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Category Archives: Broker-Dealer Regulation

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FINRA Issues Report on Its Examination Findings

Posted in Anti-Money Laundering, Broker-Dealer Regulation, FINRA Enforcement

In December 2017, FINRA issued a report highlighting several key findings from its recent examinations of broker-dealer members.  The report is available here. The report focuses on several observations from recent examinations that FINRA believed would be worth highlighting to members.  Of course, the report cannot list all of FINRA’s concerns; however, FINRA selected these… Read More

SEC Staff Solves Section 28(e)-MiFID II Compliance Conundrum—For Now

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

In a series of three “no-action” letters, the staff of the Securities and Exchange Commission (SEC) published guidance to address concerns by U.S. broker-dealers and investment advisers about how to comply with Markets in Financial Instruments Directive (MiFID II) rules that limit the use of soft dollars.  Among other things, the Division of Investment Management… Read More

SEC Chairman Clayton Addresses Senate Committee

Posted in Broker-Dealer Regulation, Investment Adviser Regulation, SEC Enforcement

On September 26, 2017, SEC Chairman Jay Clayton delivered to the U.S. Senate Committee on Banking, Housing and Urban Affairs his first testimony as Chairman.  A copy of his prepared remarks may be found here. Mr. Clayton’s testimony was fairly broad in scope, covering a variety of issues of concern to the Committee, from the… Read More

The Fiduciary Rule Poll

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

The US Department of Labor’s (DOL) fiduciary standard rule has been befuddling the financial services industry for the past seven years. In its simplest form, it increases accountability for the brokers, planners and insurance agents that handle US retirement accounts. It introduces measures to ensure they act in the best interest of their clients rather… Read More

NASAA Survey Finds Seniors Are Most Vulnerable to Financial Fraud

Posted in Broker-Dealer Regulation, FINRA Enforcement, SEC Enforcement

On August 21, 2017, the North American Securities Administrators Association (“NASAA”) released a survey on senior citizens and financial exploitation. The survey of the state securities regulators highlighted, among other things, the need for the securities regulators to take a stronger role in prevention and detection. The survey was conducted internally among NASAA’s membership of… Read More

DOL Proposes to Defer Full Implementation of its Fiduciary Rule Until July 1, 2019

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

In April 2016, the U.S. Department of Labor (DOL) adopted a rule that significantly expands the category of persons deemed fiduciaries when providing investment recommendations to most retail retirement accounts (the “Fiduciary Rule”). On August 31, 2017, the DOL published a proposal to defer full implementation of the Fiduciary Rule until July 1, 2019.1  Persons… Read More

FINRA Fines Broker-Dealers for Sales of Non-Traditional ETFs

Posted in Broker-Dealer Regulation, FINRA Enforcement

In August 2017, FINRA entered into a consent agreement with a Georgia-based broker-dealer arising from improper practices and procedures relating to its sales of leveraged ETFs.1  The sales included ETFs that were leveraged, inverse, or both inverse and leveraged, and that were sold to retail accounts.  The action reflects FINRA’s continuing concerns about the procedures… Read More

OCIE Provides Insight into Issues Identified in Recent Cybersecurity Sweep

Posted in Broker-Dealer Regulation, Cybersecurity/Privacy, Fund Regulation, Investment Adviser Regulation

The National Exam Program of the SEC’s Office of Compliance Inspections and Examinations (OCIE) recently published its observations from the second generation of its Cybersecurity Initiative. It reported overall improvement in firms’ cybersecurity awareness and preparedness, but said there is plenty of room for improvement. The staff noted that many firms have failed to adopt procedures reasonably… Read More

The Guide to Social Media and the Securities Laws

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

The growing use of social media has created challenges for federal securities regulators, who must enforce antifraud rules that were written at a time when the prevailing technology was the newspaper. This Guide summarizes how regulation has evolved in the face of the growing use of social media.  Our guide discusses the principal areas of… Read More

Does a Proposal for Further Delay in Implementation of the DOL Fiduciary Rule Suggest Major Changes Are Coming?

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

On August 9, 2017, the U.S. Department of Labor (DOL) submitted to the Office of Management and Budget (OMB) a proposal to delay until July 1, 2019 the implementation date for those portions of the DOL’s fiduciary rule that are not currently applicable.  The fiduciary rule was originally adopted by the DOL in April 2016,… Read More

FINRA Publishes “Frequently Asked Questions” on New Pricing Disclosure Rules for Securities Confirmations

Posted in Broker-Dealer Regulation, FINRA Enforcement

On July 12, 2017, FINRA issued guidance on its recent amendments to Rule 2232. The new requirements, which are scheduled to take effect on May 14, 2018, apply to transactions with retail (and not institutional, as defined in Rule 4512(c)) customers in corporate and agency debt securities. Beginning on the effective date, FINRA will require… Read More

