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SmartRIA - SmartRIA Compliance Software

SEC Policy Shifts Include Potential Admissions of Wrongdoing

December 2, 2021 by Mac Bartine Leave a Comment

Gurbir Grewal, the new director of the Division of Enforcement for the SEC, signaled several potential changes in the SEC’s enforcement priorities under his new leadership. His division would “recommend aggressive use” of various remedies, notably, seeking admissions of wrongdoing as a condition of settlement in certain instances. Some specific penalties include: Barring violators from serving as officers or directors of public companies Restrictions on stock trading or participating in securities offerings Imposing undertakings on corporate defendants to prevent future

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Filed Under: Compliance Alert

Alert: NASAA Annual Enforcement Report Released

October 25, 2021 by Mac Bartine Leave a Comment

The North American Securities Administrators Association (NASAA) published its annual enforcement report on Sept. 29. In the report, state securities regulators conducted an increasing number of investigations and enforcement actions related to digital assets, precious metals and other commodities, internet and social media schemes, and self-directed individual retirement accounts. In its report, based on 2020 data, NASAA divulged that state securities regulators opened 5,501 new investigations and continued to work on 2,572 ongoing investigations. Those 8,073 investigations resulted in 2,202

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Filed Under: Compliance Alert Tagged With: compliance, Regulation

SEC Scrutinizing RIAs on 12b-1 Fees, Revenue Sharing, and Wrap Fees

October 1, 2021 by Mac Bartine Leave a Comment

The SEC recently took enforcement actions against three Registered Investment Advisers (RIAs) that breached their fiduciary duty to advisory clients. In particular, the SEC took disciplinary action against RIAs over issues related to 12b-1 fees, revenue sharing arrangements and wrap fee programs. In brief: The SEC found that one of the firms failed to report compensation from 12b-1 fees and revenue sharing. The firm agreed to a $2.4 million settlement. The two other RIAs avoided paying transaction fees in wrap

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Filed Under: Compliance Alert, Compliance Errors, Culture of Compliance Tagged With: compliance, Regulation, SEC

SEC Findings: Wrap Fee Initiative

August 21, 2021 by Mac Bartine Leave a Comment

The SEC has been watching wrap fee programs for quite a while. From 2017-19, the SEC’s annual examination priorities named wrap fee programs as putting investors at risk. The SEC’s Division of Examinations (Division) released a July 21, 2021 Risk Alert with guidance from examiners during its Wrap Fee Initiative. The Risk Alert, “Observations from Examinations of Investment Advisers Managing Client Accounts That Participate In Wrap Fee Programs,” contains compliance guidance for Registered Investment Advisers (RIAs) that recommend wrap fee

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Filed Under: Compliance Alert, Culture of Compliance, General Tagged With: compliance, compliance software, Regulation, SEC

SEC Charges 21 RIAs for Form CRS Filing and Delivery Failures

August 4, 2021 by Mac Bartine Leave a Comment

On July 26, 2021, the SEC announced that 21 Registered Investment Advisers (RIAs) settled charges alleging that they failed to file and deliver their client relationship summaries, known as Form CRS, in a timely manner. Form CRS is also frequently referred to as Form ADV Part 3. Six broker-dealers were also accused of not filing or delivering their client relationship summaries. On June 5, 2019, the SEC adopted Form CRS and required SEC-registered investment advisers and SEC-registered broker-dealers to file

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Filed Under: Compliance Alert, Compliance Errors, General, News

Fiduciary Duty Is Broader Than Many Think

May 14, 2021 by Mac Bartine Leave a Comment

A Registered Investment Adviser’s (RIA) and its Investment Adviser Representatives’ (IARs) obligations as fiduciaries are quite extensive. Even seasoned Investment Advisers may not fully understand their fiduciary obligations. Fiduciary duty encompasses much more than just the duty to be honest and avoid negligence. Advisers also owe an affirmative duty of loyalty, which means RIAs and IARs must always put their clients’ interests ahead of their own. The fiduciary duty owed by RIAs and IARs includes all of the following obligations:

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Filed Under: Audit, Compliance Alert, Compliance Errors, Culture of Compliance

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2021 SEC Exam Priorities

March 9, 2021 by Mac Bartine Leave a Comment

On March 3, 2021, the SEC’s Division of Examinations (Division) published its examination priorities for the year. These priorities are the driving force behind the Division’s examinations but are not exhaustive. Examiners may focus on other issues during an examination. The Division, which was previously called the Office of Compliance Inspections and Examinations, circulates its yearly priorities to alert Registered Investment Advisers (RIAs) and broker-dealers regarding the risks that firms should address. The Division’s goal is to prevent harm to

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Filed Under: Audit, Compliance Alert, Cybersecurity, News Tagged With: audit, Audit Prep, audit-ready, compliance

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New York Regulatory Update

February 13, 2021 by Mac Bartine Leave a Comment

The New York State Department of Law (the “Department”) recently adopted new regulations that went into effect on February 1, 2021. These new regulations govern the registration and examination requirements for investment adviser representatives domiciled in New York, or doing business with New York clients. Previously, New York did not require registration of state and SEC investment adviser representatives. The Department is allowing for an implementation period for current New York domiciled representatives to apply for registration by August 31,

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Filed Under: Compliance Alert, General, News

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What Can RIAs Learn About the SEC’s Ponzi Scheme Charges?

February 12, 2021 by Mac Bartine Leave a Comment

On February 4, 2021, the SEC charged three individuals and their affiliated entities with running an alleged Ponzi scheme that raised over $1.7 billion from securities issued by an asset management firm and Registered Investment Adviser (RIA). Approximately 4,000 of the 17,000 retail investors defrauded were seniors. According to the SEC’s complaint, the defendants told investors that they would receive distributions from the profits of the portfolio companies. In fact, many of the payments came from the investors’ own funds.

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Filed Under: Compliance Alert, News

RIAs Can Expect Big Changes with SEC’s New Marketing Rule

December 29, 2020 by Mac Bartine Leave a Comment

Guest post by Ara Jabrayan On December 22, 2020, the SEC enacted the new Marketing Rule, which will have an enormous impact on Registered Investment Advisers (RIAs). The new rule will replace the prior Advertising Rule, as well as the Cash Solicitation Rule. The SEC also amended Form ADV and the Books and Records Rule to implement changes resulting from the Marketing Rule. The SEC enacted the new Marketing Rule to protect investors from misleading advertisements and solicitations, while accommodating

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Filed Under: Compliance Alert, Culture of Compliance, General, News

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