Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.
Stay up-to-date and in the know on everything happening in the compliance world as of May 27, 2022.
Top five compliance articles
SEC, FINRA: Act and ‘fess up early to reduce compliance risk – Author Tobias Salinger
For every compliance professional, reducing and mitigating risk tops the list of strategic compliance priorities. Luckily, the Securities and Exchange Commission (SEC) and the the Financial Industry Regulatory Authority (FINRA) provided some guidance earlier this month.
“In a May 17 panel at FINRA’s annual conference, SEC Associate Enforcement Director Melissa Hodgman and FINRA Head of Enforcement Jessica Hopper shared the key lessons for financial advisors and wealth managers from recent compliance cases. The message they imparted is that engaging early and often with regulators can help firms avoid or reduce the impact of ones coming months or years down the line. They joined other regulators who have already predicted an uptick or spike in cases amid equity volatility and high inflation this year”
FINRA Revives Plan to Create Expungement Arbitrator Roster – Author Melanie Waddell
“The Financial Industry Regulatory Authority’s Board said Friday that it has approved amendments to a rule establishing a special roster of arbitrators for expungement requests.
FINRA withdrew the proposal from the Securities and Exchange Commission last May so that it could think about revising the rule.
The newly approved proposal includes amendments to the previous plan. Those changes won’t be known, however, until the proposal is filed with the SEC.”
SEC presses on with anti-greenwashing proposals – Author Emile Hallez
“The SEC Wednesday took a step toward clamping down on greenwashing, proposing two major rule changes — one for investment product names and another for environmental, social and corporate governance (ESG) disclosures made by advisers and investment companies…
Significantly, the Securities and Exchange Commission aims to stop fund providers from labeling products as ESG unless their investment process relies on ESG more so than other factors. A so-called “integration fund” that uses ESG alongside other factors “but not more centrally” than the other factors “would not be permitted to use ESG or similar terminology in its name,” the agency noted in a factsheet for the proposal, noting that doing so could be misleading or materially deceptive.”
SEC Sends Email Warning on Marketing Rule Compliance – Author Melanie Waddell
In anticipation of the upcoming November 4th deadline, SEC issued a mass email reminding recipients of the deadline and necessary requirements to adhere to the new marketing rule.
“FrontLine Compliance warned Tuesday that “this first-of-its-kind mass email campaign by the SEC signifies that the regulator has served notice that it will aggressively pursue actions against firms that fail to comply with the new rule.”
The compliance firm said to “expect SEC targeted sweeps and exams to be a priority” once the compliance date hits.
While the SEC email — sent to all registered investment advisors on Monday — lays out helpful tips that advisors should definitely heed, at least one industry official says further SEC guidance is needed to help advisors navigate trouble spots that have cropped up.”
SEC’s Reg BI ‘evolution’ leaves industry wondering what’s next – Author Tobias Salinger
“Wealth managers are still wrapping their arms around the SEC’s Regulation Best Interest, even as they try to discredit the view that the 2020 rule hasn’t changed the industry’s practices.
That was the main takeaway from a May 18 panel at FINRA’s annual conference featuring two industry governors from the regulator’s board in Commonwealth Financial Network General Counsel Peggy Ho and Herold & Lantern Investments Chief Compliance Officer Wendy Lanton, as well as executives from Morgan Stanley and Goldman Sachs. They spoke a day after SEC Chair Gary Gensler offered his latest tough but non-specific warnings to the industry and six weeks after an agency memo described Reg BI as “substantially similar” to fiduciary standards.
The memo reflects “a very interesting evolution” from the difference between advisory accounts subject to fiduciary rules and brokerage services under the suitability standard prior to Reg BI…”