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Ransomware Attack: OCIE Urges Asset Managers to Take Preventive Measures

The ransomware assault playing havoc with organizations globally this month has not gone unnoticed by the SEC. It issued a risk alert on May 17 urging advisers, investment companies and broker-dealers to not only keep current with the latest developments about the ransomware attack, but conduct cyber-risk assessments, penetration tests, and ensure they are maintaining their IT systems.
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Recent Stories

House Bill Would Kill DOL Fiduciary Rule, Reform SEC

A bill that passed a key committee in the U.S. House of Representatives this month and may be voted on by the full House in the near future would repeal the Department of Labor’s Fiduciary Rule. It would require the DOL to wait before reintroducing new fiduciary legislation until the SEC adopts a uniform definition of "fiduciary" for all. Whatever the DOL then adopts would have to fit within the SEC definition.
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New SEC Chairman Clayton Faces Questions and Expectations

Now that Jay Clayton has been sworn in as the new chairman of the SEC, the question is what he will do. Will he meet expectations, based on his Wall Street background in mergers and acquisitions and focus on capital formation? Will he surprise everyone by continuing the enforcement practices of his predecessor? What will his priorities be as he determines where to spend the agency’s limited budget?
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Follow These Best Practices on the Road to Best Execution

The SEC does not require that advisers achieve best execution when managing transactions for their clients. What it requires is that advisers seek best execution, which it sees as part of their fiduciary duty. That clarification in no way lessens the burden on advisers. If the agency finds an adviser is not seeking best execution, you can expect its enforcement foot to come down hard.
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Examiners Coming? Here’s What Not to Do

It’s stressful enough to go through an SEC examination, without adding fuel to the fire by doing things that only make deficiencies or a referral to the Division of Enforcement more likely. Yet it is not uncommon for advisory firm employees to do just that, with actions ranging from merely embarrassing to self-incriminating. Guard against that danger by making sure your exam preparations cover not only how employees should interact with examiners, but how they shouldn’t.
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IAA: Fiduciary Rule Definition Should Not Include Pre-Contract and Sales Discussions

Does the Department of Labor just not get it? Investment advisers are already fiduciaries, both under the Advisers Act and under ERISA – yet the DOL’s Fiduciary Rule, as currently written, requires that advisers be fiduciaries not only after client contracts are signed, but during pre-contract and sales discussions. That is the view of the Investment Adviser Association, which, in an April 17 comment letter to the Department, makes clear that it wants that definition changed.
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Too Much Cybersecurity May Not Be a Good Thing

Cybersecurity is regularly ranked a top priority by advisory firms and other financial institutions. Media outlets report on companies that get hacked. The SEC issues guidance and also takes enforcement actions against advisers for not protecting client information. Cyber consultants and systems vendors find plenty of work, as advisers cannot seem to spend enough money to assure clients and potential clients that their confidential information is safe. So can a firm provide too much cybersecurity? You bet it can.
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