Investment Adviser Principal and Agency Cross Trading practices was the topic of a recent OCIE Risk Alert. The Investment Adviser’s Act Principal Transactions Section 206(3) indicates “Investment Adviser’s acting as a principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining consent of the client to such transaction” are prohibited unless the appropriate disclosures and consent procedures are addressed and completed according to the compliance requirements.
In June, the U.S. Securities and Exchange Commission (SEC) passed “Regulation Best Interest: The Broker Dealer Standard of Conduct” and “Form CRS Relationship Summary; Amendments to Form ADV”. This legislation, Regulation Best Interest and CRS Relationship Summary, is the cumulation of many attempts to mesh the “fiduciary standard” for Investment Advisers and Broker-Dealer Representatives. The objective of this legislation and its requirements are to educate investors through disclosures regarding any conflicts, fees, costs, and whether the investment opportunities being offered are suitable for the investor. This legislation will impose new documentation requirements for both Investment Advisors and Broker-Dealer Representatives.
On May 23, 2019, the SEC, NASAA, and FINRA published a year-end review of the Senior Safe Act which became federal law one year ago. In doing so, they also issued a Fact Sheet to help raise awareness with financial institutions and describe how the Act’s immunity provisions work.
During April and May 2019, FINRA introduced a new AML podcast. FINRA’s unscripted podcast explained the importance of a solid AML program, its importance to the overall industry, and best practices. Blake Snyder and Jason Foye of FINRA’s AML investigative unit were the guest speakers.
If you are a private fund adviser (i.e. hedge fund or pooled investment vehicle), do you know if you are deemed to have custody? If so, is your Form ADV Part I completed correctly? Custody for private fund advisers is regarded by the SEC as an extremely important topic and should be reviewed frequently by your firm.
Since there is a significant increase in compliance responsibilities for firms that have custody of client funds and/or securities, it’s critical that you consider whether or not your firm will be deemed to have custody.
Welcome to the third and final part in our series on the three main suitability obligations outlined in FINRA Rule 2111 (Suitability). As with our earlier posts, “FINRA Rule 2111: Reasonable-Basis Suitability” and “FINRA Rule 2111: Customer-Specific Suitability”, we will begin with a brief overview of the three main suitability obligations imposed on broker-dealers and their associated persons; then, this particular blog will focus in on Quantitative Suitability.
This post is the second in our three-part series on the three separate and distinct suitability obligations outlined in FINRA Rule 2111 (Suitability). As with our previous post, “FINRA Rule 2111: Reasonable-Basis Suitability”, we will begin with a brief overview of the three main suitability obligations imposed on broker-dealers and their registered representatives; then, this particular blog will focus in on Customer-Specific Suitability.
Although suitability is a well-established principle within the securities industry, broker-dealers and their registered representatives sometimes forget that FINRA Rule 2111 (Suitability) has three separate and distinct suitability obligations. We will begin with an overview of all three main suitability obligations. Then, we will be going in-depth on these areas across three different blogs; this particular blog will focus in on Reasonable-Basis Suitability.
In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) announced that it has adopted amendments to Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in an effort to enhance transparency in the municipal securities market. The SEC has stated that the commission believes the amendments will provide[…]
As you may remember from our earlier post on the subject, under SEA Rules 17a-3 and 17a-4, a broker-dealer is required to make and keep books and records relating to its business and may maintain and preserve records by means of “electronic storage media.” The Securities and Exchange Commission (SEC) recently released guidance in response to a letter received from FINRA regarding contractual arrangements between broker-dealers and third-party recordkeeping service providers – more specifically, contractual arrangements that include provisions permitting the third-party recordkeeping service providers to delete or discard the broker-dealer’s records, typically due to non-payment by the broker-dealer of fees due under the contract. FINRA recapped the guidance received from the SEC in its Regulatory Notice 18-31.