FINRA has recently taken steps to advance diversity and inclusion in the broker-dealer industry, including issuing Regulatory Notice 21-17, on April 29, 2021, seeking comments. FINRA stated that it is committed to supporting diversity, inclusion and equal opportunity efforts by the industry. The request for comment noted that regulatory agencies such as FINRA have an opportunity to evaluate how their rules and actions may have unintended disparate impacts on those within the industries they regulate and how they may unintentionally impede diversity and inclusion. In connection with these efforts, FINRA requested comments by June 28, 2021 “on any aspects of our rules, operations and administrative processes that may create unintended barriers to greater diversity and inclusion in the broker-dealer industry or that might have unintended disparate impacts on those within the industry.” Subsequently, on May 20, 2021, FINRA chair, Eileen Murray, participated in a virtual fireside chat at FINRA’s Annual Conference with FINRA CEO, Robert Cook, during which Ms. Murray discussed her hopes to see more accountability and standardization in the reporting of diversity and inclusion efforts within firms in the industry, and that tying executive compensation to diversity goals would make a “world of difference.”
Category Archives: Standard of Care
Pun-ishment by SEC and FINRA: Enforcement Actions in March 2021
When you think about it, puns are kind of like securities enforcement actions. They could make you groan, they could make you laugh or they could make you think—causing you to say, “Oh, I see” (which is different from the SEC’s OCIE).
In the latest edition of NCSP Currents, we explore the connection of puns and other plays on words with SEC and FINRA enforcement actions and initiatives.
Contributors:
DOL warns the ERISA fiduciary debate is far from over
The FAQ’s recently posted by the Labor Department on its latest ERISA fiduciary investment advice guidance warn that this project is far from over, and are troubling in a number of respects.
- DOL is compelling the regulated community to comply with its recent guidance by December 20 notwithstanding its intention to change the governing rules in the near term.
- DOL is on the path to recreating its vacated 2016 rule (other than the private right of action for IRA owners).
- DOL may be steering financial services providers to a fiduciary model, notwithstanding how they are treated by their primary regulation.
- In sum, the signals point to DOL resuming its 2015-2016 effort to restructure the financial services industries.
- Given the range of best interest standards recently extended to financial services providers under other bodies of law, there cannot be an updated empirical record that justifies further regulation by DOL.
Regulatory Spring Cleaning! SEC Publishes Marketing Rule FAQ and 2021 Examination Priorities, and EXAMS Risk Alert Tackles Bitcoin and Other Digital Assets
April Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.
Topics include:
- Risk Alert – Division of Examinations’ Continued Focus on Digital Asset Securities
- SEC Presents its 2021 Examination Priorities
- SEC Says New Marketing Rule is “All or Nothing”
- SEC Updates 13F FAQ to Reflect Amended Reg S-T and the Use of Electronic Signatures on EDGAR filings
- Reg Notice 21-10, Private Placement Filer Form
- SEC Publishes Small Entity Compliance Guide on Good Faith Determinations of Fair Value
- Private Fund Manager Blows Private Offering Exemption and Gets Banned from Industry
SEC Investment Advisers: Texas says “April Fools!” to Federal Preemption?
On April 1, 2021, the Texas State Securities Board (TSSB) announced the entry of a Consent Order against an SEC registered investment adviser named Independent Financial Group, LLC (“Independent”). The TSSB’s action may represent a large shift in investment adviser regulation and enforcement considerations for SEC-registered investment advisers. (Emphasis on “may.”)
The Investment Advisers Act of 1940 is commonly understood to significantly limit states’ application of their securities laws as to SEC registered investment advisers.
What makes the TSSB action against Independent truly remarkable is that there is no allegation of fraud or deceit by Independent. Instead, the only violation cited is the failure to maintain a reasonably designed supervisory system. Hardly sounds like traditional fraud or deceit.
How is the TSSB’s action possible if federal law largely preempts states from enforcing their securities laws against SEC registered investment advisers? And what does this mean for SEC Registered Investment Advisers?