What’s the latest news in the world of regulatory compliance? Welcome to our biweekly recap, where we give 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 regulatory compliance, industry news, and critical updates. Today’s recap focuses on the DOL rule, Reg BI, cryptocurrency, RIA AML, and cybersecurity.
Here are our top compliance articles as of May 24, 2024:
New Court Filing Seeks to Halt DOL Fiduciary Rule (Author – Melanie Waddell, Think Advisor)
The Federation of Americans for Consumer Choice (FACC) and independent insurance agents filed for a preliminary injunction to delay the Labor Department’s new fiduciary rule implementation. They argue it will cause significant damage and should be postponed until their existing case against the rule is resolved. The suit contends that the rule imposes onerous conditions on insurance agents and exceeds Labor’s authority. Lawmakers have also introduced a resolution to overturn the rule.
New digital assets legislation is unfit to maintain investor protection, SEC chair warns (Author – Steve Randall, Investment News)
The House passed the Financial Innovation and Technology for the 21st Century Act (FIT21) to regulate digital assets, but SEC Chair Gary Gensler expressed concerns. FIT21 aims to enhance investor protection and innovation but may weaken existing securities laws. Gensler warns it could create regulatory gaps and reduce oversight, leading to increased risk for investors. He emphasizes the crypto industry’s history of noncompliance and fraud, advocating for robust investor protections over accommodating noncompliant firms.
SEC, Treasury seek to drag RIAs deeper into money laundering fight (Author – Dan Shaw, Financial Planning)
The SEC and U.S. Treasury proposed a rule requiring registered investment advisers (RIAs) and exempt reporting advisers to collect customer ID information to combat money laundering. This aligns them with existing obligations for broker-dealers and banks. The rule mandates verification against government lists of criminals. It could impose significant costs, particularly on smaller firms. Critics argue the rule is overly broad and burdensome, while proponents emphasize the need to prevent illicit financial activities.
SEC tightens rules around data breach disclosures (Author – Leo Almazora, Investment News)
The SEC has updated Regulation S-P to enhance cybersecurity at broker-dealers and RIAs. The amendments require institutions to establish incident response programs and notify affected individuals within 30 days of breaches. The move addresses increased technological risks since the rule’s inception in 2000. Larger firms must comply within 18 months, and smaller ones within 24 months.
Setting the standard: 42 cases in 5 years of Reg BI (Author – Dan Shaw, Financial Planning)
Since the SEC’s Regulation Best Interest (Reg BI) took effect, 42 cases have been brought under its provisions, with only “seven involved firms’ alleged compliance failures in their customer relationship summaries — documents used mainly to disclose conflicts of interest.” The majority of cases focused on brokers’ duty to act in clients’ best interests. Despite this, the number of cases is increasing, with a significant rise from one case in 2021 to 31 in 2023. Enforcement is expected to become stricter over time.
Have questions? Schedule time to speak with an expert today!