Category Archives: Compliance

Compliance, Regulatory, Standard of Care

DOLFR Delay Proposal

March 4, 2017 Benjamin T. Marzouk Leave a comment

A proposal seeking to delay the applicability date of Department of Labor’s fiduciary duty rule (“DOLFR”), which impacts the compensation received by broker-dealers and investment advisers for the distribution of covered retirement accounts, was published on Thursday, March 2, 2017. According to the federal register’s notice, the applicability date (which had been scheduled for April 10, 2017) was proposed to be delayed by 60-days to June 9, 2017. The proposal allows for a 15-day comment period from the March 2, 2017 publication date, which would end on March 17, 2017. The proposal also invited comment on a February 3, 2017 Presidential Memorandum to the Secretary of Labor, requesting broader review of DOLFR and its related exemptions.

For more on the DOLFR, including legal alerts and commentary, see www.dolfiduciaryrule.com.

Compliance, Regulatory, Standard of Care

SEC Guidance on Robo-Advisers

March 3, 2017 Clifford E. Kirsch Leave a comment

The SEC staff’s recent guidance on robo-advisers is the most comprehensive SEC guidance to date concerning the considerations robo-advisers should keep in mind in meeting their legal obligations under the Advisers Act. The staff notes that robo-advisers, like all registered investment advisers, are subject to the substantive and fiduciary obligations of the Advisers Act. The staff further indicates that because robo-advisers rely on algorithms, provide advisory services over the internet, and may offer limited, if any, direct human interaction to their clients, their unique business models may raise certain considerations when seeking to comply with the Advisers Act.

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Compliance, Regulatory

Not Throwing Away Your Shot: Relying on Compliance Consultants to Defend Regulatory Actions

March 2, 2017 Clifford E. Kirsch Leave a comment

You are a CCO responsible for completing and filing Form ADV. You hire a compliance consultant to advise you on what information to include. You act in accordance with that advice, but you later find out that the SEC has instituted a proceeding against you and the firm due to the firm’s inadequate disclosures.

So, what now?
How do you defend yourself and the firm in this proceeding?
Is reliance on compliance consultants an available defense?
Will that succeed?

Who lives, who dies, and who tells your story (as Alexander Hamilton might say)?

The Custody Rule Clarified (Again)

February 27, 2017 Kenneth J. Berman Leave a comment

In a recent Risk Alert, the staff of the Office of Compliance Examinations and Inspections (“OCIE”) of the Securities and Exchange Commission (“SEC”) observed that one of the most frequent deficiencies identified in OCIE examinations was the failure of investment advisers to recognize that they might be deemed to have custody of client assets for purposes of Rule 206(4)-2
(“Custody Rule”) under the Investment Advisers Act of 1940 (“Advisers Act”). On February 21, the staff of the SEC’s Division of Investment Management provided additional guidance under the Custody Rule that addressed three situations where there have been significant questions as to whether an investment adviser has custody of client assets:

when the adviser has limited authority to transfer client assets pursuant to a standing letter of instruction or other similar asset transfer authorization arrangement (“SLOA”) established by a client with a qualified custodian;
when an agreement between the client and its custodian appears to provide the adviser with access to client assets—even if the investment adviser is not a party to such agreement; and
when the adviser has the authority to move money between the client’s own accounts (“first-person transfers”).

TIC Form SHC 5-Year Benchmark Survey of U.S. Ownership of Foreign Securities: Due March 3, 2017

February 16, 2017 Peter M. Rosenblum Leave a comment

Investment advisers are reminded to review their filing obligations under the TIC Form SHC as reporting on this 5-year benchmark survey is due on March 3, 2017. The instructions for Form SHC are available here, FAQ may be found here and key issues for reporters are available here.

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