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. This week’s recap focuses on the Securities and Exchange Commission’s (SEC) 2024 Exam Priorities, a look at the largest fee-only RIAs, the SEC’s focus on environmental, social and governance (ESG), the next steps for Grayscale’s Bitcoin, and the Department of Labor’s (DOL) fiduciary rule.
Here are our top investment adviser compliance articles as of October 20, 2023:
These are the 20 largest fee-only RIAs, ranked by AUM (Author – Tobias Salinger, Financial Planning)
This article highlights the 20 largest fee-only registered investment advisory firms in the financial planning profession, a list which was determined based on data scraped by the COMPLY™ team. Notable firms like Chevy Chase Trust Company, Moneta Group Investment Advisors, and others are featured.
“While stock and bond performance took a toll on most firms’ assets under management last year, the group of 20 RIAs stands out among the roughly 2,800 RIAs that met FP’s criteria for their sheer size as fee-only planning firms. Their girth displays “the importance of being able to offer planning that crosses more than just investments,” as well as the continual movement of financial advisors out of wirehouses and of capital from private equity firms and other backers of the M&A deals that are consolidating the industry, according to Andrew Besheer, the director of the wealth management practice at consulting firm Datos Insights.”
7 Top SEC Exam Priorities for 2024 (Author – Melanie Waddell, Think Advisor)
The SEC has revealed its 2024 examination priorities, aimed at informing investors and registrants about upcoming areas of focus. These exams will prioritize emerging risks to investors and markets, along with core areas of concern. SEC Chairman Gary Gensler highlighted the Division of Examinations’ role in protecting investors and fostering capital formation, ensuring compliance with established rules. The agency aims to enhance trust in evolving markets by aligning examination priorities with the start of the SEC’s fiscal year, offering earlier insights to registrants and investors regarding the changing focus areas for each year.
Out of sight but top of mind: SEC maintains ESG focus despite absence in exam priorities (Author – Mark Schoeff Jr., Investment News)
The SEC’s 2024 examination priorities did not mention environmental, social and governance (ESG) factors in investment recommendations and strategies. However, this doesn’t mean ESG regulation is less important to the agency. Recent enforcement actions for ESG compliance violations demonstrate continued SEC focus on the matter. Additionally, the SEC has issued regulations to combat greenwashing, with pending rules for public company climate disclosures and ESG disclosures by investment advisers and companies. Experts suggest that firms should maintain their diligence in ESG risk and compliance programs despite its absence in the 2024 priorities. The SEC’s priorities document is not exhaustive, and ESG may return in future years.
Grayscale’s Bitcoin ETF push: What’s next after court ruling stands (Author – Vildana Hajric, Financial Planning)
The SEC will not appeal a recent ruling allowing Grayscale Investments to convert its Bitcoin trust into a U.S. exchange-traded fund (ETF). Analysts expect dialogue between Grayscale and the SEC to open, with the regulator possibly filing an appeal with the Supreme Court, though this is seen as unlikely. Grayscale’s court win in August was significant for the crypto industry. “The SEC had been hesitant in the past to give a green-light. But there are currently a slew of companies, including BlackRock and Invesco, among others, trying to get such a product launched.”
Don’t say ‘fiduciary rule’; DOL terms next attempt a ‘retirement security’ reg (Author – Mark Schoeff Jr., Investment News)
The Department of Labor (DOL) is preparing a new rule on investment advice standards for retirement accounts, distinct from previous fiduciary rules. The DOL is referring to it as the “retirement security rule” to signal its uniqueness. The proposal, currently under review by the Office of Management and Budget, seeks to revise the definition of “fiduciary” in the context of providing investment advice for employee benefit plans and IRAs. The DOL’s goal is to ensure that financial advisers prioritize clients’ interests over their revenue interests. While specific details are not provided, the DOL is expected to release the proposal for public comment soon, emphasizing the urgency of the matter.
Check out our previous round up, which focused on a ruling on crypto, takeaways from the SEC’s recent WhatsApp sweep, the classification of small advisers, the new NASAA study guides and advisers home office models.