Compliance and Supervision

Oksana Wright and Charles DeMonaco discuss the management and corporate compliance measures for the companies to prioritize during the time of cost-cutting and uncertainty:

https://www.corporatecomplianceinsights.com/corporate-compliance-during-covid-19/

Although we are certain that Shakespeare never had to deal with the vagaries of Regulation BI, we do, and, in a series of questions relating to Regulation BI, the SEC Staff made it abundantly clear that, if you are a broker-dealer and not also a registered investment adviser, you cannot use the term “adviser” or

Compliance personnel– especially, chief compliance officers– cannot ignore problems because, as one  SEC ALJ determined, it will lead to censure and fines for ignoring compliance obligations.  See    https://www.sec.gov/alj/aljdec/2020/id1400cff.pdf.

Apparently, for over 10 years, a registered investment advisor hired a series of unskilled CCOs, and ignored compliance and audit requirements.  The RIA tried to claim that

Let’s be honest, the only people usually concerned about business continuity plans (“BCP”) are compliance folks and the lawyers.  In fact, many probably have not looked at their BCP since Hurricane Sandy.  Well, you better dust it off (or dry it off, more accurately).

FINRA has already provided notice regarding traders working at home.  https://www.bloomberg.com/news/articles/2020-03-09/finra-concedes-virus-may-impact-wall-street-oversight-of-traders. 

Ernie Badway, the Chair of Fox Rothschild’s Securities Industry Group, will be speaking at the National Conference of the  National Society of Compliance Professionals.  Registration information may be found at: https://www.foxrothschild.com/ernest-e-badway/events/the-secs-challenging-new-guidance-on-the-solely-incidental-broker-exemption/

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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