Investment Management

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 ...

Recent Developments - States Proceed with Their Own Fiduciary or "Best Interest" Standards

States Proceed with Their Own Fiduciary or "Best Interest" Standards While the U.S. Department of Labor ("DOL") continues with its mandated review of the Fiduciary Rule and related exemptions, including the Best Interest Contract Exemption ("BICE"), states press on with developing their own rules to fill the vacuum. We last discussed state-level legislation impacting investment advisers and other ...

Regulatory Focus on Share Class Selection in 2018

In recent years, the Office of Compliance Inspections and Examinations ("OCIE") of the Security and Exchange Commission ("Commission") has increasingly scrutinized share class selection by registered advisors. A share class recommendation must comport with the requirements of Section 206 of the Investment Advisors Act of 1940 ("Advisers Act") to act in the client's best interest and to seek best ...

FINRA Shares Examination Findings

The Financial Industry Regulatory Authority (FINRA) recently released the results of its exam program to assess compliance with securities rules and regulations. FINRA conducts cyclical examinations of broker-dealer firms: each firm undergoes an examination at least once every four years. A report of the results is only available to the particular firm. Compliance issues identified in the report ...

FINRA's New Qualification and Registration Rules Effective October 1, 2018

Last month, the Securities and Exchange Commission (SEC) approved a new set of rules proposed by the Financial Industry Regulatory Authority (FINRA) intending to consolidate and simplify qualification and registration requirements for registered representatives. These rules have been long in the making by FINRA, which first filed the proposed rule change with the SEC on March 28, 2017. After ...

Calculating Regulatory Assets Under Management

A question we frequently receive from our advisory firm clients is whether they are accurately calculating and reporting regulatory assets under management ("RAUM"). RAUM, as a metric, was first introduced by the Securities and Exchange Commission ("SEC") in 2012, and must be reported on Form ADV Part 1. Correct RAUM is important for several reasons. First, RAUM is one of the factors that ...

BICE and Related Exemptions: Limiting Your Liability Until Full Implementation

Background - Transition Period May be Extended Until July 1, 2019

Cybersecurity Guidance Update from SEC

On April 28, 2015, the SEC Division of Investment Management issued guidance with regard to cybersecurity issues for both registered investment companies and registered investment advisers. (IM Guidance Update 2015-2, "Guidance"). The Guidance identifies and discusses various measures that a fund or adviser may wish to consider when addressing privacy and data risks. The SEC notes that the ...