by brokerage and insurance industries that the Labor Department’s new fiduciary proposal would restrict small savers’ access to advice. Micah Hauptman, the director of investor protection, argued that the proposed rule aligns with the SEC’s Regulation Best Interest, which hasn’t diminished small savers’ access. Hauptman emphasized that the rule would enhance protections for retirement plans and investors, covering rollover recommendations and advice on insurance and non-securities. He contended that if some firms withdrew, others would step in, and small savers stand to gain the most from the proposed rule.
COMPLY, ZenLedger Launch Digital Asset Trade Monitoring (Author Cindy Taylor, Digital Wealth News)
COMPLY has launched a digital asset trade monitoring solution in collaboration with ZenLedger, which provides a fully digital compliance solution for the cryptocurrency market. The program offers real-time insights into employees’ cryptocurrency holdings and transactions, allowing firms to automate blockchain and exchange monitoring. COMPLY aims to address compliance challenges in the digital asset space, where a lack of clear regulation has led to manual tracking processes. The move comes as regulators like the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) focus on the cryptocurrency space, increasing the need for robust compliance solutions.
SEC Updates FAQ on Form CRS (Author – Melanie Waddell, ThinkAdvisor)
The SEC has updated its guidance on the Customer Relationship Summary form (Form CRS), addressing queries about disclosures for dually licensed professionals, private placements, and firms acting as principal underwriters. The SEC highlighted scenarios when firms would or would not need to file a Form CRS.
Check out our previous round up, which focused on the DOL Fiduciary Rule, an analysis of the 2024 SEC enforcement priorities, a Supreme Court case involving the SEC and a round up of the fastest growing fee-only RIAs.