Evershed Sutherland’s annual analysis of FINRA’s disciplinary actions indicates that FINRA fined firms and individuals a record-setting $176 million in 2016.. In addition, it ordered $28 million in restitution in 2016.
But. . .
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On March 8, 2017, FINRA’s Board of Governors will meet to discuss certain proposed rulemaking considerations, including proposals to streamline and modernize FINRA Rule 5110 (Corporate Financing Rule – Underwriting Terms and Arrangements). FINRA Rule 5110 governs member firm participation in the public offering of securities, and imposes certain filing requirements and related compensation restrictions for members participating in a public securities offering. Upon approval from FINRA’s Board of Governors, any formal proposal will still need to be published for comment to FINRA member firms (typically through a “Regulatory Notice” filing) and also published for review and approval by the SEC.
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.
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.
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.
Who lives, who dies, and who tells your story (as Alexander Hamilton might say)?
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