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With Regulation BI, Are FINRA Rules 2010 and 2111 Dead?

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FINRA Increases Emphasis on Protection of Senior and Vulnerable Investors from Financial Exploitation

In response to the recent increase in financial exploitation of seniors and other at risk investors, FINRA recently announced that it is conducting a review of the effectiveness and efficiency […]

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The SEC Examined 50+ RIAs Who Are Employing or Have Employed Individuals with a History of Disciplinary Issues and This is What They Found…

The U.S. Securities and Exchange Commission’s (SEC) Office of Compliance and Inspections (OCIE) performed over 50 examinations of registered investment advisers who employed or currently employ individuals with disciplinary events. […]

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New White Paper: Forensic Accounting in the Context of Litigation

In civil litigation where the narrative includes financial information, an experienced forensic accountant delivers analytical clarity while providing accounting, financial and investigative expertise. Backed by relevant litigation support experience and […]

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NASAA Roundup: Crypto Crackdown, Reg BI, New Warnings on Complex Products

The past few months have been a particularly busy time for state financial regulators and enforcement officials. At almost every turn, the complicated and overlapping relationship between federal and state […]

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Cannabis: Federal and State Efforts Picking up Steam

The growing global cannabis market is estimated to reach $66.3 billion by 2025, up from $13.8 billion in 2018. (Another estimate is even higher, projecting that the market will reach $89.1 billion by 2024.) […]

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OCIE Examines Investment Adviser Oversight of Supervised Persons with Disciplinary History

The SEC Office of Compliance, Inspections and Examinations (OCIE) issued a Risk Alert to address compliance and disclosure issues raised in examinations covering the oversight practices of SEC-registered investment advisers “that previously […]

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New Jersey Debates Broker Conduct Standards In The Reg BI Era

This Client Alert updates our previous commentary regarding New Jersey’s efforts to establish a fiduciary duty applicable to all broker-dealers and investment advisers doing business in the state.  Following the adoption by […]

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FinCEN Updates Advisory on Business Email Fraud: Billions Thought to Have Been Stolen

After analyzing data collected in Suspicious Activity Reports (SARs), the Financial Crimes Enforcement Network (FinCEN) issued an update to a 2016 Advisory alerting financial institutions on how best to combat criminal schemes […]

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None of Your BI Business? - The Impact of Regulation BI on Broker-Dealers and Investment Advisers

On June 5, 2019 the Securities and Exchange Commission (“SEC”) voted to enhance the regulatory framework standard of conduct for broker-dealers (or “firms”) and provide an interpretation of the fiduciary […]

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Regulation Best Interest Now Published in Federal Register: What Does This Mean for Your Firm?

The formal publication by the Federal Register on July 12, 2019, of Regulation Best Interest (“Reg BI”) triggers final effective and compliance dates for the rulemaking package. The Reg BI rule and […]

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FINRA Issues New Guidance on Extraordinary Cooperation Credit

On July 11, 2019, FINRA provided long-awaited supplemental guidance on crediting member firms and individuals for extraordinary cooperation in a FINRA investigation – a practice first outlined in Regulatory Notice […]

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Investment of Public Funds – Pitfalls of Neglecting Periodic Review of Public Money Policies

In the second installment in our series on Investment of Public Funds, we use a specific example to highlight the danger of not reviewing the statutes, regulations, and policies governing […]

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Expect More Share Class Investigations, Says SEC Enforcement Division

In May 2019, we sent out an Alert warning that the SEC's Enforcement Division had initiated investigations against firms that did not self-report by the deadline of the SEC’s Share Class Selection […]

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Bates Group Prepares Investment Adviser Firms for SEC Examinations and Provides Compliance Support

It can be daunting for you and your firm to have to undergo an SEC examination. The reality is that at any given moment the SEC’s Office of Compliance Inspections […]

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AML Legislative Update: Seeking Transparency, House and Senate Propose Beneficial Ownership Database

As described in Bates’ last review of congressional initiatives on Anti-Money Laundering / Countering the Financing of Terrorism (AML/CFT), the House Financial Services Committee has adopted an aggressive legislative agenda aimed at […]

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Massachusetts Proposes State Fiduciary Rule; Trade Groups Ask New Jersey to Pause its Process

Last month, Bates described a New Jersey proposal to apply uniform fiduciary standards to broker-dealers and investment advisers for recommendations and advice they may give to New Jersey investors. At the time […]

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Regulation Best Interest - Is Your Firm Ready?

