Compliance, Enforcement, Regulatory, Standard of Care

DOL Fiduciary Rule Rises Again, Regulatory Freeze Continues, March Madness – NCAA Players Scammed

March 8, 2021 Cari Hopfensperger Leave a comment

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

Topics include:

New SEC Division Undertakes 2021 Examination Priorities

March 8, 2021 Ernest Badway Leave a comment

On December 17, 2020, SEC created the Division of Examinations by renaming the now defunct, Office of Compliance Inspections and Examinations, making it the SEC’s 6th Division joining Enforcement, Corporation Finance, Trading and Markets, Investment Management, and Economic and Risk Analysis (DERA).

A couple of months later, the new Examinations Division announced its 2021 examination priorities, carrying on OCIE’s long standing tradition of annually publishing its examination priorities. The publication of these priorities is supposed to provide a framework for those registered persons and entities to prepare for the onslaught of SEC examiners. These priorities will include a focus on climate-related risks; broker and RIA conflicts of interest; Reg BI; FinTech risks; ESG-related risks; proxy voting policies and practices; BCPs; mutual funds; ETFs; municipal securities and other fixed income securities; variable annuities; private placements; and microcap securities.

Leaving is the Hardest Part Especially if You Want to Re-Enter the Securities Industry

March 2, 2021 Ernest Badway Leave a comment

We were recently reminded of how difficult it is to re-register for a position in the securities industry after being barred. https://www.sec.gov/litigation/admin/2021/ia-5682.pdf

On February 9, 2021, the United States Securities and Exchange Commission refused to let a former investment adviser re-register, claiming that the barred adviser had not demonstrated “extraordinary circumstances” to merit re-entry . In particular, the Commission noted that the barred adviser had not paid his penalty, initially, imposed in 2011. The Commission also rejected his arguments that, by working with an actual registered adviser, he would be appropriately supervised. However, the Commission found that the person had failed to submit sufficient evidence to demonstrate this supervision.

As a result, the barred adviser was not let back into the business, demonstrating the difficulty for others, who seek to follow in his path. We are not suggesting it is impossible, but those barred persons interested in re-entering the securities industry should seek out securities counsel prior to making any filing.

New Year, Old Problem: Broker-Dealers Should Evaluate Their Supervision of Personal Device Use

February 11, 2021 Cheryl L. Haas Leave a comment

Many companies that transitioned to a work-from-home environment in early 2020 may have reasonably anticipated a return to the normalcy of in-office operations by the end of the year. Yet as 2021 commences, remote work has become the new normal and firms can expect this arrangement to continue through the first quarter of the year, if not longer. While working from home poses challenges for all businesses, it poses unique concerns for broker-dealers whose associated persons are conducting business from their homes. Broker-dealers must remain keenly attuned to the risks posed by work-from-home arrangements, including specifically the risk that registered representatives and other associated persons use their personal devices or other unapproved and unmonitored channels to communicate with clients and conduct business.

What to Expect from the SEC Under the Biden Administration

February 10, 2021 Ronak V. Patel Leave a comment

We know there will be new leadership at the SEC. President Biden has already nominated Gary Gensler as the new SEC Chair. Mr. Gensler, who served as chairman of the CFTC under Obama, was widely perceived as an aggressive CFTC chairman during the financial crisis. At that time, this aggressiveness eased progressives’ concerns that President Obama was appointing a Wall Street executive (Gensler is an alumnus of Goldman Sachs) to head the CFTC. Now, opposition to Gensler is more likely to come from conservatives, who may regard him as an overzealous enforcer.

Meanwhile, the Commission is being led by acting Chair Allison Herren Lee. Chair Lee is a long-time SEC enforcement attorney who also acted as counsel to Commissioner Kara Stein before assuming her position as a commissioner in mid-2019. She is regarded as pro-enforcement and will be an ally of Mr. Gensler should he be confirmed as Chairman.

What will this new leadership mean for market participants?

Read more here.