News in Personal Trading Software & Compliance Monitoring Tools

What’s in the news: the top five compliance articles for September 17 – September 30, 2022

Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.

Stay up-to-date and in the know on everything happening in the compliance world as of Sept. 30, 2022.

Top five compliance articles

SEC published risk alert highlighting focus on new Marketing Rule – Author Paul Hastings

The Securities and Exchange Commission’s (SEC) Division of Examinations published a risk alert. In it, the regulator announced its intention to conduct examinations focused on compliance with the new Marketing Rule. The SEC noted its focus on:

  • Investment advisors have adopted and implemented written policies and procedures which are reasonably designed to prevent violations of the new marketing rule.
  • Investment advisors have a reasonable basis for believing they will be able to substantiate material statements of fact in their firm’s advertisements.
  • Firms meet performance advertising requirements.
  • Firms maintain appropriate books and records.

The SEC’s goal with these examinations is to encourage firms to familiarize themselves with the new Marketing Rule and ensure they are within compliance.

NASAA selects Andrew Hartnett as new president – Author Melanie Waddell

The North American Securities Administrators Association (NASAA) announced Deputy Administrator for Securities for the Iowa Insurance Division Andrew Hartnett has began a one-year term as NASAA’s new president. He has served in various regulator capacities, including as Iowa’s deputy administrator for securities and member of the NASAA Board of Directors since 2019, where he served two years as treasurer and has twice chaired NASAA’s Enforcement Section Committee.

 “I’m honored and humbled to have this opportunity, and I eagerly look forward to the year ahead and working with my colleagues on the pocketbook issues that are so important to main street investors,” Said Hartnett.

State regulators see decline in enforcement actions – Author Mark Schoeff Jr.

 NASAA released its annual enforcement report. It indicates regulators conducted 1,661 enforcement actions in 2021, whereas they conducted 2,202 in 2020. However, at a recent annual conference, state regulators said the number of enforcement actions declined because of courts being closed and traditional investigative techniques, such as in-person depositions, being curbed due to the COVID-19 pandemic. Despite the decline, it collected $145 million in fines.

State regulators say FINRA expungement reform falls short – Author Mark Schoeff Jr.

Last month, the Financial Industry Regulatory Authority (FINRA) filed a proposal with the SEC which would implement changes to the expunge process. These changes include establishing a special roster of arbitrators to hear expungement requests, requiring a unanimous vote by arbitrators to approve expungement and allowing state regulators to participate in expungement hearings. Perhaps most controversial, the proposal would allow brokers to clear customer disputes from their record.

NASAA is not yet on board with the proposed changed. The regulator is concerned there aren’t preventions in place to keep brokers from abusing the process and clearing disputes from their record which should remain.

 “That is a step. We’re looking forward to continuing to work with FINRA to come up with a better solution to the expungement problem. We’ll see what happens down the road,” said Maryland Securities Commissioner Melanie Senter Lubin.

The wrinkles with the SEC’s third-party assurance for emissions – Author Emile Hallez

The SEC’s proposed rule to make public companies report their climate risk is getting mixed reception from the investing world. For instance, traditional firms and industry groups have asked the regulator to soften the requirements the rule outlines, citing burdens on public companies to provide information which could lead to misreporting. There appears to a loophole in the proposed rule as well, while some groups claim, if implemented, this would be an example of regulatory overreach.