Displaying items by tag: enforcement

Wednesday, 13 October 2021 21:27

Reg BI May Get New Addition from SEC

(Washington)

Advisors have been paying very close attention to Reg BI. This is especially true because the Biden administration looks poised to make a number of changes to the rule, including defining “fiduciary” and bolstering enforcement. However, that appears to not be all as the SEC may be set to make an addition to Reg BI: a new section covering the gamification of trading. The SEC’s Investor Advocate, Rick Fleming, says that “N]ow it seems that most if not all of the on-line discount brokers are influencing investor behavior with digital engagement practices, which further blurs the line between providing investment advice and traditional brokerage service … At some point, if the Commission fails to brighten the distinction between advisors and brokers, it will make little sense to regulate the two with such distinct regulatory models.”.


FINSUM: Critical changes to definitions, much heavier enforcement looming, and now a pandora’s box on gamification. And this might be just the beginning.

Published in Wealth Management
Thursday, 07 October 2021 20:51

SEC Warns of Harsher Reg BI Enforcement

(Washington)

Every scary dream about regulations that broker-dealers have had since Biden got elected might be coming true, at least based on new comments out of the SEC. According to Gurbir Grewal, “We must design penalties that actually deter and reduce violations, and are not seen as an acceptable cost of doing business”. Grewal is the former Attorney General of New Jersey who is now the Director of the Division of Enforcement of the SEC. He added, “[T]o achieve the intended deterrent effect, it may be appropriate to impose more significant penalties for comparable behavior over time … Doing so will make it harder for market participants to simply ‘price in’ the potential costs of a violation”.


FINSUM: All signs point to things getting much tougher over the next couple years.

Published in Wealth Management
Wednesday, 29 September 2021 17:57

SEC Puts Out Big Warning to Advisors on Reg BI

(Washington)

The SEC just put out a shot across the bow of brokerage firms as it regards Reg BI. Firms and industry attorneys have been expecting the SEC to ratchet up enforcement over the coming year as the agency starts to bring Biden’s priorities into reality. However, the SEC made it very clear this week, telling firms that it is not enough to tell reps what Reg BI says, but educate them with examples of how to meet Reg BI’s requirements. Investment News summarized the SEC’s comments this way, saying “Financial firms that are failing to comply with the broker standard of conduct aren’t aligning their internal controls to meet its requirements”. The SEC is now checking to see if firms have set up a robust Reg BI compliance program, and if not, they will be in hot water”. According to Corey Schuster, assistant director of Division of Enforcement’s asset management unit, “firms may want to consider: Have you done a deep dive on conflicts? … Have you examined your disclosures regarding conflicts? And is there a need to mitigate certain conflicts of interest?”.


FINSUM: The SEC is gearing up to drop the hammer on Reg BI enforcement, which has long been expected. However, the reality of heavier enforcement and the specifics of how it is executed are very different than seemingly far-off expectations.

Published in Wealth Management
Thursday, 19 August 2021 18:25

SEC Readies Major New Reg BI Crackdown

(Washington)

Advisors better get ready because the Trumpian era of relatively loose SEC enforcement is about to come to an abrupt end. The SEC has just appointed a new enforcement chief and his record says everything about where the Commission is heading. Gurbir Grewal, former State Attorney General for New Jersey has been appointed as the SEC’s top enforcer. Very notably, Grewal proactively proposed a uniform fiduciary standard in his home state of New Jersey, which speaks volumes about his views.


FINSUM: So the bottom line here is that this is the clearest sign yet that the SEC seems likely to rather dramatically scale up its enforcement. Many are now expecting that the SEC will define “best interest” and then employ Grewal as a strongman on enforcement.

Published in Wealth Management

(Washington)

The moment that brokers have been dreading for months has finally arrived…see the full story on our partner Magnifi’s site

Published in Wealth Management
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