Our firm was one of the principal sponsors of IR Global’s 2022 Annual Conference held in the exciting city of Barcelona last month. Partners Erwin Shustak and Paul Reynolds attended the conference, along with 350 other IR Global members from around the world. The theme of this year’s conference was “Shaping the Future” and speakers and discussion focused on how the pandemic has changed work habits, offices, global business, and impacted other aspects of our professional and business lives.

Each year registered investment advisers (“RIAs”) must undertake a range of compliance tasks and obligations. While tasks can vary dependent upon the operations and registrations of the firm, all RIAs should examine their compliance program no less than annually.

As you know, in 2021, the SEC’s new Marketing Rule became effective with an outside compliance date of November 4, 2022. The new Marketing Rule contains numerous updates to the rules relating to how SEC registered investment advisers (“RIAs”) will need to conduct marketing and advertising activities.

On the tenth anniversary of the 2012 “JOBS Act,” the Senate Banking Committee has proposed a new legislation, the “JOBS Act 4.0.” The new Act could potentially adjust SEC regulations to increase access to high-growth investment opportunities for everyday investors and reduce the costs of raising capital for small businesses. It also could have repercussions for licensed professionals operating pooled investment vehicles or otherwise conducting private investments.

In the wake of the COVID-19 pandemic, California enacted Assembly Bill 85 (“AB 85”) [1] during the 2020-2021 legislative session to make certain changes to the California Revenue Taxation Code[2]. Among those changes was the elimination of the first-year annual tax for Limited Liability Companies (“LLCs”), Limited Liability Partnerships (“LLPs”), and Limited Partnerships (“LPs”), that organize, register, or file with the Secretary of State after January 1, 2021 and before January 1, 2024.

Under both Regulation Best Interest (“Reg BI”) and the Investment Adviser fiduciary standard, firms and financial professionals should provide recommendations only when they have a “reasonable basis to believe that the recommendation or advice is in the retail investor’s best interest.” According to a recent SEC staff bulletin, complying with Reg BI and the fiduciary standard requires broker-dealers and investment advisers to identify and disclose conflicts of interest—particularly those tied to adviser compensation. The common practice of “checking a box” on forms, which generically disclose conflicts to clients, is not enough. [...]

As most of us know, the SEC has remained active during the “COVID Era” and has been continuously examining, investigating, and enforcing the Investment Advisers Act of 1940, as amended (“Advisers Act”). A primary objective of the SEC's Division of Examinations' oversight activities is to determine whether registered investment advisers ("RIAs") are complying with regulatory requirements [...]

Five years ago, Merrill Lynch, Morgan Stanley, UBS, and other large broker-dealers announced sweeping changes to their compensation policies, including a move away from the large, up-front recruiting “transition” bonuses that dominated the recruiting space over the prior decade. Those “bonuses,” often paid in the form of forgivable promissory notes with back- and front-end payouts regularly exceeding $1-2 million, resulted in firms holding billions of dollars in outstanding loans on their balance sheets. [...]

In January 2022, GWG Holdings Inc., promoter of its high-yield bond product GWG L Bonds, reportedly missed $13.6 million in payments to investors on its GWG L bond series. Those bonds raised money to finance the purchase of life insurance policies from policy holders on the secondary market and were offered to investors primarily through independent broker-dealers, including Emerson Equity. [...]

Nondisclosure and confidentiality provisions have become common in employment separation agreements as more people have been speaking up about sexual harassment and discrimination they have faced in the workplace. [...]

Changes to broker expungements in arbitration seemed imminent when FINRA first proposed new rule changes of the expungement process to the SEC for approval. [...]

The Financial Industry Regulatory Authority (“FINRA”) recently announced important changes to its rules which deal with continuing education for registered persons. Updates to FINRA Rules 1210 and 1240 will create the new Maintaining Qualifications Program (“MQP”) [...]

Recent developments in several high-profile, Ponzi scheme cases have renewed questions about the extent of the fallout from investment fraud prosecutions and the importance of due diligence. [...]

On November 18, 2021, the U.S. Securities and Exchange Commission proposed updates to the Securities Exchange Act of 1934 rules for (i) electronic recordkeeping and (ii) prompt production of records. These updates apply to broker-dealers, security-based swap dealers, and major security-based swap participants. [...]

On January 1, 2022, certain US States will begin imposing new continuing education (“CE”) requirements for Investment Adviser Representatives (“IARs”) registered and doing business in those states. [...]

As discussed more fully in our earlier article, the Securities Exchange Commission (“SEC”) adopted its new Marketing Rule on December 22, 2020. The new Marketing Rule effectively merged two sets of rules to create a new paradigm that modernizes adviser marketing. [...]

On November 10, 20201, the SEC’s Division of Examinations issued a Risk Alert relating to investment adviser’s fee calculations. The deficiencies discussed in the Risk Alert stem from a nationwide SEC exam initiative that focused on fees charged to retail clients. [...]

At the end of every fiscal year, U.S. registered investment advisers (“RIAs”) have regulatory compliance tasks and obligations, which range from performing an annual review of the RIA’s compliance function to submitting annual update filings to the U.S. Securities and Exchange Commission (“SEC”) or state regulators. [...]

The Corporate Transparency Act (“CTA”) will soon require U.S. domiciled or active entities to report beneficial ownership information to the U.S. Department of the Treasury’s (“the Treasury”) Financial Crimes Enforcement Network (“FinCEN”) [...]

FINRA proposed a change to its expungement rules in the Fall of 2020, seeking to alter certain aspects of the expungement process, including substantially shortening the time limit for a registered representative to seek expungement of customer-related disclosures and allowing expungement to be granted only by a three-person panel (previously a single arbitrator could order expungement). [...]