On May 18, 2021, South Carolina enacted new legislation intended to help investment advisers and broker-dealers protect clients who are
vulnerable adults (such as seniors with diminished capacity) from financial exploitation. Similar to financial exploitation laws adopted by other states, South Carolina’s new law permits state registered investment advisers and broker-dealers to delay disbursements and transactions under specified, limited circumstances for a vulnerable client who is an “eligible adult” as defined by the statute. In addition, a registered investment adviser firm may contact other third parties previously designated by the vulnerable client, such as a trusted emergency contact, regarding the suspected financial exploitation. Firms are also permitted to report suspected financial exploitation to South Carolina’s Adult Protective Services and Securities Division on a voluntary basis. In the event that an investment adviser firm delays a transaction or disbursement, reporting to the specified agencies is mandatory. Click here to read South Carolina’s new financial exploitation law.
The Texas Securities Commissioner recently entered into a consent order with an investment adviser representative (also referred to as an “IAR”) related to his performance fee arrangement and trading practices.
New Sample Form – SEC Exam – Privilege Log
May 18, 2021
RIA Compliance Consultants recently created a new sample form, SEC Exam – Privilege Log.
The North American Securities Administrators Association (“NASAA”) recently published a new handbook to guide investment adviser firms and other professionals that are interested in becoming content providers under NASAA’s Model Rule on Investment Adviser Representative Continuing Education (“Model Rule”). The handbook is the most recent resource published by NASAA as it works to implement the compliance and logistical framework needed to facilitate the Model Rule. To view NASAA’s Investment Adviser Representative Continuing Education Program Handbook, click here.
Investment adviser firms advising plan participants on IRA rollovers should review the recently published guidance of the U.S. Department of Labor (“DoL”) regarding PTE 2020-02, a new fiduciary advice prohibited transaction exemption. Compliance with PTE 2020-02 now permits investment advisers to provide advice regarding IRA rollovers without violating Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the Internal Revenue Code of 1986 (“IRC”), both of which prohibit investment advisers from receiving payments that create a conflict of interest when providing fiduciary investment advice to plan sponsors, plan participants, and IRA owners. The adoption of PTE 2020-02 follows several years of rulemaking, court actions, and DoL guidance regarding the definition of fiduciary investment advice and clarifies that advice regarding IRA rollovers is considered a fiduciary activity, in contrast to the DoL’s prior interpretation.
There are several legislative proposals currently under consideration by the U.S. House of Representative’s Committee on Financial Services in response to the Archegos Capital meltdown which may be of interest to many investment advisers:
RIA Compliance Consultants has recently updated its Sample WSP/CoE Section, IRA Rollover Recommendations.
RIA Compliance Consultants recently updated its sample form, Suitability – Retirement Plan Rollover – Client Acknowledgement.
RIA Compliance Consultants recently created a new Sample Form, Advertising – Accessibility – Best Practices Checklist.
RIA Compliance Consultants recently created a new Sample Form, Client as Investor/Owner in RIA – Checklist of Compliance Issues.
