Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.
Stay up-to-date and in the know on everything happening in the compliance world as of Apr. 28, 2023.
Advisers expect more crypto failures in 2023 – Author Ali Hibbs
CoreData polled 250 advisers and wirehouse advisers in a study about a potential cryptocurrency crash in 2023. The survey found that:
- Seven out of ten advisers believe there will be more cryptocurrency failures in 2023 than in 2022.
- 26% of advisers anticipate a bigger collapse than that caused by FTX and Sam Bankman-Fried in November 2022.
- 18% of registered investment advisers (RIAs) believe that a cryptocurrency crash will occur in 2023.
- Only 6% of all respondents believe cryptocurrency has a role to play in client portfolios, with 68% disagreeing, while only 5% see cryptocurrency as an effective inflation hedge.
SEC drops final Reg BI staff bulletin, covering duty of care – Author Emile Hallez
The Securities and Exchange Commission (SEC) has released a staff bulletin outlining the “duty of care” that brokers and investment advisers owe their clients under Regulation Best Interest (Reg BI). The bulletin sets out the SEC’s expectations around understanding clients’ financial needs, fully grasping the potential risks, rewards and costs associated with a product and having a list of alternatives they have considered. The guidance is not itself a new regulation but is seen as a way to make expectations clear before the SEC potentially ramps up enforcement efforts around Reg BI. The bulletin also addresses dually licensed financial professionals with clients at their firms who have both brokerage and advisory accounts.
Branch offices lack policies for protecting client records: SEC – Author Melanie Waddell
The SEC has warned broker-dealers and advisers about the importance of having written policies and procedures to safeguard client records and information at branch offices. The SEC’s Division of Examinations noted that while many firms have implemented safeguards for their main offices, some have failed to adopt or implement similar policies and procedures for their branch offices, which has led to cybersecurity and data breaches. The SEC found that firms were particularly lax in the areas of vendor management, email configuration, data classification and technology risk at their branch offices. The Safeguards Rule of Regulation S-P requires firms to adopt written policies and procedures that address administrative, technical and physical safeguards for the protection of client records and information.
Guide to Industry Conferences: Compliance, governance and regulatory – Author Chris Latham
Wealth Solutions Report launched its new guide to industry conferences in 2023. The guide covers several events, including the ComplyConnect Conference & Expo, Financial Industry Regulatory Authority (FINRA) Annual Conference, MarketCounsel Summit, Financial Services Institute (FSI) Forum & Capitol Hill Day and FSI OneVoice.
These events bring together industry leaders, financial advisers, regulators and compliance professionals to discuss topics from compliance and regulatory developments to risk management to trends in regulatory technology. These conferences provide opportunities to network with peers and glean from the experiences of experts in the industry in tailored Q&A discussions.
The deets on noncompetes: Advisers clash with firm owners and trade groups on contract clauses – Author Dan Shaw
Financial services companies and associations are opposing a proposed federal ban on noncompete clauses, arguing that such clauses are essential to their business models. On the other hand, many individual advisors view noncompete clauses as barriers that prevent them from continuing to serve their clients when they switch jobs. Both viewpoints were prominent in the 27,000 comments that the Federal Trade Commission (FTC) received in response to its proposed ban on noncompete clauses, which prohibit employees from working for a competitor within a certain geographic range.