2019 Regulatory Deadlines for Broker-Dealers and Investment Advisers — Monthly Guides

To help compliance officers plan their regulatory calendars for 2019, we are pleased to share Hardin Compliance Consulting’s lists of regulatory requirements for Broker-Dealers and Investment Advisers.  While not intended to be exhaustive, it does provide a monthly “to do” list to assist you in planning for the year ahead . . .

BD Monthly Guide

IA Monthly Guide

Now if we could just find someone to do this for the other aspects of our lives. . .


OMG! SEC Gives Tips on IM and Texting, More Advisers Caught in 12b-1 Fee Scandal, and Lessons Learned from FINRA Exams

January Regulatory Updates from Jaqueline Hummel at Hardin Compliance Consulting LLC.

Topics include:

Read the full post here

The Real Nightmare Before Christmas: SEC Gets Tough on Firms that Did Not Self-Report during SCSD Initiative

The SEC’s Enforcement Division is following up on the Share Class Selection Disclosure Initiative (the “SCSD Initiative”) by sending out document requests to dually-registered investment advisers and investment advisers with broker-dealer affiliates that did not self-report.  The focus of this sweep is 12b-1 fees and revenue sharing and requires advisers to review their records going back to 2013.

Similar to the questionnaire from SCSD Initiative, the Enforcement Division is asking for disclosure about the aggregate amount of 12b-1 fees received by firms and their affiliates and the amount of 12b-1 fees charged to clients over the past five years.  The division may also ask firms to perform an analysis of all available share classes of the mutual funds purchased for client accounts to determine the amount of 12b-1 fees (if any) that the adviser’s clients would have incurred if they had been invested in the lowest-cost share class available.  This analysis can be a nightmare of data-gathering for firms, depending on the number of mutual funds used in client accounts.

Read the full post here

Advisers Fall Short on Referral Arrangements, Mutual Fund Exams Planned, Updates to Annual and FOCUS Reports Finalized, and Compliance Program Fails. . .

December Regulatory Updates from Jaqueline Hummel at Hardin Compliance Consulting LLC.

Topics include:

Read the full post here


12 Things You Need to Know about Adviser Referral Arrangements and the Cash Solicitation Rule

OCIE recently issued a Risk Alert on common exam deficiencies in complying with the Cash Solicitation Rule, Rule 206(4)-3, of the Advisers Act. It is not surprising that OCIE decided to highlight referral arrangements since this is an area fraught with regulatory risk. So in addition to OCIE’s insights, we’ve included some other traps for the unwary.

OCIE reviewed deficiency letters from the past three years and cited four common mistakes:

1. Disclosure Documents Failure: Advisers make two common errors. The first is a failure to provide the disclosures required under Rule 206(4)-3 to clients. The second is providing incomplete disclosures.

2. Failure to Have Acknowledgements from Solicited Clients.

3. No Agreement or Inadequate Agreement. OCIE also found that advisers paid fees to solicitors without a written agreement, or using an agreement that did not contain the provisions required by the rule.

4. Failure to Check if Solicitor is Complying with the Agreement. Another common deficiency is the failure of an adviser to follow up to determine whether the solicitor is complying with the terms of the solicitation agreement.


In addition to the Risk Alert, we’ve pulled together a hit list of common issues faced by investment advisers when entering into referral arrangements.