Displaying items by tag: compliance

Environmental, Social, and Governance standards have, up until this point, been an opt-in style strategy to give an edge in debt and equity markets, but that could all be changing. The CEO of Norges Bank Investment, the world's largest stock owner, says that corporate life is only going to be more difficult for firms that don’t meet ESG standards. Market pressures are going to rapidly change and firms will have a difficult time raising finances, maintaining employees, and retaining customers if they aren’t part of a green future. Norges plans to utilize its market power to apply a lot of pressure, one such way is by giving companies expectation documents. They believe companies won’t be profitable in the long run if they don’t commit to ESG.

FINSUM: This strategy of pressuring companies through divestment has been shown to not necessarily be effective in holding them accountable and transitioning them into a greener world.

(Washington)

The SEC just put out a shot across the bow of brokerage firms as it regards Reg BI. Firms and industry attorneys have been expecting the SEC to ratchet up enforcement over the coming year as the agency starts to bring Biden’s priorities into reality. However, the SEC made it very clear this week, telling firms that it is not enough to tell reps what Reg BI says, but educate them with examples of how to meet Reg BI’s requirements. Investment News summarized the SEC’s comments this way, saying “Financial firms that are failing to comply with the broker standard of conduct aren’t aligning their internal controls to meet its requirements”. The SEC is now checking to see if firms have set up a robust Reg BI compliance program, and if not, they will be in hot water”. According to Corey Schuster, assistant director of Division of Enforcement’s asset management unit, “firms may want to consider: Have you done a deep dive on conflicts? … Have you examined your disclosures regarding conflicts? And is there a need to mitigate certain conflicts of interest?”.

FINSUM: The SEC is gearing up to drop the hammer on Reg BI enforcement, which has long been expected. However, the reality of heavier enforcement and the specifics of how it is executed are very different than seemingly far-off expectations.

(New York)

Going independent is a huge choice. Not only do you have client risk, income risk etc, but one of the big underappreciated challenges is simply getting paid. Once you are truly running your own business, cash flow on a consistent basis is absolutely critical, which is why you need to have flexible and reliable billing software which can help you collect fees in a compliant way.

FINSUM: You need to have your tech stack solid as rock when going independent and collecting payment in a compliant way is beyond critical. Make sure to investigate the options!

(New York)

If you survey advisors—which many have done—they will tell you that the hardest part of the forthcoming Reg BI rule from the SEC is how to handle all the requirements of the new Customer Relationship Summary form (Form CRS). With that in mind, Pershing has just launched an interesting new end-to-end Form CRS product that helps advisors comply with the rule, as well as a Tracking and Reporting Solution. According to Pershing, “We recognize that account opening is not the only [thing used], so we’ve rolled out a new forms management system where the CRS can be directed and stored digitally, and married that system with a number of trigger points that require the delivery of a Form CRS … We’ve given our clients the opportunity to both deliver forms in paper where it’s still necessary, or digitally to the extent that the investor has opted into electronic delivery”.

FINSUM: Compliance with Form CRS is a challenge, and one that is being exacerbated by COVID and people working from home. This sounds like a great solution.

(Washington)

Brokers rejoice, FINRA is about to makes updating your records simpler and easier. In an effort to reduce the compliance burden and costs, FINRA is reforming its CRD system. The WebCRD interface will see an overhaul, which should make things easier for brokers. According to FINRA president Cook, “The transformation will allow FINRA to develop systems that help firms effectively maintain compliance programs and reduce compliance costs, while continuing to operate and enhance BrokerCheck as an essential tool for investors”.

FINSUM: The update is pretty short on details at the moment, but at least FINRA is trying to reduce the regulatory burden.