Category Archives: FINRA
 

FINRA Fines Firms for Deficiencies in Cybersecurity and Recordkeeping

December 29, 2016

The Financial Industry Regulatory Authority (“FINRA”) recently announced fines against 12 broker-dealers for alleged deficiencies related to their cybersecurity and record retention practices. In each case, the firms – who have consented to the fine without admitting or denying the charges – allegedly failed to properly store electronic records in a “write once read many” format that is meant to protect records from illicit alteration. The “write once read many” format is required by FINRA rules and protects broker-dealers against malicious interference with their vital business records, whether by outside hackers or disgruntled insiders.

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Deadline for Receipt of Preliminary Renewal Statement Payments Quickly Approaches

December 08, 2015

The deadline for investment advisers to submit their Preliminary Renewal Statement payment is quickly approaching. The Financial Industry Regulatory Authority (FINRA) must be in receipt of the full payment listed on the Preliminary Renewal Statement by Friday, December 18, 2015. Investment advisers with sufficient funds in their Flex-Funding Account to cover the Preliminary Renewal Statement payment will have funds automatically transferred beginning on Friday, December 11, 2015 to their Renewal Account to cover total renewal fees owed. Automatic transfers will be conducted every day after December 11, 2015 until the WEB CRD/IARD shuts down for year-end processing on Tuesday, December 29, 2015. Investment advisers that choose to mail in their payments are advised to do so now to avoid delays and to ensure funds are received by the deadline. If your investment adviser would like assistance with the annual renewal service, click here for more information on or to purchase RIA Compliance Consultants’ IARD Renewal Program and ADV Amendment Service. If you have questions regarding these or any of the other services offered by RIA Compliance Consultants, please contact your consultant if you are an existing client or click here if you have not previously engaged RIA Compliance Consultants for our services.

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Ensure Timely Preliminary Renewal Statement Payments

November 25, 2015

Don’t wait until the last minute to submit your annual renewal fees. The Financial Industry Regulatory Authority (FINRA) must be in receipt of the full payment listed on the Preliminary Renewal Statement, which is now available, by Friday, December 18, 2015. Investment advisers with sufficient funds in their Flex-Funding Account to cover the Preliminary Renewal Statement payment will have funds automatically transferred beginning Friday, December 11, 2015 to the Renewal Account to cover total renewal fees owed. Investment advisors that choose to mail in their payments are advised to do so now to avoid delays and to ensure funds are received by the deadline. If your investment adviser would like assistance with the annual renewal service, click here for more information on or to purchase RIA Compliance Consultants’ IARD Renewal Program and ADV Amendment Services.

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IARD Replacing System for a Registered Investment Advisor to Fund IARD/CRD Daily Account

April 19, 2013

Effective March 18, 2013, the IARD/CRD system implemented an E-Bill system for registered investment advisor firms to fund their FINRA Flex-Funding Account (CRD/IARD Daily Account). See the Account Payment Methods and Addresses section in the IARD public site for detailed information. Investment advisor firms may continue to use the existing Web CRD/IARD E-Pay system to make electronic (ACH) payments to their Daily Account until June 17, 2013, when the Web CRD/IARD E-Pay link will be replaced by a link to E-Bill.

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Basics About the IAPD Website

August 07, 2012

The Investment Adviser Public Disclosure (“IAPD”) website was created by the U.S. Securities and Exchange Commission (“SEC”) to provide investors with information about their investment adviser and investment adviser representative. The IAPD was created as a result of a 1996 amendment to the Investment Advisers Act of 1940. The website provides information on both SEC and state registered investment advisers, certain investment adviser firms that are exempt from registration with the SEC or states, and state-registered investment adviser representatives.

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Bachus Shuts Down SRO Bill for Investment Advisers

August 02, 2012

Last week, U.S. House Financial Services Committee Chairman Spencer Bachus (R – AL), decided to at least temporarily put the Investment Adviser Oversight Act of 2012 (“Investment Adviser Oversight Act”) on hold. This decision came on the heels of Representative Maxine Waters’ (D – CA) introduction of the Investment Adviser Examination Improvement Act of 2012 (“Investment Adviser Examination Improvement Act”).

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Illinois Becomes Third State to Pass Privacy Law Conflicting with SEC Social Media Compliance Regulations for Investment Advisers

August 01, 2012

Today Illinois Governor Pat Quinn signed a new law that makes it unlawful for employers to request passwords to social media accounts or from demanding access to social media accounts from potential and current employees. Illinois became the third state to pass such legislation after Maryland and Delaware recently adopted similar laws in May and July. After signing the law Governor Quinn said, “Members of the workforce should not be punished for information their employers don’t legally have the right to have. As use of social media continues to expand, this new law will protect workers and their right to personal privacy.”

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States Passing Privacy Laws that Conflict with FINRA and SEC Social Media Compliance Regulations

July 17, 2012

Keeping up on the new rules and regulations regarding social media use can be a difficult task for investment advisers and broker-dealers.  Recently, the U.S. Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) have each issued alerts and notices to investment advisers and broker-dealers offering guidance on social media use.  The SEC issued an alert in January of this year and FINRA has issued Regulatory Notice 10-06 and Regulatory Notice 11-39; these alerts and notices generally require investment advisers and broker/dealers to monitor and archive any business communications their employees have with clients.  Now, many states and even the federal government have bills under consideration that would limit employers’ access to its employees’ social media accounts.  If these laws are passed they could make it even more difficult for investment advisers and broker-dealers to keep adequate records and ensure compliance with the social media rules and regulations.

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New Suitability Rule for Broker-Dealers is Similar to Fiduciary Duty of Investment Advisers

July 16, 2012

There has been a lot of discussion over the last year on the different standards for broker-dealers and investment advisers. Under current regulatory requirements, broker-dealers do not have a fiduciary duty to their clients. Broker-dealers must abide by the anti-fraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) and must follow rules instituted by exchanges they are members of and the rules of the Financial Industry Regulatory Authority (“FINRA”). Investment advisers are largely governed by the Investment Advisers Act of 1940 (“Investment Advisers Act”), rules promulgated under the Investment Advisers Act, and state laws. Pursuant to the Investment Advisers Act, investment advisers have a fiduciary duty to their clients. Having a fiduciary duty to clients means that by regulation investment advisers are held to a higher standard than the standard that applies to broker-dealers. A study conducted by the U.S. Securities and Exchange Commission (“SEC”) in 2011 found that the average investor did not understand the difference between a broker-dealer and an investment adviser.

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