Regulatory Compliance E-newsletter – February 2017

Feature of the Month

The Securities and Exchange Commission has announced its OCIE 2017 priorities – ComplianceGuardian Alert

The Securities and Exchange Commission has announced its Office of Compliance Inspections and Examinations’ (OCIE) 2017 priorities.   The areas in which OCIE will focus include electronic investment advice, money market funds, and financial exploitation of senior investors.  As expected, the priorities continue to focus on protecting retail investors, including individuals investing for their retirement, and assessing market-wide risks.

The 2017 priorities are organized around three thematic areas:

1. Examining matters of importance to retail investors;
2. Focusing on risks specific to elderly and retiring investors; and
3. Assessing market-wide risks.

OCIE’s priorities identify key risk areas to investors and therefore provide a framework so that registrants can evaluate their compliance programs and make necessary changes or enhancements.

The 2017 examination priorities address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, clearing agencies, private fund advisers, national securities exchanges, and municipal advisors.  

Areas of examination focus include:

Retail Investors –  OCIE will continue several 2016 initiatives in 2017 to assess risks to retail investors seeking information, advice, products, and services. It also will undertake examinations to review firms delivering investment advice through electronic mechanisms, sometimes referred to as “robo-advising,” as well as wrap fee programs in which investors are charged a single bundled fee for advisory and brokerage services.

Senior Investors and Retirement Investments – OCIE will continue to focus on public pension advisers and expanding its focus on senior investors and individuals investing for retirement.  OCIE is broadening its ReTIRE initiative to include reviews of investment advisers and broker-dealers that offer variable insurance products to investors with retirement accounts as well as those advisers that offer and manage target-date funds.  OCIE also will focus more specifically on registrants’ interactions with senior investors, including with respect to identifying financial exploitation.

Market-Wide Risks –  OCIE will continue its focus on registrants’ compliance with the SEC’s Regulation SCI and anti-money laundering rules.   New initiatives for 2017 include an evaluation of money market funds’ compliance with the SEC’s amended rules, which became effective in October 2016.

FINRA – Consistent with OCIE’s goal of enhancing oversight of FINRA to protect investors and the integrity of our markets, it will continue conducting inspections of FINRA’s operations and regulatory programs, and focus resources on assessing the examinations of individual broker-dealers.

Cybersecurity – OCIE will continue its ongoing initiative to examine for cybersecurity compliance procedures and controls, including testing the implementation of those procedures and controls at broker-dealers and investment advisers.

The published priorities for 2017 are not exhaustive and may be adjusted in light of market conditions, industry developments, and ongoing risk assessment activities.

NRS ComplianceGuardianTM tracks regulatory changes and alerts users on an ongoing basis. The user-friendly design, comprehensive collection of materials, powerful alerts and detailed reporting capabilities provides you with the tools you need to keep your firm compliant. 

See what ComplianceGuardian has to offer your compliance program.


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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 Spring 2017 Compliance Conference: Managing Uncertainty
May 1-3, 2017 in Nashville, Tennessee

Do you know how you will manage the uncertain regulatory environment?

Before 2017 is done, you may have had to deal with new DOL rules, changes in the direction of the SEC, actions of a new Administration and who knows what else in compliance. 

Managing Uncertainty will be the focus of the NRS Spring 2017 Compliance Conference. NRS is keenly aware of these challenging times in our industry. Join us in Nashville, Tennessee,  at the Gaylord Opryland Resort May 1-3, to hear from compliance industry expert speakers on ways to help you prepare for your compliance future and understand the challenges you and your firm must address.  Agenda topics include: Cybersecurity, Addressing Conflicts and Supervision for Branch Offices, Due Diligence: Vendors, Investments and New Hires, OBA’s, Gifts and Entertainment: Managing Conflicts of Interest, Robo-Adviser: SEC Focus, Newly Adopted and Proposed Regulations for Investment Advisers plus fifteen additional session topics on the minds of compliance professionals today.  Click below to view the full agenda.

