2011 BD and RIA Renewal Process

The 2011 Renewal Program begins on November 15, 2010 when FINRA releases the Preliminary Renewal Statements on Web CRD/IARD.

Firms should note the following key dates for the renewal process:

October 25, 2010 - Firms may begin submitting post-dated Form U5 and BR Closing/Withdrawal filings

November 1, 2010 - Firms may begin submitting post-dated BDW and ADV-W filings

November 15, 2010 - Preliminary renewal statements available

December 13. 2010 - Full payment of renewal statements due

January 3,2011 - Final Renewal statements available

February 4, 2011 - Full Payment of final renewal statement due

For the full FINRA NTM, click here: BD and IA Renewals

Proposed DOL regs expose more advisors to fiduciary liability

The Department of Labor is working to reduce the fees and costs in 401(k) plans and make these fees totally transparent. The DOL has broadened the definition of fiduciary, which means that more people who are advising retirement plans, including IRAs, will be held liable as fiduciaries.  This new definition includes advisors who are giving advice to a plan on a one-time basis and advisors whose advice does not necessarily serve as a primary basis for plan investment decisions. While I think this will cause the more irresponsible advisors think twice about selling a 401(k) plan, the vast majority will welcome this new definition. They have argued fr years that they do feel they have a fiduciary responsibility to these clients. What will be interesting to see is how this will affect registered reps who are not investment advisors and have sold plans for years.

For more information, click here: Proposed DOL Regs on Fiduciary Responsibility

New Rules Could Curb Advisers' Use of Some Professional Designations

The Securities and Exchange Commission requires registered investment advisers to file certain disclosure forms. Advisers are now being required to explain the training requirements for any professional designation included in that disclosure. This change might discourage some advisers from using certain designations.

For the full story, click here: New SEC Rules Regarding Designations

BP Payout Recipients: Be on the Lookout for Investment Scams

It seems it never fails; scam artists appear to go where the money is. The latest news affects BP payout recipients. Be wary of oil spill-related investment opportunities that promise high returns with little or no risk, or involve secretive or complex strategies. The wise old adage, "If it appears to be too good to be true, it probably is", should always be remembered.

To read the full article click here: BP Payout Recipients: Be on the Lookout for Investment Scams

FINRA September Disciplinary Actions

FINRA had a big month in September. Over 50 firms and individuals either sanctioned or barred. FINRA is working hard to show they are doing thier job and finding the "bad guys". AML and supervisory isses continue to top the list of violations. Of particular note is SunTrust Investment Services was ordered to pay $1.44 Million for Unsuitable UIT, Closed-End Fund and Mutual Fund Transactions and Deutsche Bank Securities was fined $7.5 Million for Negligent Misrepresentations Related to Subprime Securitizations
Click here to read all the sanctions for September: FINRA September Sanctions

US Court of Appeals Crushes Rule 151a

The insurance lobby is celebrating thier vistory today. The U.S. Court of Appeals vacated the Rule as a result of the SEC’s “arbitrary and capricious” failure to perform the required analysis of the effect of the Rule on efficiency, competition, and capital formation. But the SEC has volunteered to help the states in their bid to implement the 2010 NAIC Suitability in Annuity Transactions Model Regulation.

To read more, click here: U.S. Court of Appeals crushes Rule 151a

The SEC is proposing changes that would replace Rule 12b-1 fees

The Securities and Exchange Commission  is proposing changes that would replace Rule 12b-1 fees that allow mutual funds to use their assets to compensate securities professionals who sell shares of the fund. What are your thoughts on this topic? Should this ending result in the brokerage industry setting up a fee for service schedule at same time they eliminate the 12b-1 that can be included in the. mutual fund prospectus?
Exactly what do you feel this fee provides to the client? Is this how reps "pay" for ongoing servicing of the client's accounts? Or should the fee be replaced with a managment fee where client's would have to hire advisors to obtain advice on thier funds?

Click here for more information:SEC Fact Sheet

States Target Structured Products and Gold

Broker-dealers' sales of structured products, including private-placement notes and reverse convertibles, remain a top concern of state securities regulators. In addition there is growing concerns among state regulators about the firm's complaice department being located thousands of miles away at the Home Office.

Structured products are complicated baskets of investments that many advisors have difficulty understanding, let alone trying to get the average cleint to understand. Given the enforcement actions arising from Auction Rate Securities, Structured product sales may be nest.

What are you thoughts on this hot topic?


To read the full article click here: States Target Structured Products and Gold

Dodd-Frank Act governance and compensation requirements: a “punch list” of action items

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act")1, enacted earlier this summer, imposes significant new corporate governance and executive compensation requirements that apply not just to financial institutions, but to public companies generally. Since many public companies begin in the fall to focus on the upcoming proxy season, this client alert is intended to provide a "punch list" of potential governance and compensation action items management and boards of directors should consider in order to comply with the Act’s new requirements.

Clcik here to read the article: Punch List

Congress passes small business lending bill

Now here is something that could help spur growth in the economy.

The Senate and the House of Representatives have passed the small business lending bill. The legislation, among other things, creates a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small business lending. .... the U.S. Treasury Department is expected to begin working with regulators within a week to develop the program’s term sheet and application. The bill also includes provisions that increase the Small Business Administration 7(a) guarantee program’s maximum loan size from $2 million to $5 million, and provide $505 million to maintain its temporary 90% loan guarantee.


