Change to New York IAR Registration

Change to New York IAR Registration

On December 1, 2020, the state of New York adopted new regulations that amended its Investment Advisory Act to require the registration of investment adviser representatives (“IAR”) including principals, supervisors, and solicitors through the WebCRD/IARD system. Prior to the rule change, New York was the only state that did not license IAR via the WebCRD/IARD system. The change to to New York IAR registration will go into effect on February 1, 2021 for all new registrants, and December 2, 2021 for any New York IARs already providing services, provided they apply for registration by August 31, 2021. The Amendments The Read more about Change to New York IAR Registration[…]

Registered Investment Adviser Succession

Registered Investment Adviser Succession

The Successor Rules in the Securities Exchange Act of 1934 allows for the legitimate transfer business between two or more entities. Succession can occur when one entity acquires substantially all of the assets and liabilities of an existing RIA, and is able to rely on a predecessor’s registration as an investment adviser with the SEC. In a guidance update, the SEC defines the instances where succession is applicable: A change of the state or territory in which a business is organized and/or a change in its form of organization; A change in control or a change in leadership at an Read more about Registered Investment Adviser Succession[…]

FINRA Rule 3241: Registered Person as Customer’s Beneficiary

FINRA Rule 3241: Registered Person as Customer’s Beneficiary

On October 29, 2020 FINRA released a regulatory notice detailing Rule 3241, a new rule that limits any associated person of a member firm who is registered with FINRA from being named a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust for or on behalf of a customer. The rule requires the member firm with which the registered person is associated, upon receiving required written notice from the registered person, to review and approve or disapprove the registered person assuming such status or acting in such capacity. Rule 3241 does not apply where the customer is a member of the registered person’s “immediate family, and becomes effective February 15, 2021

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The SEC Rule Change to Advisor Marketing Rules

The SEC Rule Change to Advisor Marketing Rules

In mid-December, the SEC adopted an amended rule to the advisor advertising rule and cash solicitation rule to reflect market developments and regulatory changes since the advertising rule’s adoption in 1961 and the cash solicitation rule’s adoption in 1979. These amendments will be the first substantive change to either rule since their inception and will create a new merged rule, The Marketing Rule, that will replace both the current advertising and cash solicitation rules.

Originally, the advisor advertising rule and cash solicitation rule were designed mainly for media such as television, radio, and newspapers. But a lot has changed since 1961 with the evolution of advertising and referral practices, advancements in technology, the introduction of the internet, and more. The Commission recognized this, stating that the new rule recognizes these changes and will “contain principles-based provisions designed to accommodate the continual evolution and interplay of technology and advice”. A few notable outcomes from this are the new rule applying to online outreach, such as adviser marketing over social media, and allowing for testimonials and endorsements.

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SEC Rule to Simplify Exempt Offering Framework for Small Firms

SEC Rule to Simplify Exempt Offering Framework for Small Firms

On Nov. 2, 2020, the U.S. Securities and Exchange Commission (SEC) adopted final rules to simplify the exempt offering framework. The SEC’s goal with these amendments was to “simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections.”. More Specifically they aimed to:

  • Address the ability of issuers to move from one exemption to another;
  • Set clear and consistent rules governing offering communications between investors and issuers;
  • Address potential gaps and inconsistencies in their rules relating to offering and investment limits; and
  • Harmonize certain disclosure requirements and bad actor disqualification provisions.

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SEC Rule to Allow for the Use Electronic Signatures

SEC Rule to Allow for the Use Electronic Signatures

The SEC recently adopted a rule change to allow for the use of electronic signatures for documents filed with the Commission. This rule change will apply to Regulation S-T, EDGAR Filer Manual, and certain other filings under the Securities Acts of 1933 and 1934 and the Investment Company Act of 1940. This long-awaited rule change was finally put into effect after the rise of COVID-19 and after the Commission received a rule making petition regarding the use of electronic signatures as the pandemic made it significantly more difficult to obtain “wet” signatures, as was originally required by Rule 302(b). Besides adding the option to use electronic signatures, the existing requirements of Rule 302(b) will be otherwise unchanged.

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