Compliance and Supervision

A chief compliance officer (“CCO”) for a registered investment adviser (“RIA”) found himself barred from any compliance or supervisory role in the future because he willfully refused to fix a number of compliance issues.  See https://www.sec.gov/litigation/admin/2017/34-82397.pdf. 

The RIA had conducted a review that uncovered numerous compliance problems.  Despite having notice of the results of this

Nearly a year ago, FINRA adopted Rule 2165 (Financial Exploitation of Specified Adults) and amended Rule 4512 (Customer Account Information). This new rule and amended rule were ways to address the myriad of issues dealing with senior clients.

With nearly a year gone by, FINRA has now published responses to frequently asked questions involving Rules

The SEC recently put out an Investor Bulletin on wrap fees. Although this guidance is steered toward consumers, there are lessons to be learned by firms who offer such programs.

The SEC specifically posed the question of what does the fee cover. Included in that list of possibilities are:

  1. Investment advice.
  2. Brokerage costs.

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FINRA recently issued a report regarding its examination findings. FINRA issued this report so that firms can gain insight from the work of FINRA’s examination of other firms.

Among the FINRA’s findings are the following areas that need additional attention:

  1. Cybersecurity, including access management, risk assessments, vendor management, branch office security, segregation on internal duties

In Notice to Members 17-38, FINRA has put out for comment a change to Rule 3110 that would allow the remote inspection of certain “qualifying offices” as that term is defined by FINRA. In its Notice to Members, FINRA highlighted the point that technology and a changing industry mandate reconsideration of requiring mandatory, in-person inspections.

The SEC recently upheld a statutory disqualification that FINRA imposed where the representative filed a false U-4 and falsely answered compliance questionnaires. It appears as though the registered representative failed to disclose tax liens and a bankruptcy on his U-4. So is statutory disqualification the proper punishment for this misdeed.

According to FINRA and

Over the last several months, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has been conducting a “sweep examination” of over 70 broker-dealers and investment advisers to assess their cybersecurity policies and procedures.  https://www.sec.gov/files/observations-from-cybersecurity-examinations.pdf.  In particular, OCIE looked at their preparedness regarding governance and risk assessment; access rights and controls; data loss prevention;