Personal Trade Reviews

Personal Trade Reviews

Citigroup Global Markets Inc. was recently censured and fined $350,000.00 ([PDF] FINRA Case #2019064316401) for failing to have a supervisory system to ensure statements were reviewed timely, as well as not ensuring they were receiving paper statements for accounts at custodians for which they did not have a direct feed. Although this particular incident was a BD fine, this information should be helpful for RIAs as well. An RIA should be conducting personal trade reviews as a part of their Code of Ethics. Considerations The review and supervision of outside brokerage accounts isn’t news; however, it’s important to take a Read more about Personal Trade Reviews[…]

FINRA's New Supplemental Liquidity Schedule (SLS)

FINRA’s New Supplemental Liquidity Schedule (SLS)

FINRA has established a new Supplemental Liquidity Schedule (SLS). The new SLS, which members subject to the requirement will need to file as a supplement to the FOCUS Report, is designed to improve FINRA’s ability to monitor for events that signal an adverse change in the liquidity risk of the members with the largest customer and counterparty exposures. This new requirement will become effective on March 1, 2022. For members subject to the requirement, the first SLS must be completed as of the end of March 2022 and will be due by May 4, 2022. FINRA Rule 4524 FINRA Rule Read more about FINRA’s New Supplemental Liquidity Schedule (SLS)[…]

Supervising Vendors

Supervising Vendors

FINRA recently released Regulatory Notice 21-29 regarding a broker-dealer’s obligation to supervise certain activities and functions of third-party vendors. This is nothing new, but we are seeing a big increase in utilizing outsourced vendors, including CRMs, Electronic Storage, Work Flow software, and IT vendors. Although the following is based on FINRA guidance for BDs, RIAs have similar responsibilities for supervising vendors, so we hope that RIA firms will glean some valuable information from this guidance as well. The level of supervision can vary depending on the vendor, access, and the critical nature of their service. Firms are encouraged to pull Read more about Supervising Vendors[…]

New York IAR Registration Waiver Deadline Reminder

New York IAR Registration Waiver Deadline Reminder

This blog is a follow up to our Change to New York IAR Registration blog, and a reminder that the August 31st deadline to submit a waiver for registration to New York is looming. Effective February 1, 2021, New York now requires Individuals to register in the state. Previously, NY has not held 65/66 licenses; however, this has changed. Note the registration standards for state-registered firms and SEC-registered firms differ. State-Registered Firms The new rule requires all investment adviser representatives with more than five clients in the state of New York to register as an investment adviser, unless exempt from Read more about New York IAR Registration Waiver Deadline Reminder[…]

FINRA Adopts Rules to Further Restrict Brokers with Disclosures

FINRA Adopts Rules to Further Restrict Brokers with Disclosures

FINRA uses a combination of tools to reduce the risk of harm to investors from member firms and the brokers they hire that have a history of misconduct. In Regulatory Notice 21-09, they set out some newly adopted rules along with the implementation.

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Investment Adviser Marketing Rule

Investment Adviser Marketing Rule

Effective May 4, 2021, the SEC’s recently adopted amendment to rule 206(4)-1 of the Advisers Act went into effect.  The Advertising Rule, 206(4)-1, which addressed how advisers marketed their services to clients and investors, had not been updated with any substance since it was adopted in 1961.  The same is true for the “solicitation rule” adopted in 1979. The new investment adviser marketing rule amends the existing rule 206(4)-1, known as “the advertising rule,” and replaces rule 206(4)-3, the “solicitation rule.” The SEC believed it was appropriate to regulate both the investment adviser advertising and the solicitation activity of an adviser through a single rule: The Marketing Rule.

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