Category Archives: Standard of Care

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

New Protections for Senior Investors

On March 30, 2017, FINRA issued Regulatory Notice 17-11 (Financial Exploitation of Seniors), announcing the SEC’s approval of amendments to the FINRA rulebook related to the financial exploitation of senior investors.  More specifically, as adopted, the amendments to FINRA Rule 4512 would require broker-dealers to make reasonable efforts to obtain the name and contact information for a “trusted contact person” for a customer’s account.  In addition, new FINRA Rule 2165 would permit (but not require) broker-dealers to place temporary holds on disbursements of funds or securities from the accounts of certain senior investors, as well as other investors with diminished capacity, when there is a reasonable belief of financial exploitation.  The FINRA notice announces an effective date of February 5, 2018, and clarifies, among other things, that the temporary hold on disbursements should not apply to securities transactions.

DOL Provides Temporary Enforcement Relief on Fiduciary Rule


The DOL issued a Field Assistance Bulletin (FAB 2017-01) on Friday, March 10, 2017 to address near-term compliance concerns relating to a proposed 60-day delay of the Fiduciary Rule. As previously reported, the DOL issued a proposal on March 2, 2017 to delay the April 10, 2017 implementation date of the Fiduciary Rule by 60 days. This 60-day delay is not yet final, however, and there has been confusion over what will happen if a decision on the delay is not made until after April 10 or if a decision is made too close to the implementation date to allow time for compliance. Although the DOL has stated that it intends to issue its decision before April 10, it issued the Bulletin to announce a temporary enforcement policy which provides certain limited enforcement relief.

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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