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FINRA recently issued Notice to Members 17-42, which proposes sweeping changes to the process by which a securities broker may seek to expunge reference to a customer complaint from his or her public record.  The comment period for the proposed rule amendments ended on Feb. 5, 2018.  The proposed changes will now to go the SEC for review and approval.  The proposal, if approved, would result in a major overhaul of the expungement process,…
FINRA recently issued Notice to Members 17-42, which proposes sweeping changes to the process by which a securities broker may seek to expunge reference to a customer complaint from his or her public record.  The comment period for the proposed rule amendments ended on Feb. 5, 2018.  The proposed changes will now to go the SEC for review and approval.  The proposal, if approved, would result in a major overhaul of the expungement process,…
As robo-advisers continue to grow in popularity with investors, especially millennial investors, at least one regulator is taking a closer look.  On July 14, 2016, Massachusetts Secretary of the Commonwealth William Galvin issued a policy statement addressing the use by investment advisers under his jurisdiction of third-party robo-advisers.  This follows a similar policy statement by Secretary Galvin in April 2016 addressing fully-automated robo-advisers.  The more recent guidance urges IAs to provide highly-specific disclosures to clients…
FINRA recently sent a sweep letter (or targeted exam letter) to select broker dealers, inquiring about those firms’ sale of non-traded Business Development Companies (BDCs).  BDCs are SEC-registered investment companies (usually closed-end funds) that pool investor funds in a debt or equity portfolio (typically of small- or medium-sized companies), with the objective of generating income or capital growth (or both).  Non-traded BDCs are illiquid and have no secondary market.  The product has come under recent…
FINRA has issued a regulatory notice (RN 16-18) regarding new Rule 2273, which requires member firms, when hiring a new broker from the competition, to send an “educational communication” to that broker’s customers if and when those customers move or seek to move their assets to the hiring firm.  The new rule, which was recently approved by the SEC, is aimed at informing investors of the potential costs associated with moving their accounts from firm…
The Department of Labor has given final approval to its long-anticipated “fiduciary standard” regulation.  The new rule – which has been in the works for nearly six years – requires financial advisors who provide investment recommendations for retirement accounts to meet a fiduciary standard by putting clients’ interests before their own.  Previously, a registered representative advising a retirement client was required only to provide recommendations that would be “suitable;” a “suitable” investment for a client nevertheless may…
The Securities and Exchange Commission (SEC) recently presented the President’s Fiscal Year 2017 budget request for the SEC to Congress.  Among the notable requests, the SEC seeks significant additional resources for increased examination coverage, primarily of investment advisers and investment companies but also related to broker dealers, crowdfunding portals, and other entities.  The SEC also seeks additional resources for its Enforcement Division, which continues to pursue a record number of cases. With respect to investment advisers…
The Office of the Comptroller of the Currency (“OCC”) recently released new guidance on the process it uses when considering enforcement actions against banking institutions and individuals for potential non-compliance with Bank Secrecy Act (“BSA”) compliance program requirements and anti-money laundering (“AML”) rules.  At the same time, the OCC also issued a revised policy for assessing civil monetary penalties against both institutions and individuals for compliance violations. The revised policy makes clear that the OCC…
FINRA has sent a sweep letter to selected broker dealers in order to learn more about how firms “establish, communicate and implement cultural values,” and whether those values are guiding business conduct.  FINRA conducts sweeps like this periodically in order to gather information that it can then use in focusing its regulatory response to emerging or priority issues, and it specifically identified “firm culture” as an area of emphasis in its 2016 examination priorities letter. …
Last spring, the U.S. Department of Labor proposed a controversial new rule which would govern retirement accounts, including IRAs and qualified employer-sponsored plans.  The rule – which would impose a fiduciary standard of care on advisors who offer advice regarding retirement accounts – is now one step from being finalized.  The Labor Department recently delivered the proposed rule to the Office of Management and Budget (OMB), which reviews proposed rules for economic consequences.  Once OMB…