Regulatory Compliance E-newsletter – February 2016

Feature of the Month

NRS 31st Spring Compliance Conference – Keynote Speaker, Andrew J. Bowden

NRS is pleased to announce our 2016 Spring Conference Keynote Address speaker Andrew J. Bowden, Senior Vice President and General Counsel at Jackson National Life Insurance Company.  Mr. Bowden oversees the company’s legal and compliance departments.

Previously, Mr. Bowden worked at the U.S. Securities and Exchange Commission as Director of the Office of Compliance Inspections and Examinations.  NRS is excited to have a speaker of Mr. Bowden’s caliber and experience kick off the NRS Spring 2016 Conference with his address, “The Future of Compliance.” 

For 31 years, investment adviser and broker-dealer compliance professionals have been attending NRS Compliance Conferences to learn from industry experts about the latest compliance challenges, strategies for building a strong compliance program, and trends that are expected to influence compliance in the future.

The 2016 Spring Compliance Conference continues this tradition with a focus on Compliance in Action – an in-depth understanding of regulations plus tools and workshops to implement an effective compliance program in a changing regulatory environment.

The roster of speakers, including regulators, former regulators, attorneys, compliance professionals and practitioners, will focus on key topics on the minds of today’s compliance professionals. Visit  NRS 31st Spring Conference site often to see new information that has been added to the conference agenda and speaker roster.

Register today for the NRS 31st Spring Compliance Conference to be held on May 10 – 12, 2016 at the newly renovated Eden Roc Resort in Miami Beach, Florida. For more information contact NRS at or call 860-435-0200.

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Improve your 2016 Branch Audit Program

Under the increased scrutiny of today’s regulatory environment, your audit program should quickly identify and mitigate risks to protect your firm. Do you feel confident that your program will successfully circumvent regulatory disciplinary action?

  • Can you effectively gather and analyze your 2015 audit data to establish a 2016 Risk Matrix?
  • Do you have sufficient corrective action protocols to expedite deficiency resolution?
  • Do you have safe storage for audit reports, supporting artifacts and sensitive documents?
  • Would your program benefit from an unbiased third party to mitigate conflict of interest?

Did you find your 2015 branch audit program to be challenging or concerning? NRS can increase the efficiency and effectiveness of your program with our Audit Solutions. Whether you’re looking for NRS to manage the process start-to-finish or you wish to implement a technology that will standardize your processes and support your audit team, NRS has the solution you need. Choose the option that best fits your firm:

Outsourcing Co-sourcing Technology
NRS’s professionally staffed Audit Team conducts the inspections on behalf of the Broker Dealer. The Outsourcing option relieves you of the burden of scheduling and traveling to conduct your audits.  Allow NRS to conduct the field work for you and deliver your audit results, so you can redirect your focus on managing the overall health of your compliance program.  NRS audit results are delivered securely via The ComplianceMAX technology, allowing for quick data reporting and streamlined corrective action processes. A flexible and collaborative approach that allows you to meet expanding audit obligations and control costs. NRS’s professionally staffed Audit Team will become an extension of your Compliance Program. NRS is available to visit any of your branch locations at a single fixed rate, while absorbing unpredictable travel costs.  With the help of NRS, you will no longer find yourself in the unhappy situation of being short staffed or unable to promptly conduct high risk inspections, without conflict of interest. The ComplianceMAX technology can be implemented into any level of Audit Solutions. You will immediately recognize a dramatic boost in productivity and increased job satisfaction. ComplianceMAX consolidates spreadsheets, emails, faxes and other manual processes into one secure and centralized repository for your data, documents and other audit materials.


For more than a decade, NRS has operated the largest and most comprehensive branch inspection service in the industry. On average, NRS’s team of auditors have over 15 years of experience and conduct more than 2000 audits per year. No other provider in the industry enhances your audit program with such expertise or scale.

For more information on Audit Solutions, contact us or sign up for a demo today.

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Differentiate Yourself and Your Firm by Earning the NRS IACCP® Designation

In 2016 many investment adviser compliance professionals are including education in their plans as a way to both help advance their careers and stay-up to date on the current regulatory and compliance requirements and initiatives. Often, a standard reaction of compliance professionals is taking a course when a new rule  is released. While this reaction fills an important need, the industry is demanding a more structured and encompassing approach to investment adviser compliance education.

Put your time and energy into earning an investment adviser compliance designation that can help you and your firm. The NRS Investment Adviser Certified Compliance Professional®(IACCP®) Program, co-sponsored with the Investment Adviser Association (IAA), is a professional education program granting the designation, Investment Adviser Certified Compliance Professional (IACCP), to individuals who complete an online and/or in-person instructor-led program of study, pass a certifying examination and meet its work experience, ethics and continuing education requirements.

