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 Dec. 9, 2022.
Top five compliance articles
Crypto regulation is coming, and it’s about time – Author Mitch Avnet
A recent debacle surrounding the misuse of cryptocurrency has placed pressure on regulators like the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Internal Revenue Service (IRS) to implement regulations related to cryptocurrency.
These regulators will have to navigate the varying opinions surrounding regulations related to cryptocurrency. Those who oppose regulations argue too many rules would violate the “decentralized ideal behind the blockchain” and would stifle creativity. Those in favor of increased regulation argue it would protect investors and bring a degree of stability to a sometimes-unpredictable market. The recent events have strengthened the arguments for those in favor of increased regulation.
ComplyConnect Spotlight’s Industry’s Top Regulatory Priorities – Author Sander Ressler
first event of its kind, the ComplyConnect Conference & Expo allowed members of the financial services industry to learn from each other and connect in-person.
Not only did the conference offer compliance professionals an opportunity to socialize with others in their field, but the conference also provided them with an opportunity to learn from industry veterans and gain insight into upcoming changes in the regulatory landscape, fulfilling a tremendous need for compliance professionals. The financial services industry is a challenging and ever-changing field for compliance professionals, as indicated in these statistics:
- 67% of chief compliance officers at RIA firms with $500 million in client assets or less have fewer than eight years of regulatory and compliance supervision experience.
- 72% of this industry group wear two or more hats, including their compliance role, typically encompassing operations, administration or technology.
- In a survey, 77% of respondents “strongly agree” that crypto regulatory and compliance concerns will fade rapidly, as the asset class continues to decline in relevance to the broader wealth management industry.
- 84% of all survey respondents “strongly agree” that the most relevant and timely regulatory and compliance issue is cybersecurity, with a close second being the new SEC marketing rule.
COMPLY Chief Executive Officer Amy Kadomatsu said, “We wanted to find a way to help bring together and celebrate compliance professionals. The participation and enthusiasm we have seen from compliance professionals recently for our educational series and symposium series encouraged us to think bigger and what better way to live out our commitment as a true champion of compliance professionals, than with the launch of ComplyConnect.”
How to keep elderly clients safe from scams this holiday season – Author Gregg Greenberg
The most important tool financial advisers can use to protect their elderly clients from scams is their deep understanding of clients’ financial circumstances, which allows advisers to spot irregular spending within a known pattern.
Nina Lloyd, President and CEO of Opus Financial Advisors said, “For our financial planning clients, we maintain a detailed record of ongoing monthly expenses, which allows us to quickly identify red flags. If a client mentions a large, unplanned gift to a loved one, it’s important to ask clarifying questions, like ‘I’d love to learn more about this gift, how did you decide on the amount you’d like to give?’ or ‘That’s a generous gift, are you trying to meet a specific need?’
Alexis Zuccaro, wealth adviser with SageView Advisory Group, recommends regularly monitoring bank accounts for unusual activity. She also recommends reminding clients about phone call and email scams and to be wary of a false sense of urgency or claims of law enforcement or government agency affiliation and not to share personal information over the phone or by email or text message.
Gensler warns market players that SEC crackdown is just getting started – Author Bloomberg News
Following a record fiscal year, in which the SEC filed more than 700 enforcement actions and collected $6.4 billion from these actions, SEC Chairman Gary Gensler has said the agency will pursue violations wherever and however they occur. This warning places pressure on compliance teams and their firm to ensure their programs address current regulations and adapt to regulations which are implemented in 2023.
Gensler acknowledged this pressure, referring to compliance teams and attorneys as “gatekeepers.” If they see situation which could lead to a possible violation, they must quickly mitigate the risk to avoid being made an example.
SEC to propose new regulation best execution – Author Melanie Waddell
The SEC has plans to consider a new best execution rule, Regulation Best Execution, for client trades. According to a recent report, the new rule “would establish a best execution standard and require detailed policies and procedures for brokers, dealers, government securities brokers, government securities dealers and municipal securities dealers and more robust policies and procedures for entities engaging in certain conflicted transactions with retail customers, as well as related review and documentation requirements.”
SEC Chairman Gary Gensler has expressed interest in such a rule in the past. He has asked SEC staff to consider having the agency explicitly define what it means for a broker to give its clients “best execution” to satisfy the agency’s requirements.
Ron Rhoades, associate professor of finance at Western Kentucky University and director of its personal financial planning program, has examined the rule. He said, “overall, consumers would be better off, as greater transparency in how broker-dealers are compensated, along with the elimination of the conflict of interest inherent when brokers receive payment for order flow, would result in greater competition and reduced transaction costs.”