How to Register as an RIA: What is a Registered Investment Advisor?

A Registered Investment Advisor, or “RIA” as it is commonly abbreviated, is a person or company engaged in the investment advisory business. That means that they engage in the regular business of providing, for compensation, either directly or through publication, advice on the value of securities or on the advisability of investing in, buying, or selling securities; or, they engage in the regular business of providing, for compensation, either directly or through publication, analyses or reports covering securities.

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FINRA Updates Anti-Money Laundering Template for Small Firms

Per the Bank Secrecy Act (BSA) and FINRA Rule 3310, FINRA member firms are required to establish Anti-Money Laundering (AML) compliance programs. To assist its smaller member firms with fulfilling these responsibilities, FINRA publishes the “Anti-Money Laundering Template for Small Firms”, which provides instructions, relevant rules, text examples, relevant websites, and other resources that can be used to develop an AML plan for a small firm.

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OBAs & PSTs: FINRA Seeks Comment on Proposed Rule

Last spring, FINRA began a review of its rules regarding Outside Business Activities (OBAs) and Private Securities Transactions (PSTs). The review was meant to evaluate the efficiency and efficacy of FINRA Rule 3270 (Outside Business Activities of Registered Persons) and FINRA Rule 3280 (Private Securities Transactions of an Associated Person). FINRA concluded that while Rules 3270 and 3280 are fulfilling their intended purposes, they could benefit from changes to make the rules more contemporary and present-day and to better align the goal of protecting investors with the reality of the current regulatory landscape and business practices. Based on its findings, FINRA has proposed a new rule governing OBAs and PSTs, meant to replace the current rules and reduce unnecessary burdens on member firms.

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Large Trader – Rule 13h-1 (Part 1)

Rule 13h-1 helps the SEC identify and obtain trading information on market participants that conduct a substantial amount of trading activity in the U.S. securities market. The rule imposes filing requirements on persons that meet the definition of “large trader.” A larger trader is any person that directly or indirectly, including through other persons controlled by such person, exercises investment discretion over transactions in NMS securities that equal or exceed:

  • 2 million shares or $20 million during any calendar day; or
  • 20 million shares or $200 million during any calendar month.

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Annual Reviews – SEC Rule 206(4)-7

SEC Rule 206(4)-7 requires investment advisers to review, no less frequently than annually, the adequacy of its written compliance policies and procedures and the effectiveness of their implementation. The SEC expects annual reviews to take into consideration any compliance matters that arose during the previous year, any changes in the business activities of the adviser or its affiliates, and any changes in the Investment Advisers Act or related rules that may impact the adviser’s policies and procedures. In addition, the SEC expects that an investment adviser will review its compliance policies and procedures on an interim basis in response to significant compliance issues, changes in business activities, and new regulation.  Read More…

SEC Releases New RIA Form ADV Filing Requirements Effective October 2017

Securities and Exchange Commission (SEC) adopted amendments to Investment Advisers Act rules in August 2016 that will result in significant changes to Form ADV for advisory firms working with SMA’s (Separately Managed Accounts).  The additional data will help the SEC focus on examining firms more often that present the greatest risks. Read More…

2017 Examination Priorities for RIA’s and BD’s

The Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”) continues another year of exam priorities for its Registered Investment Advisors (“RIA”) and Broker-Dealers. OCIE are the “eyes and ears” of the SEC, and its exams are used by the SEC to inform rule-making initiatives, identify and monitor risks, improve industry practices, and pursue misconduct. Read More…

FINRA Updates Private Placement Filer Form Pursuant to FINRA Rules 5122 and 5123

FINRA has updated the form that firms must use to file offering documents and information pursuant to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5123 (Private Placements of Securities) (Filer Form). The updated Filer Form, which became available in the FINRA Firm Gateway in May of 2017, includes new and updated questions that will facilitate review of the filed material and eliminates other questions.  Read More…

Regulatory Notice 16-39: Trade Reporting and Compliance Engine (TRACE)

In 2001, the Securities and Exchange Commission approved the Trade Reporting and Compliance Engine (TRACE), a rule that requires all member firms to report secondary market transactions in eligible over-the-counter fixed income securities to FINRA. Unlike equities, over-the-counter securities trades are private transactions between counterparties and were not previously publicly reported. This lack of reporting provided very little to no price execution transparency to the marketplace.  Read More…