Investment Advisers Need to Train Supervised Persons and Update Compliance Manual Due to Recent Passage of Senior Safe Act

June 12, 2018

Over the past several years, there has been a significant amount of movement within the financial services industry to develop policies, rules, and regulations that help safe guard the senior investor community. In 2014, the U.S. Securities and Exchange Commission (“SEC”), in coordination with FINRA, released a report on a recent senior investor initiative they had conducted. The exams that comprised the report focused on issues of suitability of investments for seniors, disclosures, account documentation, diminished capacity, and senior financial exploitation. This initiative showed that the SEC was taking an interest in senior protections and that investment advisers must follow different policies and procedures when recommending securities to and working with senior clients.

Senior Safe Act Passed – Protecting Senior Investors

June 05, 2018

On May 24, 2018 Pres. Trump signed the Senior Safe Act. The Senior Safe Act encourages financial services firms such as investment adviser firms to train employees to spot elder abuse, while granting limited immunity to individuals at financial institutions who report such abuse to law enforcement or regulators in accordance with the Act. The banking reform package of which the Senior Safe Act is part, formally known as S. 2155 or the Economic Growth, Regulatory Relief and Consumer Protection Act, modifies provisions of the Dodd-Frank Act.

SEC Proposals – ADV Part 3

May 11, 2018

On April 18, 2018, the Securities and Exchange Commission (SEC) voted to propose rules and interpretations that, among other things, are designed to enhance the transparency of investor’s relationships with investment advisers. Two of the SEC’s proposals that pertain to investment advisers are:

SEC Risk Alert – Frequent Advisory Fee and Expense Compliance Issues

April 13, 2018

On April 12, 2018, the Office of Compliance Inspections and Examinations (“OCIE”) of U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert, “Overview of the Most Frequent Advisory Fee and Expense Compliance Issues Identified in Examinations of Investment Advisers.” The risk alert provides a list of compliance issues frequently identified in OCIE examination deficiency letters relating to fees and expenses charged by SEC registered investment advisers. Click here to read the SEC’s Risk Alert.

Cherry Picking – SEC Cease-and-Desist Proceeding

March 28, 2018

In March 2018 the U.S. Securities and Exchange Commission (SEC) instituted an administrative cease-and-desist proceeding against an investment adviser firm in response to an alleged fraudulent “cherry-picking” scheme. The SEC asserts that from 2012-2015 the investment adviser firm disproportionately allocated profitable trades to a personal account, while disproportionately allocating unprofitable trades to client accounts. The firm, which had approximately $7.5-$9 million in assets under management, was fined $48,000 by its state securities regulator for failure to enforce its own supervisory procedures concerning trade allocation. Specifically, the state regulator found the investment adviser firm did not always pre-allocate block trades and did not retain a record of how block trades were pre-allocated. Click here to read the SEC’s full action.

SEC Compliance Outreach Program – Date Set for National Seminar

February 14, 2018

The U.S. Securities and Exchange Commission (SEC) recently announced that its Compliance Outreach Program National Seminar for investment adviser firms will be held on Thursday, April 12, 2018 in Washington, DC. This SEC event is designed to help chief compliance officer make improvements to his or her investment adviser firm’s compliance program. For an employee of an SEC registered investment adviser firm to attend in person, he or she can register online at https://regandsurvey.sec.gov/NoviSurvey/TakeSurveyPage.aspx?s=be9d4ac36e2c40e19efaef0ce7079d06&tsid=8ff8c4079869425ea960fd3130c3cdff&c=en-US . Additionally, the seminar will be broadcast live via the Internet which can be accessed at sec.gov .

Protecting Senior Investors

February 06, 2018

On Jan. 24, 2018 the United States House of Representatives passed the Senior Safe Act. The Senior Safe Act (referred to as “the Act,” formerly H.R. 3758) encourages financial services firms to train employees to spot elder abuse, while granting limited immunity to individuals at financial institutions who report such abuse to law enforcement or regulators in accordance with the Act.

NASAA Investment Adviser Coordinated Examinations Report

January 24, 2018

In September 2017, The North American Securities Administrators Association (NASAA) released its 2017 Investment Adviser Coordinated Examinations Report. NASAA’s report looked at 1,227 routine investment adviser examinations of state registered investment advisers. Once again, the area with the most deficiencies was books and records. Almost two out of every three investment advisers examined (64.6%) reported a deficiency in books and records retention.

New Sample Form – Bank Referral Arrangement Disclosure Statement to Client

January 12, 2018

RIA Compliance Consultants has released a new sample form, “Bank Referral Arrangement Disclosure Statement to Client.”

2018 Investment Adviser Conference

November 28, 2017

RIA Compliance Consultants will host its 2018 Investment Adviser Compliance Conference on August 22 and 23. Day 1 will consist of a half-day CCO training session with two tracks: one for advanced CCO’s and one for those just getting started. Day 2 will feature a series of informative presentations from our consultants on key topics in the world of investment adviser compliance. Early-bird registration for both days of the conference is available for the special price of $295.