COVID-19 has bought a “new normal”. From stay-at-home orders and teleworking requirements to market volatility, consumer worry, and delayed public disclosure, the face of the industry will be forever changed. In light of this, Registered Investment Advisor compliance departments should consider reviewing the landscape of the Code of Ethics requirements.
The spread of the COVID-19 pandemic has presented challenges for many financial service firms. Compliance programs are no exception. Firms are generally responsible for building, testing, and enforcing their compliance programs.
Many financial service institutions have been hesitant to create teleworking processes and systems that would give them more flexibility to service clients and build the business. However, within the regulatory framework, landmines appear at every turn.
Many financial service firms have written supervisory procedures in place for business continuity planning (BCP). Tucked somewhere on a server or in a binder, many plans have been collecting dust. More than likely, these plans are only taken out during regulatory exams, branch audits, or internal testing.
Enforcement actions can be scary, especially if you or your Firm are named in the enforcement. For the rest of us, enforcement actions provide valuable information on patterns of misconduct, rule violations, and overall cautionary tales.
MasterCompliance continues to provide clients and the public with guidance on industry focus areas, new rules, compliance foundations, and regulatory priorities. This blog explores our top six most popular blog posts.
At the end of each calendar year, the Office of Compliance Inspections and Examinations (“OCIE”) staff of the United States Securities and Exchange Commission (“SEC”) publish a list of topics for the next year’s examination priorities. Not so surprisingly, the first item for the 2019 exam priorities listed is “fees and expenses”. This topic was also the highlight of an OCIE Risk Alert in April 2018 as one of the most frequent compliance issues identified in Examinations of Investment Advisers.
Today, investment advisers and broker-dealers face many challenges when providing advice to and working for senior investors. Many seniors are living with or approaching diminished capacity due to Alzheimer’s, dementia, and/or other health-related issues. Unfortunately, these health issues create vulnerability for financial exploitation from caregivers, family members, neighbors, friends, medical professionals, lawyers, clergy, bank employees, or financial service professionals.
Under the Investment Advisors Act of 1940 (the “Advisers Act”), Investment Advisers assume a fiduciary responsibility requiring them to seek and obtain the “best execution” for client transactions when trading in client accounts. The United States Securities and Exchange Commission (“SEC”) has outlined this responsibility as “an adviser must execute securities transactions for clients in such a manner that the client’s total costs or proceeds in each transaction are the most favorable under the circumstances.” Also, the SEC has indicated Investment Advisers need to periodically “evaluate the execution quality of the broker-dealer executing their clients’ transactions.”
With the transition into the electronic storage of client data, Investment Advisers and Broker-Dealers are faced with more complex compliance issues regarding safeguarding client information and records. The United States Securities and Exchange Commission (“SEC”) OCIE Risk Alert from May 2019 addresses some of the issues and concerns identified with cloud-based storage and possible issues to consider regarding the protection of electronic client and business data.