FINRA released its 2018 Annual Regulatory and Examination Priorities Letter (Priorities Letter) on January 8, 2018. While FINRA advises that it can change its priorities in response to circumstances, the purpose of the Priorities Letter is to permit broker-dealers to plan their compliance, supervisory and risk management programs and to prepare for FINRA examinations. Therefore, this Priorities Letter is significant both in what it says and in what it has chosen not to say including failing to discuss FINRA’s views regarding a “fiduciary standard.”
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Category: SEC Rules
SEC Issues MiFID II No-Action Relief and Allays Various Cross-Border Concerns
The SEC recently issued three no-action letters designed to provide market participants with greater certainty regarding their U.S. regulated activities as they engage in efforts to comply with the EU’s Markets in Financial Instruments Directive (MiFID II).
In a recent client alert, I provided a summary of all three no-action letters and explain that as a result of these no-action letters, existing soft-dollar and commission-sharing arrangements may continue, subject to certain new restrictions. Click here to read the client alert.
As background, MiFID II will require, for impacted EU parties, that research be priced separately from execution, starting on January 3, 2018. This represents a significant change from the current practice, whereby research is generally supplied as part of a bundle of services, with no explicit charge.
Absent new U.S. regulations or other relief, this change had the potential to cause a significant number of problems for U.S. advisers, funds and clients dealing with EU parties.
What Effect, if any, will the DOL Fiduciary Duty Rule have on FINRA Arbitrations?
Will FINRA claims change in the wake of the June 9, 2017 DOL Fiduciary Duty Rule (the New Rule)?
While it does not presently have all of the bells and whistles the securities industry has been bracing itself for, it nonetheless places brokers and their broker-dealer employers servicing regular brokerage IRAs in the role of a fiduciary for these accounts. This changes the rule of law in most jurisdictions which previously only held a broker/broker-dealer to a suitability standard unless there were special circumstances. See De Kwiatkowski v. Bear, Stearns & Co., Inc., 306 F.3d 1293, 1302 (2d. Cir. 2002).
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Required Disclosures After the DOL Fiduciary Rule
You may have already missed a required deadline for disclosure to your retirement plan clients … or not. In this post, we explore the requirement to update retirement plan disclosures to reflect changes in the information that was initially provided, including a change in fiduciary status under the new rules.
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The SEC’s 2017 Cybersecurity Alert and New Cyber Unit
In August 2017, the SEC’s Office of Compliance Inspection and Examinations (OCIE) issued a Risk Alert outlining observations from its “Cybersecurity 2 Initiative,” which was built upon its 2014 “Cybersecurity 1 Initiative.” Notably, this alert offered a rare industry compliment, describing “an overall improvement” in cybersecurity practices and processes since the Cybersecurity 1 Initiative. Below we summarize the OCIE staff’s observations, certain criticisms and their descriptions of robust policies, procedures and practices.
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