News & Events –

In the past week, the SEC Office of Compliance Inspections and Examinations (OCIE) and the Financial Crimes Enforcement Network (FinCEN) warned financial institutions to guard against specific and increasingly prevalent types of fraud against consumers. These activities have been uncovered through examinations, suspicious activity reports (SARs), law enforcement information and public reporting. OCIE and FinCEN’s alerts follow other federal and state reports urging firms to increase vigilance against similar crisis-related misconduct.

The NSCP 2020 Midwest Regulatory Interchange with the SEC, DOL and FINRA is taking place on July 24, 2020. Bates Compliance Managing Director Linda Shirkey will be speaking on the SEC Discussions panel at 9 a.m. (Mountain).

Join this virtual Compliance Roundtable on Wednesday, July 15, 2020, where our industry experts and guests will address Business Continuity Plan (BCP) design and implementation, including the unanticipated issues, gaps, and shortcomings that companies may have endured as a result of the COVID-19 pandemic.

Investment advisers that manage private equity or hedge funds (“private funds advisers”) should review and enhance their compliance procedures to protect investors from (i) improper fees and expenses, (ii) conflicts of interest that may exist between the adviser and the fund, and (iii) the misuse of material non-public information (MNPI). That is the message communicated by an OCIE Risk Alert, published June 23, 2020. The Alert identified compliance deficiencies observed by SEC staff during recent examinations of private fund advisers.

The SEC has approved final FINRA amendments to its rules on suitability and non-cash compensation. The final amendments ensure that FINRA’s rules line up with the SEC’s Regulation Best Interest (Reg BI). Read our review of the final rule changes, which became effective today, June 30th, 2020, the same date as Reg BI.

Bates continues our practice leadership conversations this week with Alex Russell, Managing Director of Bates’ White Collar, Regulatory and Internal Investigations Practice. Alex’s team supports corporations, financial services firms, law firms and regulators by bringing technical, big data analytics and managerial expertise to a variety of disputes and investigations. We asked Alex about investigations, big data and other regulatory issues now and possibly on the horizon. Get the details in today's Bates Practice Leadership Insights.

FINRA issued Special Alert Notice 20-16 to share COVID-19-related off-site transition and supervisory practice information. The information was derived from recent FINRA discussions with small, mid-sized and large firms. Bates has been tracking and reporting on COVID-19-related guidance since the pandemic began. In this article, we take a closer look at FINRA’s observations on firm efforts to transition to remote work environments and to supervise remote work activities.

Robert Lavigne and Hank Sanchez are both quoted in the Investment News cover article, “The Sound of Silence,” concerning Reg BI and Form CRS, published on June 1, 2020. Mr. Lavigne is also quoted in a June 4, 2020 AdvisorHub article.

In its recently-released 2020 Investment Advisor Section Annual Report, NASAA highlights the growing concern by state regulators over cybersecurity preparation and practice. Based on firm examinations in 41 U.S. jurisdictions during the first half of 2019, NASAA found that cybersecurity deficiencies are on the rise. The issue has taken on new urgency in the wake of the pandemic. Bates takes a closer look in the full article.

Join Bates Group Director and nationally recognized expert Bruce Cramer when he presents “Reg BI for Litigators.” Topics will include an overview of the SEC’s Reg BI and the Customer Relationship Summary (“Form CRS”), duties, conflict of interest, disclosure, and care obligations, Reg BI’s impact on FINRA’s retail suitability rule, potential claims, discovery, and more.

Bates continues our practice leadership conversations this week with Edward Longridge, Managing Director of Bates Anti-Money Laundering and Financial Crimes Practice, for his views on the matters most pressing for AML officers right now, including coronavirus-related fraud, transaction monitoring, and third-party risk management. Here is a recap of our conversation.

The first part of this year has been challenging for the equity markets. In March, the S&P 500 Index plunged into bear market territory as volatility soared to historic levels. The sudden appearance of a severe global pandemic is just the most recent example of a “black swan event” roiling the markets. In this paper, Bates Director and expert Greg Kyle examines in detail bear markets, black swan events, and volatility to gain some perspective on how the recent—or current?—bear market compares with historical periods.

A message from Bates Group CEO Jennifer Stout

Concern about recommendations of complex financial products for retail investors has been at the center of the debate over changing standards for broker-dealers and investment advisers. With full implementation of the heightened Reg BI requirements less than a month away, FINRA issued a Notice reminding firms of their sales obligations when offering recommendations on complex oil-related ETPs. FINRA’s Notice provides an important case study not only as to the specific expectations of firms that trade oil-related ETPs, but also on how the self-regulator appears to be handling concerns about recommendations to retail clients of complex products in a volatile market. Bates takes a closer look in the full article, including what FINRA expects of firms and registered representatives.

Bates Group’s industry-leading insurance, forensic accounting and economic damages experts stand ready to assist Insurers and agents in the many challenges they face as result of pandemic-related business interruptions, including pre-litigation claims reviews and multi-faceted support should a matter proceed to litigation.

Join Bates Group moderator Sheila Murphy and Managing Director A. Christine Davis, along with three accomplished employment lawyers as they explore and address employment-related litigation issues, including wage and hour and potential economic damages claims, stemming from COVID-19.