News & Events – Compliance and Regulatory Alerts

Last month, we reported on FINRA's announcement that they will be conducting SEC Reg BI readiness assessments to better understand companies' Reg BI implementation preparations. Bates Compliance helps firms achieve Reg BI readiness.

FINRA has announced that they will be conducting SEC Reg BI readiness assessments to better understand companies' Reg BI implementation preparations. Learn about how Bates Compliance and our Reg BI Readiness Workshops can support your firm’s SEC Reg BI implementation efforts.

The SEC is seeking comment on a newly issued proposal to amend two rules on investment adviser advertising and solicitor compensation.

On October 11, 2019, the heads of FinCEN, the SEC and CFTC issued a joint statement to remind financial institutions of their Bank Secrecy Act obligations for transactions involving “digital assets.”

To support your Reg BI implementation efforts, Bates Compliance is rolling our Reg BI Countdown with action items to keep your compliance team on track as the June 30, 2020 implementation deadline approaches.

The SEC Enforcement Division is continuing to concentrate on firms that did not self-report by the deadline of the SEC’s Share Class Selection Disclosure Initiative, and is now focusing on revenue-sharing payments and other forms of representative compensation or cost offsets. Bates takes a look at recent SEC actions and settlements with comments and recommendations by Securities Litigation and Regulatory Enforcement Managing Director Alex Russell.

The SEC Office of Compliance, Inspections and Examinations (OCIE) issued a Risk Alert to remind investment advisers of their compliance obligations for principal trading and agency cross transactions involving clients. Specifically, OCIE alerted investment advisers of their responsibility to comply with disclosure and consent requirements under the Investment Advisers Act and that, except for specific circumstances related to cross trades, the rules require compliance on a “transaction-by-transaction basis – blanket disclosure and consent are not permitted.”

The SEC Office of Compliance, Inspections and Examinations (OCIE) issued a Risk Alert to address compliance and disclosure issues raised in examinations covering the oversight practices of SEC-registered investment advisers “that previously employed, or currently employ, any individual with a history of disciplinary events.” OCIE also proposed a number of ways that firms could address the weaknesses in their compliance frameworks related to supervised individuals with a prior history of disciplinary events.

The formal publication by the Federal Register on July 12, 2019, of Regulation Best Interest triggers final effective and compliance dates for the rulemaking package. 

By a 3-to-1 margin, the SEC voted to approve its long-debated Regulation Best Interest at an open meeting today. Also approved was a new interpretation of the “solely incidental” provision of the Investment Advisers Act of 1940.

In a new Regulatory Notice, FINRA provided guidance on reporting and monitoring suspicious activities under a member firm’s anti-money laundering (“AML”) compliance program.

The SEC's Enforcement Division has now initiated investigations against firms that did not self-report by the deadline of the SEC’s Share Class Selection Disclosure Initiative. Whether you are facing an enforcement or remediation effort, Bates can help.

In June 2018, Bates Group published an article reporting on deficiencies identified by FINRA in its exam findings which may trigger further scrutiny. In that article we noted FINRA’s focus on the Uniform Transfer to Minors Act (UTMA), among other exam topics. That scrutiny has now arrived in the form of FINRA inquiries/investigations into how accounts for UTMA and Uniform Gifts to Minors Act (UGMA) accounts are handled at financial services firms.

FINRA’s 529 Share Class Initiative self-reporting deadlines have been pushed back one month to allow firms additional time to review their supervisory systems, procedures and past transactions to identify sales of 529 plan share classes. The extension also allows firms more time to consider additional information made available by FINRA (FAQs) and to determine whether to self-report.

Firms participating in FINRA’s 529 Plan Share Class Initiative should act now to meet the regulator’s approaching April 1st deadline to self-report violations and submit a plan to remediate harmed clients. Bates looks at four distinct challenges facing firms as they prepare their response.

Bates Research recently conducted a Q & A session with Alex Russell, Managing Director of Securities Litigation & Regulatory Enforcement at Bates, to discuss FINRA's new 529 Share Class Initiative. Alex talks about responding by FINRA's deadline and potential pitfalls firms should avoid when preparing their response.