Investment Management

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 ...

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 ...