DOL warns the ERISA fiduciary debate is far from over

The FAQ’s recently posted by the Labor Department on its latest ERISA fiduciary investment advice guidance warn that this project is far from over, and are troubling in a number of respects.

  • DOL is compelling the regulated community to comply with its recent guidance by December 20 notwithstanding its intention to change the governing rules in the near term.
  • DOL is on the path to recreating its vacated 2016 rule (other than the private right of action for IRA owners).
  • DOL may be steering financial services providers to a fiduciary model, notwithstanding how they are treated by their primary regulation.
  • In sum, the signals point to DOL resuming its 2015-2016 effort to restructure the financial services industries.
  • Given the range of best interest standards recently extended to financial services providers under other bodies of law, there cannot be an updated empirical record that justifies further regulation by DOL.

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Regulatory Spring Cleaning! SEC Publishes Marketing Rule FAQ and 2021 Examination Priorities, and EXAMS Risk Alert Tackles Bitcoin and Other Digital Assets

April Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.

Topics include:

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SEC Investment Advisers: Texas says “April Fools!” to Federal Preemption?

On April 1, 2021, the Texas State Securities Board (TSSB) announced the entry of a Consent Order against an SEC registered investment adviser named Independent Financial Group, LLC (“Independent”). The TSSB’s action may represent a large shift in investment adviser regulation and enforcement considerations for SEC-registered investment advisers. (Emphasis on “may.”)

The Investment Advisers Act of 1940 is commonly understood to significantly limit states’ application of their securities laws as to SEC registered investment advisers.

What makes the TSSB action against Independent truly remarkable is that there is no allegation of fraud or deceit by Independent. Instead, the only violation cited is the failure to maintain a reasonably designed supervisory system. Hardly sounds like traditional fraud or deceit.

How is the TSSB’s action possible if federal law largely preempts states from enforcing their securities laws against SEC registered investment advisers? And what does this mean for SEC Registered Investment Advisers?

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DOL Fiduciary Rule Rises Again, Regulatory Freeze Continues, March Madness – NCAA Players Scammed

March Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.

Topics include:

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New SEC Division Undertakes 2021 Examination Priorities

On December 17, 2020, SEC created the Division of Examinations by renaming the now defunct, Office of Compliance Inspections and Examinations, making it the SEC’s 6th Division joining Enforcement, Corporation Finance, Trading and Markets, Investment Management, and Economic and Risk Analysis (DERA).

A couple of months later, the new Examinations  Division  announced its 2021 examination priorities, carrying on OCIE’s long standing tradition of annually publishing its examination priorities.  The publication of these priorities is supposed to provide a framework for those registered persons and entities to prepare for the onslaught of SEC examiners.  These priorities will include a focus on climate-related risks; broker and RIA conflicts of interest; Reg BI; FinTech risks; ESG-related risks; proxy voting policies and practices; BCPs; mutual funds; ETFs; municipal securities and other fixed income securities; variable annuities; private placements; and microcap securities.

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