The Expert's Examiner
HEARD THROUGH THE REGULATORY GRAPEVINE, COMMENT LETTERS, & SPEECHESSeptember 4, 2020
COVID-19 REGULATORY AND LITIGATION UPDATES With this virus on everyone’s mind below are a few of the most recent regulatory and operational updates:
- SEC COVID-19 COMPLIANCE RISK REVIEW On August 12, 2020 the SEC’s Office of Compliance Inspections and Examinations (OCIE) released COVID-19 Compliance and Risk Considerations for Broker-Dealers and Investment Advisors. READ MORE
- SEC COVID-19 LITIGATION DEVELOPMENTS
- SEC STATEMENTS REGARDING COVID-19
- Statement from SEC Chairman Jay Clayton and Rebecca Olson, Director, Office of Municipal Securities: The Importance of Disclosure for our Municipal Markets (May 4, 2020), available at https://www.sec.gov/news/public-statement/statement-clayton-olsen-2020-05-04;
- Division of Corporation Finance Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns (Apr. 10, 2020), available at https://www.sec.gov/corpfin/announcement/form-144-paper-filings-email-option;
- Statement of Sagar Teotia, Chief Accountant, The Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 (Apr. 3, 2010), available at https://www.sec.gov/news/public-statement/statement-teotia-financial-reporting-covid-19-2020-04-03.
- Statement from Stephanie Avakian and Steven Peikin, Co-Directors of the SEC’s Division of Enforcement, Regarding Market Integrity (Mar. 23, 2020), available at https://www.sec.gov/news/public-statement/statement-enforcement-co-directors-market-integrity.
- Investor Alert: Frauds Targeting Main Street Investors (May 4, 2020), available at https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_frauds.
- FINRA HEARING AND DISPUTE RESOLUTION COVID-19 OPERATIONAL STATUS Due to the COVID-19 outbreak, most FINRA staff are working remotely but FINRA remains operational.
- PROPOSAL TO PERMIT OHO AND NAC HEARINGS REMOTELY On August 31, 2020 FINRA proposed a rule change to temporarily amend FINRA Rule to permit certain hearings to be conducted by video conference. READ MORE
- FINRA ARBITRATION & OHO HEARINGS FINRA is postponing all in-person arbitration and mediation proceedings. READ MORE
- FINRA CORONAVIRUS IMPACT ON ARBITRATION & MEDIATION HEARINGS FINRA DRS has decided to administratively postpone all in-person arbitration and mediation proceedings scheduled through December 4, 2020. READ MORE
SEC UPDATE ON THE DEFINITION OF ACCREDITED INVESTORS On August 26, 2020, the U.S. Securities and Exchange Commission (“SEC”) added new categories of individuals to the definition of “accredited investor” and “qualified institutional buyer”:
- The first added category allows a natural person to qualify as an accredited investor, regardless of net income or net worth, if the person holds certain professional certifications, designations or credentials that arise out of an examination administered by a self-regulatory organization or other industry body.
- The second added category allows knowledgeable employees to qualify as accredited investors for purposes of investing in the funds sponsored by their employers. READ MORE
LIBOR PHASE-OUT FINRA reminds firms to evaluate their exposure to LIBOR. READ MORE
SEC REGULATION BEST INTEREST AND FORM CRS: WHAT YOU STILL MAY NEED TO KNOW While the compliance deadline for compliance with Reg BI and Form CRD have passed, here are a few suggestions for members to get up to speed on the topic:
- SEC’S REG BI RESOURCE PAGE
- FINRA AMENDS ITS SUITANILITY RULE On June 19, 2020 FINRA Amends Its Suitability, Non-Cash Compensation and Capital Acquisition Broker (CAB) Rules in Response to Regulation Best Interest
- SEC’S OCIE’S EXPECTATIONS FOR FIRM’S COMPLIANCE WITH REG BI On April 7, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released Risk Alerts for Reg BI and Form CRS. These Risk Alerts set forth OCIE’s expectations for firm’s compliance with Reg BI and Form CRS.
- FINRA’S REG BI PREPAREDNESS REPORT This report presents practices FINRA observed during is late 2019 review of firm’s to assess their preparedness for Reg BI and Form CRS.
- DOL FIDUCIARY RULE 3.0 In June, the DOL released version 3.0 of its fiduciary proposal, which formally reinstated the investment advice fiduciary definition in effect since 1975 accompanied by new interpretations that extended its reach in the rollover setting, and proposed a new exemption for conflicted investment advice and principal transactions.
