Each week we’re giving you our weekly report highlighting the top compliance news articles from various industry news publications. We have selected the most relevant and important news articles related to registered investment adviser (RIA) compliance and regulatory issues. Check back each week for the latest list of top stories.
Here’s our top investment adviser compliance articles for the week of June 11, 2016:
- Heads Up RIAs, Fiduciary Rule Will Change Your Practice, Too (Author- Maddy Perkins, Financial Planning Magazine)
“Advisers across all channels need to be prepared for how the new rule will impact the industry,” writes Maddy Perkins in this cautionary piece encouraging RIA firms to familiarize themselves with new Department of Labor (DOL) fiduciary rule regulations. Perkins draws on insights from a panel of Morningstar representatives at the recent Morningstar Investment Conference who point out that full service wealth management assets and advisers receiving third-party payments and commissions will be affected. Tricia Rothschild, head of global advisor solutions at Morningstar, summarized her advice to advisers nicely: “Determine if `investment decisions` are in the best interest of your client, demonstrate and document.”
- You Won’t Believe What Gets an Email Flagged at Goldman: CNBC Has the List (Author- Eamon Javers, CNBC)
Think twice before sending that angry (or potentially non-compliant) email. That’s the message to Goldman employees who probably already knew they were under surveillance but now better understand what internal watchdogs are looking for. In this piece, Eamon Javers shares the entire list of (often colorful) terms found in an internal document from Goldman’s compliance department “detailing more than 180 phrases flagged for scrutiny by the monitoring system.” Ranging from the expected (“embezzled””) to the profane, the list is both entertaining and educational for investment advisory firms tasked with monitoring and reviewing firm correspondence.
- U.S. Chamber Fight Over DOL Rule Is A Facade (Author- Mark Miller, Financial Advisor Magazine)
“A facade.” That’s how Public Citizen, a consumer advocacy group described the Chamber of Commerce’s “claims of grassroots support for its battle to stop the U.S. Department of Labor’s new “best interest” standard for retirement advice.” Mark MIller says the real battle is over the distinction between “advice” and “selling,” a difference that he connects to $17 billion in annual losses suffered by small investors placed in “risky or inappropriate investments by conflicted advisers.” Not only does Mark challenge the Chamber’s position, but also its tactics. Public Citizen cites a deceptive ad campaign that relied on unwilling small business owners and officials at local chambers of commerce to support the Chamber’s cause. Regardless of one’s personal stance on the DOL fiduciary rule, this is a worthwhile read.
- Flat SEC Funding Approved by Senate Committee (Author- Ted Knutson, Financial Advisor Magazine)
2017 SEC funding is likely to remain at 2016 levels, or $1.6 billion, after the Senate Appropriations Committee approved a bill that comes $176 million short of what the President wanted. “Much of the Obama increase was allocated for adding examiners to raise the SEC’s annual examination rate for investment advisers above 10 percent.” Ted Knutson points out that though there has been a lot of talk about other amendments the latest version doesn’t include provisions of the Financial CHOICE Act, nor does it remove rules prohibiting the “SEC from requiring public companies to disclose political contributions.”
- House Committee Unanimously Approves Adviser Bill on Senior Fraud (Author- Tanvi Acharya, InvestmentNews)
“A rare glimpse of agreement between the political parties in Washington” could lead to protections for financial institutions that would in turn make it safer for them to report more financial exploitation of seniors. Tanvi Acharya brings us this story, highlighting the collaborative effort of not only both sides of the aisle, but also of government with industry in defense of privacy and limitation of liability. “This display of bi-partisanship did not extend to other adviser bills discussed in the committee markup” she says, however, pointing to debate over an effort to require the SEC to perform cost-benefit analyses when implementing new rules.
Don’t forget to check out last week’s top RIA compliance news articles on creating a culture of cybersecurity and the appropriate use of client relationship management (CRM) systems. Be sure to check back next Friday for next week’s top articles!
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