Regulatory Compliance E-newsletter - June2014
Posted On 6/9/2014 9:22:00 AM
Feature of the Month
Key Takeaways from the NRS Spring 2014 Compliance Conference
The NRS 29th Annual Spring Compliance Conference proved to be what participants expected: A beautiful setting with engaging sessions that enabled compliance professionals to:
- Confirm and expand the content and direction of their compliance programs
- Re-assess compliance roles in firms of all sizes
- Enhance the compliance function with new perspectives
- Spend time networking with industry colleagues and regulators
We’d like to share some of the conference highlights:
- John Walsh, Sutherland Asbill & Brennan partner and former senior official with the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) noted that SEC registrants’ chances of receiving a visit from examination staffers are on the rise. As a result of new inspection initiatives and new data tools, chief compliance officers should be increasingly vigilant for a visit. “Between all the current SEC initiatives, the risk of being examined is going up,” he said, adding ”If you’re a large firm that’s never been examined, I would consider yourself to be at the top of the pile” (to be examined next)...
- Jeff Pasquerella, FINRA VP and District Director, advised attendees that FINRA priorities are focused on valuation issues related to broker-dealers who choose to report outside assets (assets not held at the BD/Custodian) on consolidated statements.
- Mr. Pasquerella also reminded members to be aware of the December, 2014 deadline for implementation of FINRA’s “Supervision Rule” consolidation (Regulatory Notice 14-10).
- Kevin Goodman, Head of SEC’s broker-dealer examination program, said that the Commission is taking special interest in reviewing broker-dealers and/or registered representatives who have transitioned to the registered investment advisory space, to determine whether transition or switching to fee based accounts vs. retail commission accounts are in the clients’ best interest (e.g. reverse churning). He indicated that pre- and post-trading (recommendations / level of service) in client accounts are of great concern to the Commission staff.
- Mr. Goodman also reiterated the SEC’s concern over Cyber Security in the financial services industry and the SEC’s efforts to understand how the industry is dealing with this issue.
- Holly Butson (Senior Director/Corporate Compliance/Chief Compliance Officer, Nationwide Fund Distributors) stressed the importance of not limiting training to registered personnel, including those individuals who provide support or operations functions, including them in Business Continuity Plans, Ethics, Custody, AML Training, cashiering, etc.
- Chief compliance officers face continued uncertainty on how SEC rules apply to endorsements and so-called “likes” on social media websites, despite recent guidance from the agency, according to Morgan Lewis & Bockius Partner, Jennifer Klass. “The most recent guidance focused exclusively on the testimonial rule and the gist of it is that there’s still some concern that a ‘like’ feature is a testimonial, she told attendees. That guidance gave investment advisers approval to have outsiders comment on and post reviews of them on social media sites, so long as IAs don’t filter out any negative feedback.
- Speaking on the same topic as Jennifer Klass, NRS Managing Director John Gebauer, stated that CCOs should note that LinkedIn recently introduced a certified compliance partners program that provides direct access to data for purposes of complying with SEC and FINRA rules. “If you’re thinking about a social media program, I would suggest that using LinkedIn as the cornerstone of that might make sense if [you’re] thinking in terms of compliance,” he said.
Thank you to all who participated in the NRS Spring 2014 Compliance Conference – speakers, exhibitors, sponsors and attendees. We look forward to seeing many of you again at the NRS Fall 2014 Conference in Scottsdale, AZ, October 28-30, 2014.
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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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NRS Desktop Seminars
Did you know that NRS Desktop Seminars include free ten-day access to recordings for those online events that you attend? Within 24 hours of each online event, registered attendees receive a complimentary link to the view and/or listen to the event.
The art of listening more than once has its advantages. Research on adult learning theory indicates that for new information to ‘stick,” learners need to be exposed to material more than once, and get more and more engaged with the content with each exposure. In response to this research and client demand, NRS online events pack more power by extending the learning experience beyond the real-time event.
NRS online, real-time events are filled with so much information that the option to listen to education events more than once is our commitment to helping the securities industry’s compliance professionals master the basics and the nuances of compliance requirements and best practices. Participate in the online session the first time without scrambling to take pages of notes. Listen to the expert instructors and absorb. Listen again at your convenience to flesh out compliance topics that need a second pass.
With several topics offered in the second half of 2014, including the two recently added desktops - Meeting the Cybersecurity Challenge on July 10th and FINRA’s New Consolidated Supervision Rules for Broker-Dealers on August 14th, the transfer of information and learning can be doubled, or even tripled, with an NRS online event coupled with free ten-day access to the recording.
Sign-up for a desktop seminar today.
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SEC Set to Enforce Broker-Dealer Registration Requirements on Private Fund Managers
In 2011, the SEC adopted Dodd-Frank driven regulations which required advisers to hedge funds and other private funds to register as investment advisers. The private fund industry was faced with major challenges as it adapted to doing business in a regulated environment. Private fund managers, though not thrilled with the new requirement, completed their registrations, implemented compliance programs, and suddenly found themselves subjected to SEC “presence exams,” for the first time. Many private fund managers felt they had weathered the storm of regulation and could breathe a sigh of relief, but another wave of oversight may be headed their way. The SEC has recently put private fund managers on notice that they may, in fact, be engaging in broker-dealer activities and may be required to also register as a broker-dealer, becoming subject to FINRA oversight.
Private fund managers have been asked to overcome wave after wave of new regulatory oversight and their survival requires focus and expertise. As the recognized experts in the industry, NRS has helped hundreds of private funds tackle their registration challenges to successfully register with state and Federal regulators. An experienced partner like NRS can help navigate through this new storm. For a full white paper on this topic click here.
To find out how NRS can help, contact us today.
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