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The weekly news source for investment management legal and compliance professionals

Topic: Broker-dealers

Advisers Paid by More than One Party in a Deal are Likely to Draw SEC Attention

August 16, 2019
Word to the wise: When in a deal, represent just one of the players. Advisers representing more than one party in a transaction may think they have a sweet arrangement, but it is more likely they catch the eye of the SEC Division of Enforcement. It’s not worth it.

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SEC Staff Urges Market Participants to Begin Transition from LIBOR

July 19, 2019
The end of 2021 may still seem some far off, but in terms of advisers and other market participants that will need to transition from the London Interbank Offered Rate (LIBOR), it may be getting uncomfortably close. The SEC staff in July issued a statement urging all market participants using LIBOR to begin the process of moving away.

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Clayton Rebuts Critics of SEC Standards of Conduct Package

July 12, 2019
The SEC is standing its ground on Regulation Best Interest, the investment adviser fiduciary interpretation, Form CRS and the agency’s interpretation of the "solely incidental" prong under the Advisers Act. Much of the criticism, agency Chairman Jay Clayton said in a strongly-worded July 8 Boston speech, is "false, misleading, and, unfortunately, in some cases, is simply policy preferences disguised as legal critiques."

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House Amendment Prohibits SEC from Acting on Standards of Conduct

June 28, 2019
Every day is different. Less than a month ago, the SEC adopted the components of its Standards of Conduct Package – Regulation Best Interest, Form CRS, an interpretation of an adviser’s fiduciary duty, and an interpretation of what constitutes "solely incidental" advice provided by broker-dealers. On June 26, the U.S. House of Representatives passed an amendment to an appropriations bill that would prevent the SEC from using its funds to "implement, administer, enforce or publicize" those same rules and interpretations.

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SEC Adopts Form CRS, Regulation Best Interest, Adviser Fiduciary and ‘Solely Incidental’ Interpretations

June 7, 2019
The SEC on June 5, with one commissioner dissenting, adopted the much-discussed Standards of Care package, including Form CRS, Regulation Best Interest, a new Commission interpretation of adviser fiduciary duty, and an interpretation relating to when a broker-dealer may give advice to a client without being considered an adviser.

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SEC Expected to Vote on Standards of Conduct Package Wednesday

May 31, 2019
The long wait may finally be over. The SEC on June 5 will conduct an open public meeting to consider whether it will adopt new and amended rules and interpretations that have been a source of contention within the asset management community for years: the standards of conduct package.

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Clayton Pledges to Complete Standards of Conduct Package for Advisers and Brokers

April 26, 2019
Without getting into the specifics of what they will contain, SEC Chairman Jay Clayton this month pledged to complete what has become a somewhat controversial set of proposals: the agency’s standards of conduct for advisers and broker-dealers.

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Blass: SEC Not Ready to Make Research-Related Exemption Permanent

March 22, 2019
Those looking to the SEC to extend or make permanent a temporary exemption tied to broker-dealers unbundling research costs from execution costs did not hear the best news at a recent industry conference. That’s when agency Division of Investment Management Director Dalia Blass told attendees that the Investment Management staff is not yet prepared to recommend such a course to the Commission.

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Soft Dollars and MiFID II: SEC Ponders Post-Relief Course of Action

March 1, 2019
The asset management industry wants to hear from the SEC, while the SEC wants to hear more from the asset management industry. The issue is what the agency will ultimately decide on the question of how broker-dealer research costs should be paid in light of the European Union’s directive requiring that those costs be unbundled from broker-dealer execution costs.

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2018 in Review: Standards of Care, Cryptocurrencies, SEC Changes and More

December 21, 2018
With the past year almost over and a new one about to begin, it’s time to take a look back and take stock of what was accomplished in 2018 and what issues remain. The past 12 months found major developments involving standards of care for advisers and broker-dealers, the emergence of an SEC strategy regarding cryptocurrencies, a full year in office for a new SEC team and philosophy, the rising challenges of cybersecurity, and more.

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Adviser Association Finds Recent Testing of Proposed Form CRS ‘Flawed’

December 7, 2018
The Investment Adviser Association is not happy with the recent testing of the SEC’s proposed Form CRS. In a December 6 statement, the IAA said that the testing of the relationship summary form, conducted by the Rand Corporation at the agency’s behest, “is substantially flawed and does not provide a reasonable basis for adopting Form CRS as proposed.”

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Form CRS: Investor Survey Finds Overall Satisfaction, but Improvements Needed

November 16, 2018
Form CRS, like a number of the SEC’s standards of care proposals, has run into significant industry criticism, but the Commission may take some satisfaction from a recent investor survey finding that nearly 90 percent of respondents said that the form would help them make more informed decisions about investment accounts and services.

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Study from AARP and Other Groups Finds SEC’s Proposed Form CRS Confusing

October 5, 2018
The SEC proposed Form Customer Relationship Summary to make the differences between advisers and broker-dealers easier for retail investors to understand – but it may not be passing that test. Three major consumer groups – the AARP, the Financial Planning Coalition and the Consumer Federation of America – in their comment letter to the SEC revealed that an independent study of investors “indicate the need for the Commission to revise and retest the content, language and format of the CRS.”

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Clayton and Blass Defend and Seek Input on Proposed Standards of Conduct

May 4, 2018
Proposing new standards of conduct may turn out to have been the easy part. The SEC now has to persuade the asset management community to buy into the proposals.

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SEC Proposes Broker-Dealer Best Interest Standard, Adviser Fiduciary Interpretation

April 20, 2018
The SEC on April 18 laid down its initial markers on the subject of standards of conduct for both broker-dealers and advisers – while making clear that it expects and welcomes changes.

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SEC May Propose Its Own Fiduciary Rule by Second Quarter

January 12, 2018
It’s an ambitious target, but the SEC is reportedly planning to propose a Fiduciary Rule that would cover all brokers – not just those selling retirement accounts – by the second quarter of this year. That could mean that there will be a proposed rule in about 10 weeks, but it could also mean in about five months, depending on whether "by the second quarter" means the beginning or the end of that quarter.

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Adviser and Broker-Dealer Issues Play Out in Latest Share Class Settlement

January 5, 2018
The SEC reached a settlement with a dually-registered advisory firm / broker-dealer that involves the issue of recommending higher-cost share classes of securities to clients when lower-cost share-classes of securities are available. This latest share-class settlement has an added wrinkle in that the firm may have had a conflict of interest because, in its capacity as a broker-dealer, it allegedly received the additional service fee from the purchase of the higher-cost shares.

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Advisers: Beware of Loans Provided by Friendly Broker-Dealers

October 20, 2017
Three settlements issued on the same day concerning the same alleged violation: accepting loans with favorable terms from broker-dealers in exchange for sending business to those same broker-dealers. Sounds like the SEC is sending a message.

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Associations and Firms Want SEC/DOL Coordination on Standard of Conduct

August 18, 2017
More than 90 comments have been received by the SEC to date in response to agency chairman Jay Clayton’s June 1 call for comments in regard to standards of conduct for investment advisers and broker-dealers. Among the trends emerging from the comments received to date is that the SEC, in coordination with the Department of Labor, create a separate standard of conduct for broker-dealers.

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SEC Seeks Updated Assessment on Need for Uniform Standard of Conduct

June 9, 2017
New SEC chairman Jay Clayton dipped his and the Commission’s toe back into the waters of a possible uniform Fiduciary Rule for advisers and broker-dealers. The end result may be a uniform standard of conduct or something else.

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