Author: Fred Reish

Fred Reish

Fred Reish represents clients in fiduciary issues, prohibited transactions, tax-qualification and Department of Labor, Securities and Exchange Commission and FINRA examinations of retirement plans and IRA issues.

View the full bio for Fred Reish at the Drinker Biddle website.

Posts by Fred Reish:


SEC Examination Guidelines and FAQs on Form CRS

The SEC has issued guidance addressing the Form CRS. The first is a Risk Alert from the Office of Compliance Inspections and Examinations (OCIE) indicating that OCIE will be looking for good faith compliance when it conducts examinations after the June 30, 2020 Form CRS compliance date. The second includes additional FAQs providing clarification on delivery and filing requirements along with several other topical areas. We discuss the examination guidance and the FAQs in more detail in an alert on our website for those looking for more in-depth analysis. Also, note that the CRS Risk Alert was issued concurrently with a similar Alert on Reg BI examinations in general, which is the subject of a separate post on this site.

As SEC Chairman Clayton previously indicated, the compliance date of Form CRS will not be extended, but the “initial” examinations will focus on whether firms made “a good faith effort to implement Form CRS.” While emphasizing that the Risk Alert is not intended to serve as an explanation of Form CRS requirements, OCIE explains that its initial examinations may include assessment of compliance with the following areas:

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The Word Is Out on SEC Examinations for Reg BI Compliance – the OCIE Risk Alert

On April 7, 2020, the Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert providing guidance for the SEC’s post–June 30, 2020, examinations of firms’ compliance with Regulation Best Interest (Reg BI). This guidance is covered more fully in our Client Alert of April 13, 2020.

In an effort to present transparency in its prospective examination for Reg BI compliance, OCIE’s Risk Alert includes a three-page Appendix that provides an example of an OCIE Reg BI examination document and information request list. OCIE encourages firms to use the documents listed in the Appendix to assess their implementation plans for Reg BI. Firms should study this exemplar request list closely.

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403(b) and 457(b) Plans Going Under the Regulatory Microscope

It appears that the SEC has initiated a “sweep” examination to inquire into the sales practices applicable to retirement plans for teachers and state and local government employees. We understand that multiple SEC regional offices have issued document requests seeking information from the third-party administrators, the broker-dealers, and the registered investment advisers that work with 403(b) and 457(b) plans. Further, the New York Department of Financial Services (NYDFS) recently launched an investigation into the sales tactics and costs involved with 403(b) plans, which appears to focus on the annuity practices of the insurance industry.

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A Look Inside the SEC’s Final RIA Guidance and Its Discussion of “Best Interest”

In light of the significance of the final rules and commission interpretations issued by the Securities and Exchange Commission on June 5, 2019, Drinker Biddle & Reath’s Best Interest Compliance Team is publishing a series of articles on the subject. The first article, “The Final Reg BI Package: What to Know and What’s Next,”  described the final package of rules and interpretations. The second article covered “Form CRS .” The third article, summarized here, will provide a more detailed analysis of strategically selected provisions of the RIA Guidance.

The Securities and Exchange Commission (SEC) Interpretation Regarding Standard of Conduct for Investment Advisers (RIA Guidance) reaffirms, interprets, clarifies, and provides guidance regarding the fiduciary duty an investment adviser owes to its clients under the Investment Advisers Act of 1940 (Advisers Act) as it has been interpreted by common law and SEC guidance. The RIA Guidance also describes the underlying responsibilities that constitute an investment adviser’s fiduciary duties: the Duty of Care and the Duty of Loyalty.

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Financial Services Industry’s New Regulation Best Interest Standard of Care

On June 5, 2019, the Securities and Exchange Commission (SEC) approved the Regulation Best Interest Final Package, the new disclosure requirements that accompany the financial services industry’s new Regulation Best Interest standard of care. In light of the significance of Regulation Best Interest (Reg BI) for the financial services industry, Drinker Biddle & Reath’s Best Interest Compliance Team is publishing a series of articles on the SEC’s finalized “Reg BI Package” of rules and guidance.

One of the four parts of that package is Form CRS − a mandate that broker-dealers and investment advisers with retail investors (natural persons, trusts or entities representing natural persons) provide a two-page relationship summary disclosing information about their firm before a new client enters an investment adviser’s agreement or engages the services of a broker-dealer, or in the case of an existing client when there is any material change in the nature and scope of the relationship.

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Nevada Proposes Fiduciary Regulations

Nevada has released a proposed regulation to regulate broker-dealers and their advisors as fiduciaries. In 2017, the state amended its securities law to provide that broker-dealers and investment advisers owe a fiduciary duty to their customers, but the change didn’t provide details on what that meant. Instead, the legislation required that a regulation be issued to explain and implement the change. Nearly a year and a half later, a proposed regulation has been released.

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Alert: FINRA’s 529 Plan Share Class Initiative to Self-Report

On January 28, 2019, FINRA released its Regulatory Notice 19-04 announcing its 529 plan self-reporting initiative. This initiative is part of FINRA efforts to have broker-dealers promptly remedy potential supervisory and suitability violations related to recommendations of share classes for 529 plans. Continue reading “Alert: FINRA’s 529 Plan Share Class Initiative to Self-Report”

Recommending Rollovers in the Evolving Regulatory Environment (Part 3)

In Parts 1 and 2 of this post, we talked about the current and proposed rules applicable to rollover recommendations by broker-dealers and RIAs. Part 1 discussed the DOL and FINRA rules that apply now. In Part 2, we explained the SEC proposals. In this post, we talk about how to make a compliant rollover recommendation, regardless of which set of rules applies.

(“Rollover recommendation” refers to advice to a retirement plan participant to take a distribution of his or her account and roll it over to an IRA that is being advised by the broker-dealer or RIA.)

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