The SEC voted on June 5th 2019 to approve a set of proposals setting new conduct standards for broker-dealers. Regulation Best Interest (“Reg BI”) is part of a package of rules and interpretive […]

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May Alternative Investment Industry Insights

AI Insight recently added Industry Reporting capabilities to help you review alternative investment trends and historical market data for Private Placements, Non-Traded REITs, BDCs, and Closed-End Funds, and Alternative Mutual […]

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Cryptocurrencies Regulatory Update: FinCEN Guidance, SEC and Commissioner Commentary

Last month, Bates described a New Jersey proposal to apply uniform fiduciary standards to broker-dealers and investment advisers for recommendations and advice they may give to New Jersey investors. At the time […]

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Key Issues Discussed at SIFMA's C&L Society Regional Seminar in Boston

SIFMA’s Compliance & Legal Society held a regional seminar in Boston on May 21, 2019. The conference hosted four panels comprised of regulators and various attorneys in the securities industry, […]

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Broker-Dealer Branch Office Compliance

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SEC Office of the Investor Advocate Releases New Report on Efforts to Protect Seniors

An Engagement Adviser[1] in the SEC Office of Investor Advocate (OIA) has prepared a valuable overview report on the SEC’s efforts to protect seniors from financial exploitation. The 25-page paper highlights the agency’s […]

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SEC Enforcement Investigating Firms That Did Not Self-Report

The SEC's Enforcement Division has now initiated investigations against firms that did not self-report by the deadline of the SEC’s Share Class Selection Disclosure Initiative. (See Bates Alert for background on the Initiative.) As […]

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NASAA Members Adopt Investment Adviser Information Security Model Rule Package

Only a few weeks ago, Bates described an SEC Office of Compliance Inspections and Examination (OCIE) Risk Alert that highlighted privacy and information security issues raised during examinations of registered investment advisers and broker-dealers. […]

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New Jersey Makes Its Move, Proposes Financial Services Fiduciary Standard

On April 15th, the New Jersey State Bureau of Securities proposed applying uniform fiduciary standards to broker-dealers and investment advisers for recommendations and advice they give to New Jersey investors. The new, […]

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Federal Legislators Target Mandatory Arbitration

Longstanding opposition to mandatory arbitration is finding renewed momentum as federal legislators introduce bills to limit or even eliminate the binding provisions in consumer, employment and financial contracts. In the […]

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Changing Firms? Five Issues to Consider

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FINRA Is Scrutinizing UTMA/UGMA Accounts

In June 2018, Bates Group published an article reporting on deficiencies identified by FINRA in its exam findings which may trigger further scrutiny. In that article we noted FINRA’s focus […]

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The Changing Landscape of Non-Compete Agreements in Advisor Recruiting

The Protocol for Broker-Dealer recruiting was adopted in 2004 by Merrill Lynch, UBS PaineWebber and Smith Barney and quickly developed into an almost industry-wide agreement between firms, with more than […]

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Compliance Technology: The Quest for the Ideal Solution

This is the fourth of our series on Building a Business Case for Compliance Technology for Hearsay Systems. In this article, Mitch Avnet shares the process of building a business case within your […]

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Latest Developments in Variable Annuities and Life Insurance

In our last review of developments concerning variable annuities and life insurance, Bates discussed the SEC’s issuance of a comprehensive new rule proposal intended to create a “layered disclosure approach” for regulating these products. […]

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Investment Advisers 2018 Regulatory Review and 2019 Outlook

With 2018 in the rear-view mirror and 2019 underway, we find ourselves in a position to look back across the regulatory landscape on what transpired over the course of last […]

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The State of Play on Cryptocurrency Regulation

For legislators and regulators, writing rules for crypto-related assets requires balancing the tension between innovation and entrepreneurship, and between sound markets and investor protection. In previous articles, Bates Research has described […]

