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New York Insurance Regulation 187 Found Unconstitutional: Now What? A Faegre Drinker Podcast

On April 29, 2021, the State of New York Supreme Court Appellate Division in the Third Judicial Department issued an Opinion and Order finding that the amendment to New York Insurance Regulation 187 was unconstitutionally vague. In this Faegre Drinker podcast, a cross-disciplinary team of our attorneys discusses the preliminary implications of this important decision.

The SEC’s CCO Guidance Month

In an unprecedented move, the U.S. Securities and Exchange Commission (SEC) released guidance on several platforms in a 30-day period in 2020 regarding certain views on the important role and potential liability risks of chief compliance officers (CCOs). The SEC’s focus on the role of compliance is not new but sometimes the SEC’s support for compliance has not appeared to extend beyond the SEC’s Office of Compliance Inspections and Examinations (OCIE). In this article, we analyze the guidance provided by each source.
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The Final Reg BI Package: What to Know and What’s Next

To nobody’s great surprise, on June 5, the SEC approved the “Reg BI Package,” which includes a series of new standards governing the fiduciary responsibilities of broker-dealers and investment advisers. The approved items consisted of the Regulation Best Interest – Standard of Conduct for Broker-Dealers; Form CRS Relationship Summary; Standard of Conduct for Investment Advisers; and Interpretation of “Solely Incidental,” all of which seem likely to have considerable impact on the industry going forward.

Drinker Biddle’s Best Interest Compliance Team issued an alert summarizing the June 5th meeting, certain statements made by the commissioners, and examining the potential effects of the new standards.

Read the full client alert.

Fiduciary Status for the Unwary

If you thought that avoiding fiduciary status would be a slam-dunk after the “new” DOL fiduciary advice rule was vacated, think again. The DOL’s old fiduciary regulation is back and it casts an unexpectedly wide net.

Let’s start with the background. The reinstated fiduciary definition says that a broker-dealer and its advisor (a “broker”) are fiduciaries to a plan if a functional five-part test is satisfied: (1) the broker provides advice about investments for a fee or other compensation, (2) on a regular basis, (3) under a mutual understanding, (4) that the advice will form a primary basis for the plan’s decisions, and (5) that the advice is individualized based upon the plan’s particular needs. For this purpose, a “plan” includes not only an ERISA plan, but also an IRA. (In the context of IRAs, being a fiduciary under the five-part test does not itself implicate a standard of care, but does apply to the applicability of certain prohibited transactions.)

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FINRA’S First Ever Public Release of Exam Findings: Top 6 Observations for Improving Compliance

As part of the Financial Industry Regulatory Authority’s (FINRA) efforts to protect investors, FINRA regularly conducts examinations of its broker-dealer members. Despite requests to release the reports to assist other FINRA members in improving their compliance with securities rules and regulations, FINRA has traditionally kept the reports private. That all changed this month.

On December 6, FINRA released a Summary Report of several observations from recent examinations. FINRA selected key issues based on their “potential impact on investors and markets or the frequency with which they occur.” The Summary Report will help FINRA members address potential areas of concern and improve their compliance and supervisory programs prior to their own examinations.

The Summary Report provides observations in 11 exam areas, and the notable ones include:

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