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

Topics include:

• Not Quite Dead Yet – DOL’s Fiduciary Rule Rises Again!
• Regulatory Limbo – Freeze Impacts on RIAs and Investment Companies
• FINRA Publishes 2021 Enforcement Priorities and Exam Findings Report
• FINRA Warns of Risks when Engaging in Low-Priced Securities Business
• CFTC Amends Form CPO-PQR
• Payment for Order Flow Gets Another Broker into Hot Water for Undisclosed Conflicts
• Multiple Disclosure Failures Lead to $18 Million Fine for Wrap Sponsor
• March Madness – RIA Bribed Agents to Recruit NCAA Player Clients
• Heed the Advice of Your CCO

Read more here.

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.

Read more here.

We were recently reminded of how difficult it is to re-register for a position in the securities industry after being barred. https://www.sec.gov/litigation/admin/2021/ia-5682.pdf

On February 9, 2021, the United States Securities and Exchange Commission refused to let a former investment adviser re-register, claiming that the barred adviser had not demonstrated “extraordinary circumstances” to merit re-entry .  In particular, the Commission noted that the barred adviser had not paid his penalty, initially, imposed in 2011.  The Commission also rejected his arguments that, by working with an actual registered adviser, he would be appropriately supervised.  However,  the Commission found that the person had failed to submit sufficient evidence to demonstrate this supervision.

As a result, the barred adviser was not let back into the business, demonstrating the difficulty for others, who seek to follow in his path.  We are not suggesting it is impossible, but those barred persons interested in re-entering the securities industry should seek out securities counsel prior to making any filing.

Read more here.