Investment Management

OCIE Identifies Common Deficiencies Relating to Best Execution

On July 11, 2018, the Office of Compliance Inspections and Examinations ("OCIE") of the Securities and Exchange Commission published a Risk Alert relating to best execution deficiencies on the part of investment advisers. Under section 28(e) of the Securities and Exchange Act of 1934 (the "Act"), as a fiduciary, an adviser with responsibility to direct client trades is obligated to seek "best ...

Recent DOL Settlement Agreements with ESOP Trustees

The spate of recent settlements between the U.S. Department of Labor ("DOL") and trustees of employee stock ownership plans ("ESOP") is a signal that trustees and other fiduciaries should reassess their fiduciary obligations. While these settlement agreements do not have the force of law, they signal the DOL's current position with respect to the duties of ESOP trustees and fiduciaries in certain ...

Recent FINRA Notices Seek Comment on Proposed Amendment to Quantitative Suitability and Efficacy of Supervision Rule

On the heels of the Security and Exchange Commission's (the "Commission") April 18, 2018 release of the proposed Regulation Best Interest rule package ("Regulation BI") (which was covered in our April 20, 2018 Law Alert), the Financial Industry Regulatory Authority ("FINRA") on April 20, 2018 issued Regulatory Notice 18-13 ("Notice 18-13") seeking comment on its proposed amendments to the ...

DOL Issues Temporary Enforcement Policy with Respect to Investment Advice Fiduciaries

Today, the Department of Labor ("DOL") issued Field Assistance Bulletin 2018-02 (the "FAB"), which indicates that both the DOL and the IRS will continue to rely upon its previously announced temporary enforcement policy, pending the issuance of additional guidance by the DOL. The FAB states that during the period from June 9, 2017 until after regulations or prohibited transaction exemptions or ...

Another Win for the Plan Fiduciary - Fifth Circuit Follows Dudenhoeffer Standards in RadioShack Case

On February 6, 2018, the Court of Appeals for the Fifth Circuit in Singh v. RadioShack Corp. aligned with the Second Circuit and affirmed the dismissal of Plaintiffs' proposed class action.  The suit alleged that plan fiduciaries breached their fiduciary duties of prudence and loyalty by continuing to invest retirement assets of the employee stock ownership plan ("ESOP") in company stock, despite ...

SEC Proposes Three Related Releases on Retail Investor Matters

I. Introduction After a delay of almost eight years from the date that the SEC is authorized under the Dodd-Frank Act to provide for fiduciary standards for broker-dealers and investment advisers, the SEC, by a 4-1 vote, issued a detailed set of proposed rules in Release No. 34-83062 regulating the standard of conduct for broker-dealers, referred to as "Best Interest Regulation."While three ...

FINRA Rules Going into Effect in 2018

There are a host of new and amended rules promulgated by the Financial Industry Regulatory Authority ("FINRA") that will be going into effect throughout 2018. This Alert summarizes these impending rule changes.

Massachusetts Securities Division Files Suit to Enforce Fiduciary Rule

In a recent Alert, we discussed how several states are charting their own course while the U.S. Department of Labor ("DOL") proceeds with its review of the Fiduciary Rule, the Best Interest Contract Exemption ("BICE") and other related exemptions. Yesterday, Massachusetts filed suit against a broker-dealer firm for violations of the Fiduciary Rule.

SEC Offers Amnesty Under Share Class Selection Disclosure Initiative

In our January 18, 2018 Law Alert on share class selection, we expressed our opinion that share class selection is likely to remain an enforcement focus for the Security and Exchange Commission (the "Commission") in 2018. This was confirmed by the Commission's February 7th announcement of its 2018 exam priorities wherein it affirmed its intent to protect retail investors, which includes share ...

Tax Reform: Unintended Consequences for Broker-Dealers

The "Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018" (the "Tax Act") - formerly known as The Tax Cuts and Jobs Act - was signed into law on December 22, 2017.  Because of the speed at which it was passed, many analysts predicted that unintended consequences and loopholes would soon be identified. A loophole is ...