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The weekly news source for investment management legal and compliance professionals

Industry Representatives Seek Changes to SEC’s Proposed Standards of Care

Harmonize rules for investment advisers and broker-dealers. Impose federal licensing and education requirements on advisory firms. Require advisers to provide clients with account statements. Codify advisory firms’ fiduciary duty in a rule. If these possibilities from the SEC’s standards of care package proposed in April give you concern, you can take solace knowing that some major industry heavy hitters share them, and have some other concerns, as well.
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Advisers Bullish About Future Business Prospects

Nearly 80 percent of advisers expect to grow their workforces over the next 12 months. Fifty-seven percent with individual clients think their assets under management will grow over the next three years, while 59 percent with institutional clients expect the same.
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Recent Stories

Proxy Advisory Firms Again Come Under the SEC Spotlight

Advisers’ use of proxy advisory firms, including the degree to which advisers follow proxy advisers’ recommendations when they vote, will again come before the SEC, as part of a planned roundtable on the proxy process this fall. Whether any changes will result is another matter.
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International Memorandums of Understanding: How the SEC Uses Them

It will come as no surprise to many advisory firms to learn that the SEC has written agreements of cooperation, known as memorandums of understanding (MOUs), with dozens of other countries. But what may be less understood is just what those MOUs permit the agency to do, and how the SEC works with foreign countries under the agreements.
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Compliance Officer Latest to Settle AML Charges in Aegis Capital Case

The SEC wants anti-money laundering rules followed – and will go after both firms and individuals at firms that it believes violate those rules. A compliance officer at a dually-registered adviser and broker-dealer learned this the hard way earlier this month after he allegedly failed to file Suspicious Activity Reports on hundreds of transactions.
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OCIE Reveals Most Common Best Execution Deficiencies Found by Examiners

Wouldn’t it be great to know what examiners expect to find – and, as a result, will be looking for – when they visit? In the area of best execution, at least, that is no longer a mystery. The SEC’s Office of Compliance Inspections and Examinations on July 11 released a risk alert containing "the most common deficiencies associated with advisers’ best execution obligations identified by OCIE staff."
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Bill Requiring SEC to Redefine Small Business Moves Forward in Congress

Small business needs may soon play a greater part in SEC deliberations. The House of Representatives on July 17 with an overwhelming bipartisan vote passed a bill that would require the SEC to redefine the definitions of "small business" and "small organization" – and thereby force the agency to better consider the needs of small advisers when formulating new rules or other proposals.
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Cybersecurity Again Top Adviser Compliance Topic

A recently released nationwide survey provides numbers behind what should not be a surprise conclusion for most asset management professionals: Cybersecurity remains far and away the hottest topic among investment advisers, dwarfing other concerns like advertising, custody, privacy and fiduciary duty.
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Trump Gives SEC and Other Agencies More Leeway in Choosing ALJs

President Donald Trump on July 10 allowed the SEC and other agencies that employ administrative law judges greater leeway in just how they find and hire those ALJs. Some industry observers are welcoming the move as an important step to streamline the hiring process, while others are questioning whether politically appointed agency heads will now be able to appoint ALJs that meet their political points of view.
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Expect Kavanaugh to Stay in Line with Supreme Court Securities Rulings

Should federal appeals court Judge Brett Kavanaugh be confirmed as a Supreme Court justice, as many commentators think likely, don’t expect him to rock the boat when it comes to rulings involving the nation’s securities laws. The high court has a long history of deciding securities law cases fairly narrowly, and Kavanaugh is unlikely to push the court one way or the other, legal and securities experts say.
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Third-Party Agreements: Ensure Clients Don’t Get Burned by Conflicts of Interest

Advisers may see agreements with other advisory firms as a way to enhance revenue. While such third-party agreements may on their face bring in additional dollars, advisers should also take precautions that they don’t create conflicts of interest with clients. When that happens, the agreements may bring in more than additional revenue – they may bring in SEC examiners and investigators.
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SEC Adopts Liquidity Classification Changes, Proposes Standard ETF Exemption

The SEC on June 28 took some major steps toward fulfilling its agenda, and in ways that will ease work for advisers and funds. Among them were adopting the changes it proposed this past March to the classification requirements of the Liquidity Risk Management Rule, and a proposal that would allow certain exchange-traded funds to operate without first having to obtain a fund-specific exemptive order.
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