The deadline by which SEC-registered investment advisers and SEC-registered broker-dealers are required to file Form CRS with the SEC and deliver the Form to retail investors is quickly approaching. Firms registered with the SEC prior to June 30, 2020, must file the Form with the SEC no later than June 30, 2020. In addition, firms are also required to deliver their Form CRS to new and prospective retail investors. For retail investors who already have a brokerage or advisory account, Form CRS must be provided by July 30, 2020.
On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers.
This is the fourth in a series of articles describing the SEC’s rulemaking package. This article addresses the SEC’s Interpretation of the “Solely Incidental” Broker-Dealer Exclusion. That exclusion allows broker-dealers to provide certain advisory services without becoming subject to regulation as investment advisers under the Advisers Act, as long as those services are “solely incidental” to the broker-dealers’ core business. The SEC’s new interpretation of this exclusion provides some helpful guidance for broker-dealers and dually-registered firms.
On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers. These rules include a new set of disclosure requirements to address retail investor confusion over brokerage and investment advisory services.
This is the third in a series of articles describing the SEC’s rulemaking package. This article provides an overview of the Form CRS – Relationship Summary portion of the package.
On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that applies to investment advisers and broker-dealers. In a series of four articles, Spencer Fane LLP outlines the SEC’s rulemaking package. Our first article summarized “Regulation Best Interest” a new standard of conduct governing broker-dealers. In this second article, we describe the SEC’s interpretation of the standard of conduct that applies to investment advisers when they engage with their clients.
On June 5, 2019, the Securities and Exchange Commission adopted a rulemaking package that is applicable to investment advisers and broker-dealers. The package includes two final rules and two interpretations – Regulation Best Interest, Investment Adviser Standard of Conduct Interpretation, Form CRS – Relationship Summary, and Solely Incidental Broker-Dealer Exclusion Interpretation. The Regulation Best Interest and Form CRS requirements are effective 60 days after they are published in the Federal Register, with a transition period for compliance that ends on June 30, 2020. The SEC’s interpretations are effective immediately upon publication in the Federal Register. In a series of four articles, Spencer Fane LLP outlines the SEC’s rulemaking package. This first article describes the Regulation Best Interest portion of the SEC’s package.
In a significant blow to the Department of Labor’s controversial regulation re-defining what constitutes an investment-advice fiduciary, a split three-judge panel of the Fifth Circuit Court of Appeals ruled on March 15 that the DOL exceeded its authority when creating the rule. The 2-1 decision of the appellate court strikes down the regulation and its associated prohibited transaction exemptions in their entirety. (Chamber of Commerce v. U.S. Dept. of Labor (5th Cir. March 15, 2018)). In its wake, the court’s decision leaves even more of the confusion that has plagued the DOL’s 2016 rulemaking.
The Securities and Exchange Commission recently announced a temporary program for investment advisers who may have inadequately disclosed potential conflicts of interest related to their selection or recommendation of mutual fund share classes. Participation in the program, however, is not without its drawbacks.
On November 29, 2017, the Department of Labor granted an extension of the transition period for the Fiduciary Rule’s Best Interest Contact Exemption and Principal Transaction Exemption, and delayed the applicability date of the amendments to Prohibited Transaction Exemption 84-24. The new transition period will end on July 1, 2019, rather than January 1, 2018. The Department also extended the temporary enforcement policy in Field Assistance Bulletin 2017-02 to July 1, 2019. Thus, financial institutions and advisers impacted by the Fiduciary Rule and related exemptions remain subject to the same requirements as they have been since June 9, 2017, when the Fiduciary Rule and the Impartial Conduct Standards became applicable.
The Federal Bureau of Investigation has cautioned organizations, regardless of industry, that cyber-attacks continue to increase and evolve. Cyber-attacks often target digital files containing sensitive and proprietary data. Thus, the operational, financial and reputational impact caused by cyber-attacks to an organization, either directly or through its service providers, can be significant.
To illustrate the widespread acknowledgement across industries of the importance of cybersecurity, this article describes: 1) best practices identified by the Securities and Exchange Commission Office of Compliance Inspections and Examinations for designing cybersecurity programs, and 2) guidance issued by the Department of Health and Human Services Office for Civil Rights under the Health Insurance Portability and Accountability Act for responding to cyber-attacks.
According to U.S. Labor Secretary Alexander Acosta, the Department of Labor’s Fiduciary Rule will become effective on June 9th. As discussed in our May 9th article, the Rule’s expanded definition of “fiduciary” will apply, and advisers and financial institutions providing investment advice as fiduciaries must comply with the Rule’s “impartial conduct” standards, beginning on June 9, 2017. At this time, the full scope of the Fiduciary Rule and its related prohibited transaction exemptions will be applicable on January 1, 2018.
For investment advisers and financial institutions, the countdown to compliance with the Department of Labor’s new “conflict of interest” rule ends on June 9, 2017. The Department of Labor (“DOL”) issued a final rule on April 7, 2017, that delays the original applicability date of its conflict of interest regulation (the “Fiduciary Rule”) and its related prohibited transaction exemptions for 60 days, creating a “Transition Period” that starts on June 9, 2017, and ends on December 31, 2017.
The increased popularity of automated digital investment advisory programs (often called “robo-advisers”) has drawn the attention of the Securities and Exchange Commission (“SEC”). On February 23, 2017, the SEC’s Division of Investment Management issued Guidance Update No. 2017-02 (the “Update”). That Update provides guidance to robo-advisers as they seek to satisfy their disclosure, suitability, and compliance obligations under the Investment Advisers Act of 1940 (“Advisers Act”). On the same day, the SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin to educate investors about robo-adviser programs.