Cryptocurrency and The Securities Industry

Cryptocurrency (also spelled crypto currency) is everyone’s new favorite hot topic. Even if you’ve done no research into the topic, you’ve probably heard of the most (in)famous cryptocurrency: Bitcoin. But what are cryptocurrencies? And how are they affecting the securities industry?

Read More…

Cybersecurity Programs Remain a Priority in 2018

Cybersecurity programs remain a significant priority for financial services industry regulators, including the SEC, FINRA, and state securities regulatory agencies. As mentioned in FINRA’s 2018 Annual Regulatory and Examination Priorities Letter, member firms need to have cybersecurity programs in place and such programs must capable of protecting sensitive information, including personally identifiable information of clients, from both internal and external threats. Over the past couple of years, awareness of cybersecurity risk has increased dramatically. However, as awareness increases, so does the sophistication of cybersecurity threats. And even a robust cybersecurity program can be compromised by something as simple as an employee opening an email attachment that contains malware. So, what can a firm do to combat phishing and spearphishing attacks, ransomware attacks, fraudulent third-party wires, etc.?

Read More…

How to Register as an RIA: State Registration vs. SEC Registration

In our previous blog on Registered Investment Advisors (RIAs), “How to Register as an RIA: What is a Registered Investment Advisor?”, we discussed some important basics of RIAs – how does one define an RIA, what is Fiduciary Duty, why do RIAs need to register, what is the difference between state registration and SEC registration, etc. Today, we will return to the topic of state registration vs. SEC registration in order to provide a more thorough examination of the issue.

Read More…

Crowdfunding: Funding Portal Registration – Part II

[Continued from Crowdfunding: Funding Portal Registration – Part I]

Funding Portal Registration Process

Firms seeking to register as funding portals must do so via completion of an application process with FINRA.  The registration process for a funding portal is similar to, but much less comprehensive and exhaustive, the New Member Registration process completed by applicants wishing to become broker-dealers.

Read More…

Crowdfunding: Funding Portal Registration – Part I

Title III of the Jumpstart Our Business Startups (JOBS) Act, enacted in 2012, provides guidance and regulation relating to securities offered or sold through crowdfunding activities. In 2015, the Securities and Exchange Commission (SEC) added onto this initial act by creating a new ruleset that implemented a regulatory framework for intermediaries that facilitate such crowdfunding transactions. This includes regulations for a relatively new intermediary: the funding portal. Securities Act Section 4(a)(6) (otherwise known as “Regulation CF”) requires that intermediaries in crowdfunding transactions be registered with the SEC as either a broker-dealer or a funding portal.

Read More…

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.

Read More…

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…

Investment Advisers: SEC vs. State Registration

Due to the Dodd-Frank legislation, as of mid-2012, there are rules for registration eligibility that are primarily determined by a firm’s assets under management (“AUM”). For all firms below $100 million AUM, registration is required with the appropriate state jurisdictions.  For firms above $100 million AUM, registration will be at the SEC level, unless a registration exemption exists. In order to account for fluctuations in AUM, the SEC has imposed, by rule, a buffer for Investment Advisers with AUM between $90 million and $110 million. An adviser may register with the SEC once it reaches AUM of $100 million. An adviser must register with the SEC if it’s AUM is $110 million or more at the time they file their annual ADV amendment. Once registered with the SEC, a mid-size adviser can remain registered with the SEC as long as its AUM is at least $90 million at the time they file their ADV amendment.  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…