All posts by Clifford E. Kirsch

With more than 25 years of experience, Cliff regularly counsels clients on the design and distribution of investment products including wrap-fee programs and other advisory products, mutual funds, bank collective investment funds and insurance products. He also focuses on issues related to the design and implementation of compliance programs at financial services firms.

Senior Investors Focus of New “Principal Consideration” in FINRA Sanctions

Last month, FINRA’s National Adjudicatory Council (NAC) introduced new Sanction Guidelines which allow the NAC and FINRA staff to take into consideration the “undue influence” of registered individuals over vulnerable customers in determining appropriate sanction levels. The last update to the Guidelines occurred approximately two years ago, and included changes related to unsuitable recommendations and misrepresentations. Last month’s changes to the Guidelines provide for the first time a “principal consideration that analyzes whether a respondent has exercised undue influence over a customer.” Now listed as a specific factor for adjudicators and FINRA staff to consider in determining appropriate sanctions is  “[w]hether the respondent exercised undue influence over the customer.”

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Additional contributors to this post:

Bruce M. Bettigole, brucebettigole@eversheds-sutherland.com

Sarah Razaq Sallis, sarahsallis@eversheds-sutherland.com

Caveat Compliance: Can Firms Rely on Advice Received from Compliance Consultants?

Broker-dealers (BDs) and investment advisers (IAs) regularly hire compliance consultants to obtain advice about regulatory requirements. A recent Securities and Exchange Commission (SEC or Commission) enforcement proceeding against an investment adviser (IA) calls into question whether firms may rely on compliance consultants as a defense to violating the law.  However, if firms take proper steps, BDs and IAs may still be able to retain consultants and defend themselves based on the advice they receive. Otherwise, “caveat emptor” (as the saying goes) or “caveat compliance” (as the SEC seems to be saying).

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Additional contributors to this post:

Brian L. Rubinbrianrubin@eversheds-sutherland.com

Rebekah R. Runyonrebekahrunyon@eversheds-sutherland.com

The Final Rule: Delayed But (Perhaps) Not Denied

On April 4, 2017, the Department of Labor released its final rule postponing the applicability date of its new “investment advice” fiduciary definition and related exemptions. This extension, which was published in the April 7 Federal Register, generally delayed the applicability dates under the rule for 60 days, until June 9, 2017, and also modified limited but important conditions in the rule for 2017.

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Additional contributor to this post:

W. Mark Smithmarksmith@eversheds-sutherland.com

BICE on Ice? Status of the DOL Fiduciary Rule

With recent developments in all three branches of government bearing on the authority and timing of the new DOL final rule expanding the definition of fiduciary “investment advice” for purposes of ERISA, the already formidable challenges for plan sponsors and retirement product and service providers have been made more difficult.

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Additional contributor to this post:

W. Mark Smithmarksmith@eversheds-sutherland.com

 

FINRA Focus: What Happened With Restitution in 2016?

Evershed Sutherland’s annual analysis of FINRA’s  disciplinary actions indicates that FINRA fined firms and individuals a record-setting $176 million in 2016.. In addition, it ordered $28 million in restitution in 2016.

But. . .

  • How did 2016 compare to previous years, including 2015’s record-breaking year?
  • What types of cases triggered orders of restitution from FINRA in 2016?
  • What should firms expect in 2017?

View the analysis here

Additional contributor to this post:

Brian L. Rubinbrianrubin@eversheds-sutherland.com