Social Media Hot Topics

There have been a lot of discussions lately regarding the regulatory landscape in the financial services sector. I know everyone has Dodd-Frank on the mind these days; however another significant hot topic is Social Media. It is a topic of discussion at every conference I have attended this year.

Over the last couple of months the IIROC (Investment Industry Regulatory Organization of Canada) has issued their guidance on social media, FINRA announced their examination priorities for 2011 and the SEC sent our sweep letters regarding the use of social media. It’s clear with all the attention social networking has generated that it is not a fad that’s going away and the regulators are serious about making sure it’s done in a compliant manner.

So what does it mean when I say “in a compliant manner”? Well first and foremost it means that you have policies and procedures that are reasonably designed to supervise and train your representatives and staff about how to use or not use social media sites. One thing that has been made perfectly clear is that a policy that says you do not allow social networking and attestations from your representatives stating they do not use social media is not considered sufficient by the regulators.

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