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The loss of key personnel can have a devastating effect on a financial institution, especially small investment advisory firms. In a worst-case scenario, the loss forces the firm to shut down and leaves clients without a financial advisor to manage their money. The North American Securities Administrators Association (“NASAA”) addressed the loss of key personnel by state-registered investment advisers through the adoption of Model Rule 203(a)-1A, which governs businesscontinuity and succession planning. The NASAA’s Guidance on Business Continuity and Succession Planning for State-Registered Investment Advisers, which accompanies the Model Rule, is a good resource for the investment adviser preparing or Read More....
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FINRA is proposing to amend the FINRA Rule 6700 Series and the Trade Reporting and Compliance Engine (‘‘TRACE’’) dissemination protocols to provide for dissemination of transactions in an additional type of Securitized Products—specifically, collateralized mortgage obligations (‘‘CMOs’’). In addition, FINRA is proposing a corresponding change to Rule 6730 to reduce the reporting period for CMOs from end-of-day to 60 minutes, and also to amend Rule 6730 to simplify the reporting requirements for transactions inCMOs executed prior to issuance. Specifically, FINRA is proposing to amend the Rule 6700 Series to: (1) Provide for the dissemination of transactions in CMOs; (2) reduce Read More....
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SEC-registered investment advisers are taking a closer look at their compliance policies and procedures following Donald Trump’s selection of Mike Pence as Vice President. “Why?” you may ask. It’s because Mike Pence is the current state governor of Indiana and is thus subject to the “pay-to-play rule”. Let me explain. SEC’s Pay-to-Play Rule On June 30, 2010, the SEC adopted SEC Rule 206(4)-5, the “pay-to-play rule”, to address the unethical pay-to-play practices of investment advisers. The rule has the effect of restricting or limiting political contributions to an “official” of a “government entity.” What Is a “Government Entity”? “Government entity” Read More....
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FINRA has recently made several changes to FINRA Rule 2210 to expressly address its application to debt research reports in light of the SEC’s approval of a dedicated debt research conflict of interest rule. FINRA Rule 2242, which addresses conflicts of interest relating to the publication and distribution of debt research reports, became effective on July 16, 2016. First, Rule 2210(b)(1)(A) requires an appropriately qualified registered principal to approve each “retail communication” before the earlier of its use or filing with FINRA’s Advertising Regulation Department. Both a debt and equity research report constitutes a “retail communication,” unless it is distributed Read More....
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If you’re reading this blog, you probably know all about the Series 63: The Uniform Securities Agent State Law Examination (more commonly known as the Series 63 or S63) was developed by the North American Securities Administrators Association (NASAA) to qualify candidates as securities agents. The exam covers the principles of state securities regulations as laid down in the Uniform Securities Act. It is intended to helpstate securities administrators determine that the applicant knows and comprehends a state’s regulations. (And if you don’t yet know all about the S63, welcome to the blog anyway! FINRA has some additional information about Read More....
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In the broker-dealer industry, firms are always looking for ways to increase efficiencies while reducing budget constraints. One way that this is accomplished is through outsourcing certain functionalities to third-party service providers. What areas do firms commonly outsource? It runs the gamut – everything from IT services and website development, office cleaning and maintenance services, accounting/payroll activities, order management services and quote providers, AML/OFAC screening and technologies, to legal services and back-office compliance and operations. In viewing such outsourced relationships and arrangements, it is important to understand a firm’s responsibilities with respect to such third-party vendors. FINRA Exam Priorities In Read More....