DOL Issues Request for Information Regarding Fiduciary Rule

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

On June 29, 2017, the Department of Labor (“DOL”) issued a Request for Information (“RFI”) in connection with its examination of the Final Fiduciary Rule, which was published on April 8, 2016, and became applicable on June 9, 2017.  The Best Interest Contract (“BIC”) Exemption and Principal Transaction Exemption also became applicable on June 9,… Read More

IFLR Webinar – Regulatory Burden Relief: What to Anticipate

Posted in Broker-Dealer Regulation, Events, Investment Adviser Regulation

Tuesday, July 25, 2017 10:00 a.m. – 11:30 a.m. EDT Join us as presenters share their views and predictions regarding: the Presidential Orders relating to deregulation; the Treasury Department’s initial report regarding the core principles of financial regulation; the Financial CHOICE Act and its principal provisions; the areas of regulatory reform as to which compromise… Read More

Attention Retail Investors: The SEC Wants to Hear Your Views on the DOL’s Fiduciary Rule

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

In connection with the Department of Labor’s (“DOL”) fiduciary rule (the “Fiduciary Rule”), key provisions of which became applicable on June 9, 2017, SEC Chair Jay Clayton issued a public statement seeking retail investors’ (and other interested parties’) views in advance of any “possible” future SEC action in the area. The Chair said that he… Read More

IFLR Webinar: Living with the DOL Fiduciary Rule

Posted in Broker-Dealer Regulation, Events, Investment Adviser Regulation

Wednesday, June 28, 2017 12:00 p.m. – 1:30 p.m. EDT The first phase of the Department of Labor’s (“DOL”) new fiduciary rule (“Fiduciary Rule”) was implemented on June 9, 2017. The Fiduciary Rule greatly expands the categories of persons who are deemed fiduciaries when dealing with retail retirement investors.  Many investment professionals will now be… Read More

U.S. Treasury Department Report on Core Principles for Regulating the United States Financial System

Posted in Broker-Dealer Regulation, Enforcement, Investment Adviser Regulation

As required by the President’s Executive Order 13772 setting forth the core principles that should be taken into account in connection with the regulation of the U.S. financial system, the U.S. Treasury Department published a report identifying regulations inconsistent with the seven principles articulated in the order. The report is the first of series of… Read More

Implementing the DOL Fiduciary Rule

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

Background On June 9, 2017, key provisions of the fiduciary rule adopted by the Department of Labor (DOL) will become applicable for most broker-dealers, as well as many bankers, insurance agents, and others who make investment recommendations to retail retirement investors (the “Fiduciary Rule”).  As discussed below, only a portion of the Fiduciary Rule and… Read More

Living with the DOL Fiduciary Rule: Be Prepared for the June 9 Implementation Date

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

The first phase of the Department of Labor’s (“DOL”) new fiduciary rule (“Fiduciary Rule”) is scheduled to be implemented on June 9, 2017.  The Fiduciary Rule greatly expands the categories of persons who are deemed fiduciaries when dealing with retail retirement investors.  It was adopted by the DOL in April 2016 together with new prohibited… Read More

FINRA T+2 Rules Are Approved

Posted in Broker-Dealer Regulation

In May 2017, in Regulatory Notice 17-19, FINRA announced the SEC approval of a variety of its proposed rule amendments relating to the upcoming move of the U.S. securities markets to the T+2 settlement cycle. In order to coincide with the effective date for the revisions to SEC Rule 15c6-1(a), these amendments will become effective… Read More

FINRA Retrospective Rule Review: Outside Business Activities and Private Securities Transactions

Posted in Broker-Dealer Regulation

The Financial Industry Regulatory Authority (“FINRA”) is conducting a retrospective review of the rules that govern outside business activities and private securities transactions to assess their effectiveness and efficiency.  FINRA posted the following release on the subject. A retrospective review involves FINRA looking back at a significant rule after a period of time to determine whether… Read More

Presidential Actions on Regulatory Rollback: The Order of the Orders

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

Since his inauguration on January 20, 2017, President Trump has issued a number of presidential orders and memoranda relating to the reduction of regulation.  Among these include the “two-fer” order, a memorandum to the Department of Labor relating to the delay of its Fiduciary Duty Rule and an order to identify and reduce tax regulatory… Read More

FINRA Publishes New Guidance on Social Networking Websites and the Application of Rule 2210

Posted in Broker-Dealer Regulation

In Regulatory Notice 17-18, the Financial Industry Regulatory Authority, Inc. (“FINRA”) provided additional guidance, in the form of 12 FAQs, on its earlier regulatory notices relating to the use of social media and the application of FINRA Rule 2210 (Communications with the Public). Specifically, the FAQs expand on the areas of recordkeeping, third-party posts and… Read More

SEC Approves FINRA’s Rules to Protect Seniors from Financial Exploitation

Posted in Broker-Dealer Regulation, FINRA Enforcement

On March 30, 2017, the SEC approved the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) (see our related blog post about the proposal).  Among other things, Rule 2165 permits brokers to place holds on disbursements of funds or securities from the accounts of “specified adult” customers.  Specified adults include those 65… Read More