Category Archives: Compliance

Compliance, Enforcement, Regulatory, Standard of Care

August Regulatory Updates

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From our friends at SEC3 , the August regulatory updates you need to know about:

  • More Flack on WhatsApp, Hypothetical Performance SmackDown, A Timely Warning on the Pay-to-Play Rule, and Updates to Qualifying Venture Capital Fund Exemption
  • 26 More Firms Slammed with $390 Million in Fines for Failure to Retain Texts and Chats
  • Adviser Ordered to Stop Using Hypothetical Performance on Public Website
  • Adviser Pays $95,000 Fine for Pay-to-Play Foot Fault in a Timely Reminder this Election Season
  • Venture Capital Funds Adjustment for Inflation

Read all about them here.

 

Compliance, Enforcement, International, Regulatory, Standard of Care

Celebrating the SEC at 90!

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Good people, important problems and workable laws – celebrating the SEC at 90!

On July 17, PLI hosted The SEC at 90: A Celebration and Retrospective in our New York Conference Center. The program, chaired by longtime Securities faculty Clifford Kirsch, featured SEC Commissioner Hester Peirce, author Diana Henriques (Taming the Street and The Wizard of Lies), former SEC Commissioners Robert J. Jackson, Jr. and Troy Paredes, and other expert panelists. Speakers discussed the SEC’s formation, challenges it faces, opportunities in the next 90 years and beyond, and where SEC practice has been, is, and will be.

Compliance, Regulatory, Standard of Care

Common Mistakes in Client Referral Arrangements

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According to Richard Chen, RIAs are still making these 3 common mistakes when it comes to client referral arrangements.

1. SEC-registered advisers who pay parties more than $1,000 per year for referrals are sometimes not considering communications made by those referring parties as their own advertisements that are subject to the SEC Marketing Rule. 2. RIAs are not vetting referral sources to ensure they are not statutorily disqualified (i.e., subject to certain criminal or regulatory sanctions).

3. RIAs are still utilizing parties to refer clients for compensation even if those referring parties are not appropriately registered as investment adviser representatives in the states where they are soliciting clients.

Read more here.

Compliance, Regulatory, Standard of Care

RIA Client Referral Mistakes to Avoid

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Referrals are often a significant source of new business for many RIAs. However, before entering into such arrangements, advisers should ensure they take proper steps to ensure those arrangements don’t run afoul of applicable laws.

First, make sure that the referring party is properly registered as an investment adviser representative, if applicable. Most states consider a person referring business to an RIA for compensation to be a “solicitor” that is required to register as an investment adviser representative with the state.

Second, make sure the referring party is not statutorily disqualified (i.e., has been subject to criminal or regulatory sanctions) that would prevent them from making such referrals. In addition, the SEC’s Marketing Rule requires that any “promoter” providing any “endorsement” to an SEC-registered RIA must not be statutorily disqualified.

Third, make sure that referred clients are  notified of the arrangement to ensure they understand the conflicts of interest associated with the referral.

Read more here.