Home » regulatory policy

Category: regulatory policy

CCS’s Silva and Garcia Report on Philadelphia Compliance Roundtable Meeting

Emily Silva and Bridget Garcia of Cipperman Compliance Services recently attended the Philadelphia Compliance Roundtable meeting that included presentations by the Investment Adviser Association about its regulatory priorities and Morgan, Lewis & Bockius about SEC and FINRA Enforcement Trends.   Linked below is a more detailed summary of the meeting prepared by Emily and Bridget, who would be happy to discuss with you in more detail.  Representatives of the IAA said that they would advocate for a uniform fiduciary standard, simplification of the custody rule, and protecting customer information.  The Morgan Lewis lawyers outlined recent enforcement trends including protecting retail investors, undisclosed compensation, anti-money laundering, and compliance.  The Roundtable is a group of Philadelphia-area investment compliance professionals that meets periodically throughout the year to discuss compliance best practices.

Philadelphia Roundtable Session writeup – Sessions 1 and 2- FINAL DRAFT

Regulators Warn Investors about Cryptocurrency Offerings

NASAA and the SEC warned investors about the risks of investing in cryptocurrency-linked investment products.  The President of NASAA (the association of state securities regulators) warned, “Cryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility.  Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart.”  NASAA further highlighted the risks of cryptocurrency investments including minimal regulatory oversight, the possibility of cybersecurity breaches, lack of insurance, high volatility, and reliance on unproven companies.  The SEC commended NASAA’s statement, stressing that cryptocurrencies, “lack many important characteristics of traditional currencies, including sovereign backing and responsibility, and now are being promoted more as investment opportunities than efficient mediums for exchange.”

OUR TAKE:  We predicted (not very long ago) that the regulators will pursue regulation of cryptocurrency offerings.  This may not be bad for this emerging industry in the long term.  After all, significant regulation made mutual funds the most popular investment vehicle of the last 100 years.



The Friday List: Our 2018 Predictions

Today, we offer our “Friday List,” an occasional feature summarizing a topic significant to investment management professionals interested in regulatory issues.  Our Friday Lists are an expanded “Our Take” on a particular subject, offering our unique (and sometimes controversial) perspective on an industry topic.

Every year, we offer our predictions on what will happen in the investment management regulatory world.  Last year, we went 4-6 (not great on a test, but pretty good in baseball).  We were right about the fiduciary rule, whistleblowers, state enforcement, and individual liability.  We missed on our predictions of regulatory changes and how the industry would respond to the increased demand for bonds.

The current uncertain regulatory environment has changed our hubris to humility.  Thus, it is with humble intent that we look forward to offer our 2018 predictions:


Predictions for the 2018 Regulatory Year


  1. More states will adopt fiduciary rules.  Nevada has already adopted a uniform fiduciary standard in the wake of the DoL’s delay.  We expect other states (e.g. California, New York, Connecticut) to follow.
  2. The SEC will propose a uniform fiduciary rule for retail advisers and broker-dealers.   Chairman Clayton has spoken publicly about the need for the SEC to wade into the fiduciary waters.  Expect a proposed rule this year.
  3. The SEC will commence significant cybersecurity enforcement actions.  The staff has done a sweep and issued guidance.  We have not yet seen significant enforcement actions.  We expect several this year.
  4. There will be cases alleging C-suite wrongdoing in private equity.  The SEC Enforcement Division has focused on the private equity industry for the last couple of years.  Given their interest in prosecuting senior executives to deter unlawful conduct, expect a couple of big cases against private equity execs.
  5. FINRA will bring actions against firms for hiring bad brokers.  Rather than simply prosecute the brokers, FINRA will dedicate some enforcement resources to firms that fail to screen out the bad brokers, thereby making it a firm responsibility.
  6. SEC and/or FINRA will bring cases alleging inadequate branch office supervision.  Both regulators have expressed concerns about remote office supervision.  Enforcement cases will ensure the industry’s attention.
  7. The SEC will commence significant marketing/advertising cases.  Seemingly out-of-the-blue, the SEC warned advisers about misleading marketing and advertising claims.  We are assuming that OCIE is uncovering a lot of problems.
  8. The SEC will propose a re-write of the custody rule.  The custody rule has the right intent, but the rule itself is too open to interpretation and questions (see multiple FAQs).  We think the Division of Investment Management will undertake a re-write (although maybe this is just wishful thinking.)
  9. The SEC will propose cryptocurrency regulations.  Bitcoin futures are flying high.  The SEC has expressed its opinion that it should regulate cryptocurrency offerings.  We expect some rules.
  10. The SEC will re-propose the ETF rule.  Plain vanilla ETFs should have a rule that allows them to proceed without an exemptive order.  The SEC proposed and abandoned a rule several years ago.  We anticipate that the SEC will resuscitate the effort.