Regulatory Compliance E-newsletter -2015
Posted On 6/15/2015 9:16:00 AM
Feature of the Month
National Regulatory Services Celebrates its 30th Anniversary of Conferences Focusing on Risk and Regulatory Compliance
During the NRS’ 30th Spring Investment Adviser and Broker-Dealer Compliance Conference in May, NRS explored topics on cyber security and regulation, internal data analytics and market wide risks. This conference guided the complexities of the modern regulatory framework and provided the insight, knowledge and best practices needed for attendees to significantly strengthen their compliance programs. Regulators expect a dynamic and robust program that is an integral part of the firm’s operations, management and overall culture, and on-site sessions allowed for compliance professionals to confirm and expand the content and direction of their compliance programs; re-assess compliance roles in firms of all sizes; and enhance the compliance function with new perspectives while networking with industry colleagues and regulators.
Key themes that emerged from the conference include:
- Enterprise Risk Management – Firms, especially the larger firms, are recognizing that risk does not just fall within the compliance department. It is important to examine risk across the entire firm to be best equipped to manage regulatory demands, and protecting against any fraudulent activity.
- Cybersecurity – Both FINRA and the SEC have outlined cybersecurity as a key priority and the audience has taken notice. The importance of creating policies and procedures to increase security across a firm continues to be a key issue that firms need to manage and invest in.
- DOL’s revised fiduciary proposition – Many investment advisers and broker dealers are awaiting the latest plans from the DOL which would dramatically change the definition of “fiduciary”, which could result in many limitations for broker-dealers by prohibiting certain transactions. These new changes would create further regulatory complications as increased disclosure, for example, would require the use of additional brokerage and insurance agents.
- Internal Data Analytics – Firms will need to not only look at prevention of external risks, but they will also need to better manage and increase surveillance using the data and analytics that they have within their firm to identify any threats that lie within the company itself and identify them immediately.
“We are thrilled to announce that NRS has been hosting thought provoking and industry leading conferences for the past 30 years,” states John Gebauer, President at NRS. “Over the past three decades, our executives and industry speakers have tackled many of the important developments happening in the world of financial services, including risk and compliance concerns and initiatives to better prepare the industry for the future. We want to thank all of our speakers, exhibitors, sponsors and attendees for making the last 30 years of events a tremendous success and we look forward to continuing our commitment to networking and education for many years to come.”
For more information on NRS and our events, please visit: http://www.nrs-inc.com/
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Mid-Year Policies & Procedures and Annual Review Status Check
Believe it or not, mid-year is upon us — and summer is the perfect time to make sure your firm's Policies and Procedures are up-to-date and to start working on your Annual Review. NRS ComplianceGuardianTM provides easy-to-use tools to make these tasks simpler:
- Written Policies and Procedures Manuals - Create a required Written Supervisory Policies and Procedures or a Code of Ethics including attestations for your firm with Guardian's online manuals. The manual content is written and updated by NRS consultants to ensure that your firm meets current regulatory requirements. NRS's Smart Update technology protects your custom content by not allowing it to be overwritten unless you so choose.
- Annual Review Tools - Use the Annual Review Tool for investment advisers to assist in the annual review process. For broker-dealers, use the model documents and in particular the ‘Annual CEO Certification Language’ document as a guide for completing the annual review.
Get your summer "compliance to-do list" in order with ComplianceGuardian by requesting a demo today.
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The Significance of In-Person Compliance Education
Technology and online education make it possible for compliance professionals to conveniently keep informed on the latest regulatory and compliance developments without leaving the office. In addition to convenience, what else do compliance officers request most from compliance education? The answer is clear: Convenient online education and face-to-face education
NRS in-person education provides an opportunity to spend time immersed in compliance conversations with other compliance professionals and industry experts. With NRS onsite education, compliance professionals get:
- The facts – information and implications of new and existing regulations and regulatory examinations;
- An exchange of ideas on how to maintain a robust compliance program to help keep the firm compliant;
- An electronic library of material;
- An opportunity to earn continuing education credits (IACCP, CLE, CPE and CFP); and
- A network of compliance professionals.
NRS delivers compliance education in person in cities throughout the country with classroom and conference options to help you and your firm meet regulatory requirements and discuss the state of compliance.
- Use the summer to participate in discussions on timely investment adviser compliance topics in a classroom setting. Pick and choose individual sessions or attend all days to refresh your firm’s approach to investment adviser compliance. Courses qualify for credits towards the IACCP and Core Compliance Programs.
- NRS also offers a conference format in the Fall with sessions to keep you ahead of the curve on examinations, cybersecurity, risk, ethics, disclosure and much more:
Join NRS in person soon. Register today or contact NRS for more information.
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As the number of senior investors continues to grow from year to year, regulatory concern grows along with the curve.
One of the biggest challenges facing broker-dealers is that no specific regulatory definition of “seniors” exists. When FINRA discusses "seniors," it uses "retired" or "close to retirement" terminology rather than giving any specific age. So, someone who has worked it out well and is retiring at 48......a senior citizen? The Income Tax Act has categories of Senior Citizens and "Very" Senior Citizens. Medicare is 65. States vary ... Florida's Department of "Elder Affairs" seems to think 60 begins the senior years.
In the meantime, industry will have to take steps to determine their own definitions, based on risk tolerance, business practices and products. One thing is clear, there must be policies and procedures, and supervisory controls, concerning senior investors, especially an awareness of any deteriorating change in mental capacity.
From “OCIE/FINRA National Senior Investor Initiative”: “Building on prior regulatory initiatives, OCIE’s National Examination Program staff, in coordination with FINRA, initiated a series of 44 examinations of broker-dealers focused on the types of securities senior investors were purchasing and the methods firms were using when recommending securities. In an environment where traditional savings accounts and more conservative investments were earning historically low yields, OCIE and FINRA staff assessed whether broker-dealers were recommending riskier and possibly unsuitable securities to senior investors looking for higher returns or that such senior investors may be making financial decisions without fully appreciating the risks associated with those recommendations.”
Employee training is a key measure broker-dealers must incorporate, ensuring that the issues surrounding dealing with senior investors are fully comprehended and that all internal policies and procedures are understood and adhered to. How to identify the possibility of diminished capacity and what to do upon such identification may require specialized training.
Suitability, while required for all recommended securities transactions, takes on a more diligent stance when dealing with seniors. Consideration should be given to the requirement to obtaining more detailed customer account information than what is required by the applicable rules. For example, detailed expense information could be obtained from customers and calculated for both short and intermediate-term expenses. Drafting product applications that require firm representatives to consider and document crucial investment profile information and establishing strict firm product concentration guidelines for senior investors are other control possibilities that should be considered.
To find out how NRS can help, contact us today.
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