Click here ro read the article: Congress Passes Small Business Lending Bill

Auditors of Nonpublic Broker-Dealers

......the SEC’s exemption permitting nonpublic broker dealer firms to have their financial statements audited by independent public accounting firms not registered with the PCAOB expired on Dec. 31, 2008. The SEC’s exemption was initially by order issued Aug. 4, 2003, and subsequently extended three times. The extension, issued as a result of amendments to §17(e)(1)(A) of the Securities Exchange Act of 1934 by the Sarbanes-Oxley Act, was based on the fact that application of registration requirements and procedures to auditors of nonpublic broker-dealers was still being considered.



For the full story click here: Auditors of Nonpublic Broker-Dealers

Pay-to-play: proposed MSRB guidance regarding PACs under Rule g-37

The Municipal Securities Rulemaking Board (“MSRB”) recently filed with the Securities and Exchange Commission (“SEC”) proposed guidance regarding affiliated Political Action Committees (“PACs”) for purposes of the pay-to-play limitations imposed on municipal securities dealers under MSRB rule G-37.  Much of the Proposed Guidance consolidates MSRB policy statements regarding PACs that were previously approved by the SEC. While the Proposed Guidance is aimed at municipal securities dealers, if approved by the SEC it will likely serve as precedent for similar limitations imposed on investment advisers by Rule 206(4)-5 under the Investment Advisers Act of 1940.

Click here to read the full story: Pay-to-play: proposed MSRB guidance regarding PACs under Rule g-37

Frustration mounts: Experts, RIAs identify six most important unknowns about the switch to state oversight

With many RIAs staring down the onerous task of registering in multiple states, while coping with a new, more demanding ADV form, frustration is mounting at the lack of information from the SEC and the lack of uniformity among the states..... it was only a few days ago that the SEC posted the first shred of information about the switch to state oversight. That shred of information was the news that the commission plans to release its proposed rules between October and December.

The most difficult issues are clearly those surrounding the dual registration requirements, that call for advisors with an office or five or more clients in a state to register in it. An advisory firm that would be required to register in 15 or more states under the law can opt to remain SEC-registered; there’s also an exemption for advisory firms with institutional clients. It’s not clear to what extent registering in a state subjects an advisor to the different state regulations.


Click here for the full story: Frustration mounts: Experts, RIAs identify six most important unknowns about the switch to state oversight

The SEC Releases a Timetable for Dodd-Frank Rulemaking

The SEC has released a timetable of its upcoming rulemaking efforts to implement provisions of the Dodd-Frank Act. Between October and December, the SEC will issue proposed rules on the following: shareholder “say on pay” votes on executive compensation, disclosure by investment advisers of votes on compensation matters,  new listing standards regarding compensation committee independence and factors affecting compensation adviser independence, and disclosure of consultant conflicts.

Between April and July 2011 the SEC will adress: the disclosure of pay-for-performance, pay ratios, and stock hedging by employees and directors, the recovery of erroneously awarded compensation and rules that define “other significant matters”.

Click here to see the full timetable:   SEC Releases a Timetable for Dodd-Frank Rulemaking

Municipal Advisers Must Register With the SEC by October 1

The Securities and Exchange Commission announced on September 2, 2010, that it has adopted a temporary rule requiring municipal advisors to register with the SEC by October 1, a deadline established by the newly-enacted Dodd-Frank Wall Street Reform and Consumer Protection Act.

Municipal advisors can now access and complete the new registration form (Form MA-T) on the SEC’s website. Municipal advisors are encouraged to begin the registration process as soon as possible because of the impending registration deadline and the requirement that applicants first obtain an ID and password.
The SEC implemented the registration provision on an interim basis in order for municipal advisors to meet the new law’s October 1 registration deadline. The SEC expects to propose a permanent rule later this year.

For more information click here: Municipal Advisers Must Register With the SEC by October 1

New "Narrative" ADV Part 2 Requirement

The SEC has amended Part 2 of Form ADV to require registered investment advisers (RIA) to provide clients with clearly written, current and meaningful disclosures, in plain English, about the adviser’s business practices, conflicts of interest and certain personnel. This becomes effective October 12, 2010.

To read the specific details of the SEC’s 174 pages of requirements,click here: SEC ADV Part 2 Requirements

SEC Transitioning Auditing Responsibility to the States for RIAs with less than $100 Million in AUM

Section 410 of the Dodd-Frank Wall Street Reform and Consumer Protection Act states that an investment adviser with assets under management greater than $100 million will need to register with the SEC, while an adviser with assets under management less than $100 million will need to register in the state in which it maintains its principal office. Those advisers who operate in more than 15 states would be permitted to register with the SEC. This change is effective July 21,2011.

To read the full Act, click here: Dodd-Frank Wall Street Reform Act

Compliance Services

The Advisers Act requires all investment advisers to develop and implement compliance programs. Such compliance programs must include written policies and procedures reasonably designed to prevent violation of the Advisers Act. In today's ever evolving environment of securities regulation, more time and attention is required than ever before. The penalties for non-compliance with SEC regulations can ruin a firm. We stay abreast of new SEC and State rules and investment adviser regulatory requirements so that we only offer up-to-date advice and ensure your firm is in compliance with new rules and regulations as they occur.

Red Oak can save you time and money by reducing your full-time staffing needs while staying compliant with the regulatory bodies. Our highly qualified compliance consultants are here to help you improve efficiency, increase profitability and make your job easier.