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 industry appeals to the SEC, the evolution of M&A, the DOL proposal, and crypto enforcement.
Here are our top investment adviser compliance articles as of February 2, 2024:
Investor advocates call on SEC to end RIAs’ use of mandatory arbitration (Author – Mark Schoeff Jr., Investment News)
Investor advocates urge the SEC to halt Registered Investment Advisers (RIAs) from mandating arbitration for dispute resolution, citing concerns over transparency and fairness. They argue that arbitration clauses disadvantage investors by limiting legal options and concealing wrongdoing. SEC Chairman Gary Gensler’s remarks suggest potential regulatory action. Critics view mandatory arbitration as a barrier to accountability and advocate for investor protection reforms. The SEC faces mounting pressure to address this issue and uphold investor rights within the RIA industry.
FSI presses SEC to end ‘regulation by enforcement’ (Author – Mark Schoeff Jr., Investment News)
The Financial Services Institute (FSI) urges the SEC to cease “regulation by enforcement,” advocating for clearer regulatory guidance and a collaborative approach to compliance. FSI asserts that enforcement actions without sufficient guidance harm firms and advisers, undermining regulatory objectives. They propose enhanced communication between regulators and industry stakeholders to foster compliance and protect investors. FSI’s call highlights the need for a more proactive and transparent regulatory framework to ensure fair and effective oversight in the financial services sector.
Why last year’s M&A drop-off may already be over (Author – Tobias Salinger, Financial Planning)
The decline in mergers and acquisitions (M&A) activity within the wealth management sector may have reached its nadir, with signs indicating a potential rebound. Despite challenges like regulatory valuation concerns, industry experts anticipate a resurgence in deal-making activity, signaling a potentially brighter future for M&A in the wealth management industry.
“Despite the drop-off for the year, the number of transactions in the fourth quarter surpassed that of the same period in 2022, according to both reports. The climbing quarterly figures suggest volume might regain its record-breaking level of previous years in 2024.”
DOL retirement proposal faces 2 potential checks before election (Author – Tobias Salinger, Financial Planning)
The pending retirement advice regulation from the Labor Department, expected later this year, has become a focal point in the presidential election. President Biden’s administration aims to enhance fiduciary duties, particularly regarding IRA rollovers and certain insurance-product sales, to ensure they are in the best interest of 401(k) savers. Advocates see it as bolstering consumer protections, while opponents view it as overly burdensome and potentially reducing access to professional advice. The timing of the final rule’s release is critical, as it will trigger congressional review and potential legal challenges, with implications for the industry and consumers. Wealth management firms anticipate navigating stricter regulations, especially regarding IRA rollovers, which could impact their business models. While opponents argue the rule could restrict access to financial advice, supporters emphasize its importance in fostering trust and leveling the playing field for consumers.
SEC crypto-related enforcements grew exponentially in 2023 (Author Steve Randall, Investment News)
In 2023, the Securities and Exchange Commission (SEC) saw a significant increase in crypto-related enforcement actions, marking exponential growth compared to previous years. The surge reflects the agency’s heightened focus on regulating the cryptocurrency market, aiming to address potential risks and protect investors. The SEC’s enforcement efforts underscore the evolving landscape of digital assets and the necessity for robust regulatory measures to maintain market integrity and investor confidence.
Check out our previous round up, which focused on a ruling from the DOL, generative AI, succession planning for RIAs, and M&A within the industry.