Category Archives: Regulatory

Compliance, Enforcement, Regulatory, Standard of Care

SEC SCHOOLS ADVISORS ON BEST INTEREST OBLIGATIONS; “TO DO” LIST FOR FIXED INCOME PRINCIPAL AND CROSS TRADES; COMPLEX PRODUCT AND FORM CRS FAILS

September 10, 2021 Cari Hopfensperger Leave a comment

September Regulatory Updates from Cari Hopsfenperger at Foreside.

Topics include:

SEC Tells Advisors How to Manage Retail Accounts
Risk Alert – Observations Regarding Fixed Income Principal and Cross Trades by Investment Advisors from An Examination Initiative
Attention FinOps: FINRA Updates Interpretations of Financial and Operational Rules
FINRA Adopts New Rule Addressing the Operation of Inter-dealer Quotation Systems
When Products are This Complicated, Training is Not Enough
A Day (or a Year) Late and a Dollar Short – SEC Charges 27 Financial Firms for Form CRS Filing and Delivery Issues
Three Blind Mice – The Latest Trio of Share Class Selection Disclosure Cases
Classic Example of Suitability Violations Involving Structured Products

Attn: RIAs Charging Performance-Based Fees, Thresholds for “Qualified Client” Increased by $100K

August 25, 2021 Lauren C. Jackson Leave a comment

The Investment Advisers Act of 1940, as amended (the “Advisers Act”), generally prohibits SEC‑registered investment advisers (“RIAs”) from entering into an advisory contract that charges a performance fee to a client who is not a “qualified client” under Rule 205-3(d)(1) under the Advisers Act.[1] Effective Monday, August 16, 2021 (the “Effective Date”), an inflation adjustment has raised two of the thresholds for determining whether a client is a “qualified client” by $100,000.

New Limits for Qualified Clients

August 9, 2021 Ernest Badway Leave a comment

The SEC adjusted the definition of “qualified clients,” becoming effective on August 16, 2021, pursuant to the Dodd-Frank Act of 2010, requiring such an adjustment for inflation every five years. Investment Advisers Act of 1940 Section 205(a)(1) prohibits an RIA from charging a client a performance-based fee unless the client is a qualified client having a particular new work.

SEC’s Division of Enforcement is Not Taking a Summer Break, FINRA Speaks on Best Execution, Margin Requirements and Private Placements, New Definition of Qualified Client Takes Effect and More

August 8, 2021 Cari Hopfensperger Leave a comment

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

Topics include:

Securities Regulators Focus on Forgivable Recruitment Loans/Bonuses, Social Media Influencers, and Rescission Offers

June 14, 2021 Lauren C. Jackson Leave a comment

In recent weeks, we have observed significant new developments in securities regulation related to two enforcement actions by the Commission and an unexpected (and, to our knowledge, unprecedented) new rule adopted by a state securities regulator. First, the Commission has published enforcement actions against registered investment advisers (“RIAs”), involving: (a) failure to make conflicts-related disclosures about payment of forgivable recruitment loans/bonuses; and (b) failure to comply with Rule 206(4)-3 (the “Solicitation Rule”) when using social media influencers acting as referral sources. Second, the Tennessee Securities Division has fundamentally changed the process for issuers and broker-dealers attempting to shield themselves from civil liability arising from unregistered, non-exempt securities offerings through rescission offers.