Regulatory Compliance E-newsletter - March
Posted On 3/2/2015 11:43:00 AM
Feature of the Month
Manage Your Branch Audit Program Efficiently
Regulators continue to escalate their initiatives for the identification of outside business activities, fraudulent actions and other potential deficiencies through the branch inspection process. Keeping accurate records and implementing a risk-based approach to branch audits is the key to staying out of harm’s way. NRS’s cMAX Audit Technology will not only help increase the efficiency of your audit team, it will turn a manual review, approval and corrective action process into an electronic one. All supporting documentation will be stored together with the audit form ready and available for review and reporting.
ComplianceMAX Audit Technology can:
- Automate the assignment of audits to the audit team
- Monitor the status of audits from auditor assignment through a completed audit report
- Issue Alerts as audits are assigned, completed and reviewed
- Store all documentation, artifacts and images associated with an audit on-line
- Automatically flag findings for deficiencies or issues, and automate corrective actions
- Allow an auditor to drill-down into a flagged issue through the use of Dynamic audit questioning
- Identify risks and trends among or across specific branches or OSJ’s
- Store and report all audit records and documents providing reporting in full compliance with 17a-4 books and records rules
Under the increased scrutiny of today's regulatory environment, you need a risk adverse audit program. Register today for a ComplianceMAX Audit Technology demo.
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NRS ComplianceGuardian™ Form ADV Part 2 Brochure Architect
NRS has designed an easy to use tool for firms to facilitate the creation of the required plain English firm brochure and brochure supplements. Our tools are designed to assist firms in meeting compliance requirements and NRS’s Brochure Architect is designed to not only create the firm brochure and supplements, but also to maintain it going forward and to archive prior versions. Unlike other templates, this tool will allow users to answer questions about the firm and their supervised persons efficiently creating the appropriate plain English language as the foundation of the adviser’s brochures. From there, firms can edit the content to be more specific to their firm’s situation and once completed, the brochures can be saved in any number of formats, including the required text searchable PDF format.
Register for a ComplianceGuardian Demo today or contact us for more information.
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SEC's OCIE Releases Second Cybersecurity Risk Alert: NRS Offers Education to Help Firms Manage Cybersecurity Risk
On February 3, 2015, the SEC Office of Compliance Inspections and Examinations issued a second cybersecurity risk alert summarizing the results of cybersecurity sweep examinations for over 100 broker-dealers and investment advisers. Preparedness and cybersecurity policies and procedures, adopted by a cross-section of industry firms, were among the factors considered. NRS continuously tracks regulatory and compliance developments, like the recent cybersecurity alert, and NRS Education incorporates these developments into its online and onsite compliance events. NRS gives you several opportunities to review and discuss cybersecurity and other important compliance topics during upcoming online and onsite education events including:
NRS Education offers many options for understanding timely and timeless regulations for investment advisers and broker-dealers. Whether you choose an individual course or a more structured education program, NRS offers learning opportunities to help you understand regulatory mandates and to help your firm implement practical solutions to challenging compliance issues.
Keep yourself updated on compliance developments and risks, and Register Today for an NRS event.
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Fiduciary Standard for Persons Providing Services to Retirees
President Obama made front-page news in February 23 by endorsing a proposal by the US Department of Labor (“DOL”) that would impose a fiduciary standard on persons providing advice or selling securities to retirees. While the text of the proposal is not yet available, the White House has stated that the new fiduciary standard would be imposed on commission-based broker-dealers as well as on fee-based investment advisers.
Addressing his remarks to attendees at an event hosted by the AARP, the President stated, “If your business model rests on taking advantage, billing hardworking Americans out of their retirement money, then you shouldn’t be in business. … Outdated regulations, legal loopholes, fine print, all that stuff today makes it harder for savers to know who they can trust.”
While we await the DOL’s proposal, this is a good time to re-visit the ongoing efforts by the SEC to determine if broker-dealers should be fiduciaries to all of their clients.
While the SEC has not yet indicated whether it will, in fact, advance a broker-dealer fiduciary standard proposal, SEC chairman, Mary Jo White has said "The threshold issue is whether to proceed and what to proceed with, if so," further stating that "It's a primary, immediate focus." While Ms. White declined to reveal her own position on a uniform fiduciary standard, she stated that "I have said, and I firmly believe, that it's a very high priority to make that decision, and it's something I have given a high priority to within the agency."
While SIFMA has laid out some concerns, they have come out in favor of a broker-dealer fiduciary standard.
FINRA has weighed in by saying: FINRA has long stated that the standard of care for brokers should be a fiduciary duty to act in the best interests of the customer without regard to the professional's financial or other interests. Dodd-Frank and the SEC study both recognize that application of a fiduciary duty must reflect the nature of the broker-dealer business. Such a uniform standard of care would help to protect the customers of both investment advisers and broker-dealers.
A review of FINRA and SEC speeches and publications over the past 10 years or more finds the words “fiduciary responsibility” echoed time and time again. While there is not yet a legal “fiduciary” standard for broker-dealers as there is for investment advisory firms, it seems clear that such a definition is waiting in the wings for the entire industry. It’s not a matter of “if” it’s a matter of “when”.
Regulators are already looking for many areas which fall within fiduciary standards, such as: conflicts of interest, more clarity in terms of business practice disclosures, and greater suitability responsibilities.
NRS, with nearly 30 years of experience with IA fiduciary standard requirements, the ever-increasing complexity of BD compliance requirements and regulatory oversight, and the challenges faced by advisers to ERISA plans and retirees in general, is in a strong position to work with broker-dealers as they face the prospect of a very different regulatory environment.
With the knowledge and guidance of NRS Consultants, broker-dealers can ensure that they are ready for, and perhaps ahead of the game, should a Fiduciary Standard officially come to pass. With or without such a legal Standard be introduced, it’s clear the DOL, the SEC and FINRA will be examining firms to determine whether or not they are acting in the best interests of their clients, in all areas. To find out how NRS can help you contact us today.
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