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FINRA recently published its 2019 Risk Monitoring and Examination Priorities Letter (“Priorities Letter”) highlighting topics upon which FINRA will focus in the coming year. Unlike letters in prior years, the Priorities Letter focuses primarily on areas that FINRA considers to be material new priorities. Of particular interest to the growing number of companies providing financial services through an online platform is the first materially new priority highlighted by FINRA in its Priorities Letter—online distribution platforms…
On July 2, 2018, the State of Massachusetts announced that it was investigating 10 broker-dealers that have 15% or more of their agents with current disciplinary incidents and that offer private placements to individual investors. According to the announcement, the investigation arises in large measure due to a recent Wall Street Journal investigation into these types of firms, which targeted senior investors in particular. The Wall Street Journal’s article on the subject can be found at…
In the third release comprising part of the package of proposed rules and forms related to broker-dealers’ and investment advisers’ standards of conduct, the SEC proposed a new disclosure document to be used by registered broker-dealers, registered investment advisers, and dual registrants. The new client relationship summary, or “Form CRS,” would provide certain basic disclosures to retail investors at the account opening stage. Form CRS would be an additive disclosure; it is not designed to…
According to the SEC, its April 18, 2018 release proposing an interpretation of the standard of conduct for investment advisers is intended to “reaffirm – and in some cases clarify – certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206” of the Investment Advisers Act of 1940. As discussed in greater detail in this alert, however, the proposed interpretation, if adopted, appears to expand the parameters of…
On April 18, 2018, the SEC introduced new Regulation Best Interest for broker-dealers and their associated persons when dealing with retail customers. This alert provides background of broker-dealer regulation, an overview of Regulation Best Interest, and our take on what this means for broker-dealers going forward. This alert is one in a series of Client Alerts on recent SEC proposals regarding regulation of broker-dealers and investment advisers. Read our client alert.…
On February 15, 2018, the Enforcement Section of the Massachusetts Securities Division (the “Division”) of the Office of the Secretary of the Commonwealth charged a registered broker-dealer (the “Broker-Dealer”) that operated in Massachusetts with violating its own internal policies designed to ensure compliance with the U.S. Department of Labor’s (the “DOL”) Fiduciary Rule. The DOL Fiduciary Rule The DOL Fiduciary Rule significantly expands the scope of persons who will be deemed fiduciaries when dealing with…
On February 15, 2018, the Enforcement Section of the Massachusetts Securities Division (the “Division”) of the Office of the Secretary of the Commonwealth charged a registered broker-dealer (the “Broker-Dealer”) that operated in Massachusetts with violating its own internal policies designed to ensure compliance with the U.S. Department of Labor’s (the “DOL”) Fiduciary Rule. The DOL Fiduciary Rule The DOL Fiduciary Rule significantly expands the scope of persons who will be deemed fiduciaries when dealing with…
Until recently, broker-dealers operating in the United States weren’t subject to a fiduciary standard when dealing with their retail clients. The passage of the Dodd-Frank Act in 2010 included a provision enabling the Securities and Exchange Commission to consider and propose a higher standard of care for broker-dealers – something which it has not yet done but appears intent on pursuing this year. The Department of Labor (DOL) on its own adopted a fiduciary standard…
The US Department of Labor’s (DOL) fiduciary standard rule has been befuddling the financial services industry for the past seven years. In its simplest form, it increases accountability for the brokers, planners and insurance agents that handle US retirement accounts. It introduces measures to ensure they act in the best interest of their clients rather than for their own financial gain. And exactly what steps can be taken to best respond to the rule are…
In April 2016, the U.S. Department of Labor (DOL) adopted a rule that significantly expands the category of persons deemed fiduciaries when providing investment recommendations to most retail retirement accounts (the “Fiduciary Rule”). On August 31, 2017, the DOL published a proposal to defer full implementation of the Fiduciary Rule until July 1, 2019.1  Persons deemed fiduciaries under this rule may not receive transaction-based compensation or engage in principal transactions with their retail retirement clients,…