Compliance and Supervision

The SEC recently issued regulatory guidance for robo-advisors. This guidance focuses on what robo-advisors must do to meet their disclosure obligations.

Among other things, the SEC has recommended robust disclosures in the following areas:

  1. The use of algorithms, overrides, third parties, fees and client information.
  2. The limits on use of the robo-advisor model to ensure

The SEC recently released its findings relating to exams of investment advisers.  https://www.sec.gov/ocie/Article/risk-alert-5-most-frequent-ia-compliance-topics.pdf.

In particular, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) found weak compliance programs; insufficient or late filings; custody rule violations; Code of Ethics problems; and the often used books and records issues. OCIE, in fact, criticized the use of non-particularized,

The Office of Compliance Inspections and Examinations (or OCIE) recently issued a Risk Alert that identified the five most frequent compliance topics that arising from OCIE examinations. These compliance topics include the following:

  1. Deficient compliance programs,
  2. Late or insufficient filings,
  3. Violations of the custody rule,
  4. Code of Ethics compliance deficiencies, and
  5. Books and records.

Among

Like it has in the past, FINRA is sharply focused on examining brokers with a disciplinary past, including the identification and examination of such brokers being placed at the top of its 2017 exam priorities. Does this mean that firms cannot hire brokers with a past?

The short answer is no, but the longer is

In its never-ending effort to thwart senior investor fraud, FINRA recently proposed a new rule to the SEC. This proposal would require member firms to obtain the name of a trusted contact person for the customer’s account. The new rule would also allow firms to place temporary holds on the disbursement of funds or securities

Consistent with the ongoing guidance/requirements from the SEC and FINRA, all firms must have and enforce data security policies and procedures.  Even the best policies and procedures may, however, not protect the firm in every instance.  So what do you do if there is a breach?19196909_s

One of the most important things to determine is

In the hectic world of financial services, registered representatives and investment adviser representatives are always looking to increase their assets under management. At what cost? Are there situations where you would be better off just saying no to accepting that one additional client?

In my many years of defending representatives and advisers from customer complaints,

On Monday, September 12, 2016, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced that a “Supervision Initiative” will take place across the country.

OCIE staff will conduct focused RIA examinations of firms employing or contracting with supervised persons, who have a disciplinary history.  OCIE plans to evaluate the effectiveness of RIA compliance programs,

That is the question that the SEC has essentially posed for registered investment advisers in a National Exam Program Risk Alert. In doing so, the SEC has stated that it will be “examining compliance oversight and controls of registered investment advisers that have employed or employ individuals with a history of disciplinary events . .

Over the years that I have defended broker-dealers and investment advisors on customer-initiated claims, I have seen many things that would make any compliance officer cringe. One spine tingling (not in the good way) type of conduct is when an advisor engages his/her client when the client makes an informal complaint, instead of routing the