The issues presented by the case are troubling because if the court sustains the disciplinary action, it could lead to 1) dozens of CCOs being charged every year for their firms’ deficient procedures, even if they acted in good faith; and 2) a strict liability standard applying to “should have known” liability.
Category Archives: Compliance
Why FINRA’s 529 Plan Self-Reporting Initiative Matters a Year Later For Participating and Non-Participating Firms
Over a year ago, on January 28, 2019, FINRA announced its 529 Plan Share Class Initiative (the Initiative) to encourage firms to self-report potential violations of rules governing 529 plan share class recommendations. FINRA’s concern centered around the potential that supervisory programs were not reasonably designed to determine whether representatives were making suitable share class recommendations given the varying time horizons of beneficiaries. Approximately 100 broker-dealers elected to participate. Other firms decided not to participate. The deadline for participation in the Initiative has long since passed, however, the issues and regulatory concerns underlying the Initiative remain relevant for both participating and non-participating firms.
Killing Eve (all others are fined or suspended): SEC and FINRA Enforcement Cases in May 2020
In May 2020, one of the most anticipated and watched television shows was Season 4 of Killing Eve. For those who have not seen this award-winning British comedy-drama, it’s about Eve (but not All About Eve), a British intelligence investigator. She becomes obsessed with Villanelle, real name, Oksana Astankova (a psychopath assassin for a mysterious group called The Twelve). Villanelle, in turn, becomes obsessed with Eve. It is a cat-and-mouse game involving rulemaking, rule-breaking, good guys, bad guys, and those in between, much like securities enforcement cases. However, in our world, while we don’t have assassinations by poisonous homemade perfume or by necktie, we do have fines and suspensions, and there are important lessons for compliance officers and other securities professionals (but not so much for hired assassins) contained in the enforcement actions from May 2020.
Additional contributors to this post:
Brian L. Rubin, brianrubin@eversheds-sutherland.com
Sarah Razaq Sallis, sarahsallis@eversheds-sutherland.com
Department of Labor’s Fiduciary Proposal 3.0
In an important development, the Labor Department has issued a new proposal to address conflicted investment advice provided by ERISA fiduciaries:
- Consonant with the vacatur of its 2016 rule, DOL reinstated the longstanding 5-part test of investment advice fiduciary status, but announced new interpretations of that test that will cause rollover advice and possibly other interactions to become fiduciary advice.
- DOL also proposed a new, principles-based class exemption broadly available for conflicted advice and intended to align with other bodies of law to which financial institutions are subject.
Entering Another New Normal: Regulatory Updates for July 2020
June Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.
Topics include:
- Reg BI and Form CRS are here! Now what?
- Did you know that June 15th was World Elder Abuse Awareness Day (WEAAD)?
- Form CRS and the Land of Oz…State considerations for Form CRS
- West Virginia Enacts Senior Safe Legislation
- Temporary Relief extended for In-Person Board Meetings
- Another Adviser Nailed for Inadequate Handling of Material Nonpublic Information
- The Fat Lady Has Not Sung Yet… the SEC Continues its Crusade against “Inadequate Disclosure” of Mutual Fund Fees
- Former RIA COO Barred from Industry