                          Agenda – NRS Spring 2017 Compliance Conference

In keeping with our Managing Uncertainty focus, NRS is pleased to offer a Pre-Conference Workshop: Managing Your Resources in Unsettled Times that will be held on April 30, from 2:00pm – 4:00pm. Obtaining and effectively deploying compliance resources is a challenge in the best of times. Over the past twelve months, compliance professionals in firms of all sizes have had to prepare for sweeping changes without being able to predict with reasonable clarity if, how or when these changes would have to be accomplished.  This workshop will look beyond specific rules to examine methods of anticipating and planning for change when the scope and timing of that change are uncertain.

Reasons to Attend:

  • Gain essential knowledge on compliance topics making headlines today
  • Engage in interactive workshops that present real life applications  
  • Interact with thought leaders, who are on the front lines of compliance
  • Participate in peer leaning discussions on common issues, challenges and solutions
  • Earn continuing education credits – CLE, CPE, CFP and IACCP
  • Access exhibitors showcasing products and services that support compliance operations

Register now to secure your place for the Spring 2017 Compliance Conference. Seating is limited for the pre-conference workshop.

NRS has secured a special Group Room Rate of $220.00 (includes $20.00 resort fee) plus tax/per night on the nights of April 30 – May 3 for attendees at Gaylord Opryland Resort.

Group room rate is available until April 7, 2017 or sold out.

Reserve Your Room Today:  NRS Spring 2017 Conference – Group Room Block

Gaylord Opryland Resort offers attendees the finest in Southern hospitality and an unforgettable getaway with all the excitement and energy of Music City under one spectacular roof. Located only 10 minutes from the airport and featuring an extraordinary selection of dining, shopping, recreational activities and entertainment, there’s never a shortage of things to do at the resort. Explore the nine acres of lush indoor gardens and cascading waterfalls, view the international waters fountain show nightly, go on a riverboat tour traveling down a scenic river through a 4.5 acre indoor garden, make a splash at the indoor or outdoor pool, visit the spa, play a round of golf or hit the gym at the state-of-the-art fitness center. 

Whether you are new to compliance or a seasoned professional, the NRS Spring 2017 Compliance Conference can help you navigate the complex maze of regulatory compliance.


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OCIE Multi-Branch Adviser Initiative

On December 12, 2016, the SEC Office of Compliance Inspections and Examinations (“OCIE”) issued a National Exam Program Risk Alert regarding its new Multi-Branch Adviser Initiative.  OCIE expressed concern that the use of a branch office model can pose unique risks and challenges to advisers, particularly in the design and implementation of a compliance program and the supervision of people and processes in branch offices. The Alert highlighted OCIE’s commitment to examining advisers operating out of multiple branch offices to determine whether they comply with all applicable laws and regulations.  Among the areas OCIE will focus on are implementation of policies and procedures in the main and branch offices, supervisory structure, the role and empowerment of compliance personnel at branch offices, accuracy of filings, calculation of fees and overall billing processes at the branch offices, control over advertising materials originating and/or disseminated from branch offices, implementation of a firm’s Code of Ethics, asset controls, and provision of investment recommendations.  OCIE underscored its continued focus on registered investment advisers providing advisory services from multiple locations in its 2017 examination priorities released in January of this year.

In view of this initiative, advisers with multiple locations should take proactive steps to examine the adequacy and efficiency of their supervisory controls over remote locations and personnel.  As part of this review, firms should reevaluate their Form ADV filings and compliance manuals to ensure that these documents provide the necessary disclosures and amply address specific risks associated with administering a compliance program over multiple geographic areas.  Furthermore, an onsite audit of each location should be undertaken, with the intent to examine all aspects of supervision, including maintenance of required books and records, advertising controls, proper identification of access persons, timely submission and monitoring of personal securities transactions reports, controls related to the identification of accounts over which the adviser has custody, business continuity and cybersecurity, identity theft protection measures and supervision and review of investment recommendations made to clients.

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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