Blog | MasterCompliance

FINRA Rule 2210 requires that firms retain records of communications that relate to their “business as such” under Rule 17a-4(b) of the Securities Exchange Act of 1934 (SEA).  Therefore, it is the content of the broker’s communication that determines whether it is regulated under Rule 2210.   However, how does the rule apply if the firm or its registered representatives are not the authors of the content?  What if the content is created by a third-party?  We will discuss how the Rule 2210 applies in such scenarios. Third-Party Sites As explained by FINRA, posts by customers or other third parties on Read More....

As you may recall, the Fiduciary Rule’s BIC Exemption and Principal Transaction Exemption became applicable on June 9, 2017, with transition relief through January 1, 2018.  However, recently the Department of Labor announced the delay of the second implementation of the Fiduciary Rule, amending it from January 1, 2018 to July 1, 2019.  Due to this amendment, Financial Institutions and Advisers will only have to comply with the Impartial Conduct Standards during the transition phase.  The Impartial Conduct Standards requires an Adviser to seek to obtain the best execution reasonably available under the circumstances with respect to the transaction, and Read More....

Regulation D, established by the Securities and Exchange Commission, provides exemptions that allows companies to raise capital through the sale of unregistered securities.  Under Regulation D, companies can avoid the costs associated with a public offering.  Although companies are not required to register with the SEC under Regulation D, they are still required to provide the proper framework and disclosure documentations.  There are four exemptions under Regulation D: Rule 504, 505, 506(b), and 506(c).  The exemptions differ in regards to who can invest, how much capital can be raised, and who can be solicited. Rule 504 Under Rule 504, an Read More....

The Securities and Exchange Commission (“SEC”) recently announced an upcoming change to the definition of “qualified client” as defined in Rule 205-3 under the Investment Advisers Act of 1940 (“Advisers Act”) that will become effective August 15, 2016. This applies to any Registered Investment Adviser (“RIA” or “Investment Adviser”) that earns performance based fees. To provide some background, Section 205(a)(1) of the Advisers Act generally prohibits an investment adviser from entering into, extending, renewing, or performing any investment advisory contract that provides for performance compensation or performance fees. However, there are certain exemptions from this prohibition. One such exemption under Read More....

FINRA has long been concerned with practices used by broker-dealers and their newly registered representatives to convince clients to transfer accounts from the representative’s old firm as well as the fees that are sometimes associated with such transfers.  To address this concern, FINRA Rule 2273 requires  broker-dealers to deliver an educational disclosure to potential clients in connection with recruitment practices and account transfers. Representatives who begin working for a new broker-dealer often contact former customers hoping to continue their business relationship by transferring their assets to their new broker-dealer, thereby maintaining continuity by staying with the representative.  In this situation, Read More....

Recently, the Financial Crimes Enforcement Network (“FinCEN”) adopted a final rule on Customer Due Diligence (“CDD”) Requirements for Financial Institutions.   As a result, firms will be required to address the new requirements within their Anti-Money Laundering (AML) programs.  Firms must be in compliance with its provisions by May 11, 2018. Initially, firms’ AML programs were required to meet, at a minimum, the statutorily enumerated “four pillars” that were established by the Bank Secrecy Act (BSA).  The four pillars included the following: the establishment and implementation of policies, procedures and internal controls reasonably designed to achieve compliance with the applicable provisions Read More....