The NRS IACCP program:

  • Provides participants and their firms with a solid understanding of current regulations and rules required for investment advisers
  • Provides resources to help strengthen the firm’s compliance program and promote continuous learning within the firm
  • Encourages candidates to apply what they learn as they learn it
  • Signals recognition of advanced compliance knowledge and skill level to help differentiate you from other compliance professionals
  • Allows firms that educate compliance personnel to add another cost- and time-effective risk management tool
  • Demonstrates the firm’s commitment to an educated workforce and a strong culture of compliance
  • Helps advance compliance as a profession
  • Supports the community of compliance professionals

Earning the IACCP designation helps identify you as a committed compliance leader and demonstrates your firm’s commitment to compliance.

For those who want to take the first step toward advancing their investment adviser compliance education with a less intensive curriculum, the NRS Investment Adviser Core Compliance Program provides a foundation with focus on the first level of compliance courses. By completing 10 courses and submitting an Ethics assessment, compliance professionals can earn a Certificate of Achievement, which can then be applied for credit in the future toward the IACCP Program requirements. Review the Core Program requirements.

When it comes to selecting a partner for your compliance education and investment adviser designation, make sure the firm can deliver. Contact NRS for online, face-to-face and on demand compliance education. Let NRS put our 30 years of compliance experience to work for you.

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2016 Promises to Bring New BD Compliance Challenges

Following years of speculation and discussion, a recent flurry of activity over the past several months appears to have brought the Department of Labor’s (DOL) controversial rules to redefine “fiduciary” to the last step before being finalized.

On January 28, 2016, the DOL delivered the final regulation to the White House Office of Management and Budget (OMB) for its review.  This is the last stop before the final regulations are released and published in the Federal Register. Those in the know believe the final regulations will be published in late March or early April.

The proposed rules are still controversial.  In February there was activity in the House and Senate to try to derail the proposed rules.  That said, it seems unlikely that opponents to the proposed rules could create a majority sufficient to withstand a presidential veto. Among other things, the proposed rules would make broker-dealers who provide services to IRAs “fiduciaries” under ERISA.  Advocates of the proposed rules believe they will stop the erosion of saving attributable to high-fee investments sold by brokers.  Opponents feel the rules will significantly increase liability risks and regulatory costs, forcing brokers to abandon investors with small accounts.

NRS is following this closely and, once the final rules have been adopted, we will keep you informed through bulletins, desktop seminars, and conferences, and will provide products and services designed to keep you in compliance with these dramatic changes.  Stay tuned! 

On another front, FINRA is developing new rule proposals that will include the ability of broker-dealers to pause orders if they believe some type of financial exploitation of senior investors in occurring or if a senior (defined as “an individual either aged 65 or older, or an investor who has some other evidence of vulnerability”).

FINRA also is planning on releasing another, related proposal seeking to amend the current Rule 4512 around customer account information. The change would require member firms to get trusted contact information on accounts of senior investors.  While the proposed rule will not grant immunity, it will allows brokers to reach out to the “trusted contact” giving firms some level of assurance that there is not a Regulation S-P concern here which makes firms harbor inhibitions about telling outside contacts, such as family members, that something may be wrong.

The proposed “safe harbor” rule notes that if firms do decide to pause disbursements, they have to tell the so-called “trusted contact” on file with the account.

The Securities and Exchange Commission has yet to release any proposals around the financial exploitation of senior investors, although the agency’s Kevin Goodman says the protection of senior investors and those saving for retirement remains a top priority.  When asked Tuesday whether the SEC is likewise working on some rule proposal in this space, Goodman noted “there’s been talk of that; that is all I know at this point.”

In its 2016 “Regulatory and Examination Priorities” letter, FINRA highlighted the following broad areas of concern:

Culture, conflicts of interest and ethics
FINRA will assess five indicators of a firm’s culture:

  1. whether control functions are valued within the organization
  2. whether policy or control breaches are tolerated
  3. whether the organization proactively seeks to identify risk and compliance events
  4. whether supervisors are effective role models of firm culture
  5. whether sub-cultures (e.g., at a branch office, a trading desk or an investment banking department) that may not conform to overall corporate culture are identified and addressed

Supervision, risk management and controls
FINRA’s focus on firm culture is closely related to a firm’s supervisory, risk management, and control systems. FINRA will focus on four areas:

  1. management of conflicts of interest
  2. technology
  3. outsourcing
  4. anti-money laundering (AML)

Relying on the experience gained from providing customized compliance services and solutions to the financial services industry for nearly 30 years, NRS is uniquely positioned and adept at helping firms deal with these, and many other, challenges. NRS Consultants will work with appropriate personnel to review supervisory structure, personnel supervision/oversight, written supervisory policies and procedures and company-wide compliance buy-in.  Clients are increasingly turning to NRS for guidance in these very important areas. We understand what FINRA means when it says it will be assessing a “firm’s culture.”  Let us partner with you to ensure your firm lives up to regulatory expectations.  If you would like to make sure your firm is up for existing and yet to come challenges, please contact us today.

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