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New Congress, New Priorities for Financial Services in 2019

The priorities of the congressional committees that oversee financial services are changing. The contours of that change are beginning to take shape as Democrats take control in the House of […]

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Bates Group’s FINRA 529 Share Class Initiative Support for Firms

Last week, Bates sent a time-sensitive Alert concerning FINRA’s new Share Class Initiative. The initiative is similar to the SEC’s Share Class Initiative that focused on mutual funds in advisory accounts, except […]

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A Continuing Controversy Under Pennsylvania Law: Does the Economic Loss Doctrine Preclude Negligence Claims Against an Insurance Agent or Broker?

By G. Jay Habas, Esquire Insurance errors and omissions claims typically are situations where insurance coverage for a claimed loss is denied or limited and the agent or broker involved in placing […]

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FINRA Highlights Online Platforms, Mark-Up Disclosure & Compliance, RegTech in 2019 Exam Priorities

In his latest annual priorities letter to members, FINRA Chief Executive Officer Robert Cook emphasized that FINRA will be monitoring firm developments “to identify risks and assess their prevalence and impact.” He […]

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HOW BROAD IS THE DISCIPLINARY PROCEEDING COVERAGE GRANT UNDER YOUR BD-RIA PROFESSIONAL LIABILITY INSURANCE POLICY?

Recently, several broker-dealers were served with requests for information from a couple of State Securities Divisions concerning the sale of specific private placements under investigation by the SEC for their […]

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FINRA 2018 Exam Findings Report and Regulatory Update Reminder

On December 7, 2018, FINRA released their annual Exam Findings Report. This is an important tool for Member Firms to leverage when prioritizing their compliance initiatives for 2019. CRC has […]

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Defense Verdict for Insurance Agency and Owner in Professional Negligence Case

In Patrick and Robin Coval v. Hrenko Insurance Agency and Jim Burns, we successfully defended an independent insurance agency and its owner against claims of professional negligence brought by former […]

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SEC Office of Compliance Inspections and Examinations Announces 2019 Examination Priorities

SEC Office of Compliance Inspections and Examinations (OCIE) has announced their exam priorities for the upcoming year. You can read the press release here.

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Does your professional liability policy exclude coverage for claims arising out of multi employer welfare arrangements?

The DOL is proposing to allow advisers to aggregate new and existing clients in the same geographic area into one common 401(k) plan. RIAs and Broker-Dealers, before you green light […]

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Compliance in the Age of Robo Investment Advice

In late August, four registered financial service firms settled SEC charges of misleading retail investors about the efficacy of their quantitative models. The SEC alleged that the firms promoted, offered, […]

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Best Practices When Working with Expert Witnesses

Your relationship with your consulting or testifying expert is a critical component to your case. Mastering best practices when working with an expert will better support your case. We recently […]

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BCS Alert: FINRA’s Susan Schroeder Previews 2019 Enforcement Priorities

At the November 2018 SIFMA C&L New York Regional Seminar, Susan Schroeder, FINRA’s Executive Vice President and Head of Enforcement, discussed some of FINRA’s enforcement priorities heading into 2019. You […]

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Alert: OCIE Recommends IAs Review Compliance Procedures on Cash-Based 3rd-Party Client Solicitation

On October 31st, the SEC Office of Compliance Inspections and Examinations issued a Risk Alert informing investment advisers, investors and other market participants of the most common compliance deficiencies related to the […]

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New York DFS Asserts Itself in National Annuities Standards Debate

In a few weeks, a working group of the National Association of Insurance Commissioners (NAIC) will meet again in a continuing effort to complete a revision to the organization’s Suitability in […]

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Millennial Marketing—Why It’s Vital and How to Shape It

While millennials in general may not be hot prospects, the young adult children of your clients are another matter. If you want to keep managing that money once it is […]

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FINRA Consolidating Exam and Risk Monitoring Programs

On October 1, FINRA announced that it will consolidate its Examination and Risk Monitoring Programs under a single structure. When completed in 2019, the move will incorporate business conduct, financial […]

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