Regulatory Compliance E-newsletter - March2013
Posted On 3/14/2013 3:00:00 PM
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 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 Risk Alert Pinpoints the Custody Rule, NRS Education Offers Preventive Solutions
On March 4, 2013, the SEC Office of Compliance Inspections and Examinations issued a Risk Alert and Investor Bulletin on the Investment Adviser Custody Rule, noting that examiners found custody-related deficiencies in about one-third of the advisers examined. Some of the firms with deficiencies were referred to the SEC Division of Enforcement.
NRS continuously tracks SEC regulatory and compliance developments, like the recent SEC Custody Risk Alert, and NRS Education incorporates these developments into its online and onsite compliance courses. NRS gives you several opportunities to review and discuss this Risk Alert and other important compliance topics during upcoming online and onsite education events including its April 4 desktop seminar, Selected Advisers Act Anti-Fraud Rules: Custody, Political Contributions, Solicitors and Proxy Voting Requirements, the NRS Spring Compliance Conference in Fort Lauderdale, FL on May 8-10, and the NRS Investment Adviser Compliance Symposia in New York on June 11-12 and Chicago on July 23-24.
NRS Education offers many options for understanding the Custody Rule and other timely and timeless regulations. Whether you choose an individual course or a more structured education program, NRS offers learning opportunities to help you understand SEC mandates and help your firm find solutions to prevent compliance problems.
Keep yourself updated on compliance developments and risks and register today for an NRS event.
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Dual Registrants on the Hot-Seat
The National Examination Program (“NEP”), administered by the SEC’s Office of Compliance Inspections and Examinations, recently published its Examination Priorities for 2013. This report is filled with incredibly useful information for Investment Advisers and Broker-Dealers who should review the priorities as part of an annual or on-going risk assessment.
While there were numerous highlighted priorities for the coming year, NRS took special note of one emerging issue that is applicable to many of our clients – Dually Registered IA’s/BD’s. The NEP plans to expand coordinated and joint exams “…of dually registered firms and distinct broker-dealer and investment advisory businesses that share common financial professionals. For example, it is not uncommon for a financial professional to conduct brokerage business through a registered broker-dealer that she does not own or control and to conduct investment advisory business through a registered investment adviser that she owns and controls, but that is not overseen by the broker-dealer. This business model presents multiple conflicts.”
Investment advisers whose principals are also registered reps of a broker-dealer and broker-dealers that allow their registered reps to have a separately registered investment adviser should take note. The SEC and FINRA (and NRS through its consultancy) have taken a keen interest in these cases where two separate and distinct regulated activities are delivered to the public through one relationship. The broker-dealer’s supervisory system often does not extend to the investment advisory activities and the investment adviser is often in a position to recommend activities that will generate commissions for the broker-dealer representatives (themselves). This potential conflict-of-interest is often not clearly understood by the investment adviser or broker-dealer firms. Therefore, it is not adequately disclosed to nor well understood by the firms’ clients.
These issues can manifest into regulatory actions related to best execution, disclosure, supervision or fraud. NRS recommends that you review your related business practices to ensure that you are not assuming any undue regulatory risk. NRS Consultants are available to help Investment Advisers and Broker-Dealers review their business activities and identify any potential risk areas, ensuring that you follow industry best practices.
To find out how NRS can help you contact us today.
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