News & Events –

State and federal regulators are pressing firms to increase vigilance against crisis-related misconduct and other vulnerabilities in order to protect investors. The North American Securities Administrators Association (NASAA) recently took several public steps in response to COVID‑19 challenges, including forming a COVID-19 Enforcement Task Force that will identify and stop the latest potential threats to investors. Meanwhile, FINRA issued alerts detailing the most prevalent scams during the pandemic and the recommended practices for both investors and firms to combat them. Bates Research takes a closer look.

In this first of a series of conversations with Bates Group practice leaders, we caught up with Robert Lavigne, Managing Director and Bates Compliance Practice Leader, and Hank Sanchez, Esq., Bates Compliance Managing Director and former SEC and FINRA regulator, to get an understanding of what they are hearing from compliance officers right now, as well as advice for compliance teams in the "new normal."

At a time when regulators are emphasizing their understanding of, and flexibility concerning, the difficulties facing financial firms as a result of COVID-19, FinCEN and the umbrella Federal Financial Institutions Examination Council (FFIEC) are demanding robust compliance with Bank Secrecy Act/ /Anti-Money laundering (BSA/AML) requirements. Since Bates’ last report, in which FinCEN highlighted warnings about bad actors finding opportunities created by the volatility and the fear in the markets, FinCEN issued additional compliance information to its previous alert, and FFIEC published a long- anticipated update to its BSA/AML Examination Manual. Bates Research has the details.

Bates Group is proud to welcome our newest experts and consultants: 

Kathy D. Ireland – ERISA, Investment Advisers Act, Codes of Ethics

Philip Lieberman, CPCO, CLU – Property and Casualty Insurance

Jennifer Luce – Accounting, Media, Publishing

Mike Steinmetz – Cybersecurity

Join our panel of nationally recognized leaders for a conversation about what vulnerable and senior financial investor issues and litigation claims may look like going forward, recent cases and regulatory updates, and resources to assist firms in preventing exploitation. 

May 14, 2020 1:00 PM Eastern/10:00 AM Pacific

Please join moderator Lilian Morvay, Principal and Founder of Independent Broker Dealer Consortium, LLC (“IBDC”) and Bates Expert, along with panelists including Bates Alternative Products Testifying Expert Robert “Bob” Reidy, as they discuss the effects that Covid-19 may have on claims against BDs/RIAs, insurance concerns and considerations and opportunities to expand your businesses. Hosted by Bates Group and IBDC.

May 12, 2020 3:00 pm Eastern/12:00 pm Pacific

While the COVID-19 pandemic continues to create unusual and difficult challenges for the financial service industry, FINRA continues to move forward with regulatory matters that warrant attention. In this article, Bates reviews recent FINRA developments on high-risk brokers, proposed limitations on brokers acting as beneficiaries, executors or trustees for senior investors, additional COVID-19-related hearing postponements, a recent arbitration proposal related to claims against inactive members and further remarks on Regulation Best Interest (Reg BI).

The countdown is on! Join our complimentary Form CRS for IAs webinar Thursday, April 30, 2020. Specifically designed for SEC-registered IAs, this webinar will help you tackle Form CRS with confidence. Presented by Bates Compliance.

These are uncertain times for insurers. In a report issued on March 31, 2020, Congressional Research Service (“CRS”) staff noted the likelihood that “loss of income from mandatory or voluntary closures, supply chain disruptions, and reduced demand due to social distancing measures may induce businesses of all sizes to seek compensation from insurers.”

That was clearly an understatement. Now, market participants are sounding alarms about a wave of state and federal legislation that would shift onto insurers a significant portion of the burden to compensate businesses from the massive losses resulting from pandemic-related shutdowns. Bates takes a look at these legislative moves, early legal action taken by policyholders seeking coverage for business interruption losses as a consequence of the coronavirus (COVID-19), and the reaction by the insurance industry.  

The SEC recently adopted new Rule 498A under the Securities Act, including various supporting amendments, to “simplify and streamline” the disclosure framework for variable annuities and variable life insurance contracts. As Bates described when the rule was first proposed, the new rule allows for a plain-English, easy to read, concise “summary prospectus” to satisfy obligations under the securities laws concerning variable product prospectus delivery. Read more to prepare for the July 1, 2020 effective date.

On April 7, 2020, the SEC Office of Compliance Inspections and Examinations issued two new alerts to broker-dealers and investment advisers about the “expected scope and content” of its compliance examinations for Reg BI and the Client Relationship Summary (“Form CRS”). Previously, SEC Chair Jay Clayton announced that the June 30, 2020 compliance deadline for Reg BI will not be delayed due to the impact of COVID-19. These alerts, therefore, underscore the need for firms to be prepared and compliant by the deadline. Here, we detail what the SEC is expecting from you and firms.

Over the past few weeks the coronavirus pandemic has overtaken the nation’s financial agenda and diverted the attention of financial regulators who are struggling to keep up and address urgent market needs. These actions have left some firms curious as to whether the rollout of Regulation Best Interest (“Reg BI”) may be delayed. Well, the wait is over, and SEC Chair Clayton has weighed in. Meanwhile, FINRA has pushed forward amendments to its rules on suitability and non-cash compensation, and the SEC has filed a brief in the Second Circuit Court of Appeals arguing for rejection of state petitions for review of the Reg BI final rule. There is so much happening and many moving parts. Here’s what you need to know.

Compliance is challenging to begin with, but in this new landscape, it is an even greater stretch for compliance teams to manage company-wide systems while working remotely. Here are five items you should be thinking about when addressing supervision and control functions.

The SEC’s IAA Release No. 5469 on Wednesday, March 25, 2020 amends its IAA Release No. 5463 and now allows for extending the filing and delivery deadline dates of the Form ADV amendment to June 30, 2020 due to COVID-19 and its consequences. The SEC has also amended the notice requirements—find out what you MUST do if you cannot meet the filing deadlines.

As regulators struggle to adjust to the stress that the coronavirus pandemic is placing on the markets, fraudsters are viewing it as an opportunity. Bates Research takes a look at the latest enforcement warnings and guidance from financial regulators, who are sounding alarms over the added threats that exist in the current volatile environment.

In a Notice issued on February 27, FINRA advised firms of their responsibilities over custodial accounts under the Uniform Transfers to Minors Act and Uniform Gifts to Minors Act (“UTMA/UGMA”) and warned members that adequate compliance requires firms to take into account termination of custodianship and changes of authority. Bates can help your firm respond to UTMA/UGMA account inquiries.