All the major regulators of advisors — the Financial Industry Regulatory Authority, the Securities and Exchange Commission, individual state regulators and the North American Securities Administrators Association — disclose publicly what their enforcement focuses will be at or near year-end.
(See SEC's Top Exam Priorities for 2016; FINRA's Top Exam Priorities for 2016; Top 5 Investor Threats: NASAA)
When officials from those regulatory bodies speak in person, advisors can learn how they cooperate with each other (and don't) and gain insights into what an examiner will be looking at when they show up on advisors' doorsteps. That's likely why a panel at the Financial Services Institute's annual OneVoice conference in Orlando attracted such a big audience on Tuesday afternoon.
David Bellaire, who heads FSI's advocacy efforts as executive vice president and general counsel, began by recalling that FSI had focused its efforts in 2015 on stopping the Department of Labor's fiduciary redefinition under the Employee Retirement Income Security Act. While that rulemaking appears to be heading forward, Bellaire vowed that FSI will continue to fight against the DOL rule, which he said had become a cornerstone of President Barack Obama's domestic agenda in his second term, despite the "irreparable harm" it will cause to investors.
Bellaire then handed over the reins to FSI President and CEO Dale Brown, who introduced Bob Colby of FINRA, Stephen Luparello of the SEC and Judith Shaw, the NASAA president and commissioner at the Maine Office of Securities.
Responding to Brown's question on priorities for regulators this year, Colby began by saying that FINRA will be focusing on recruitment compensation and changes to the self-regulator's registration rules to accommodate registered individuals who may leave the industry for a short time or who change their responsibilities within an organization.
Shaw, whose term runs through September 2016, said that at "the top of our list is senior issues," along with new products and "point of sale" issues. Speaking as she was to an audience of senior broker-dealer executives, she said that NASAA would be looking at issues regarding "fees, registration and conflicts of interest." Particularly for IBDs, she said examiners would look at "how you supervise the outside activities" of registered reps who had their own RIAs. As for common deficiencies that state regulators are finding in exams, she cited books and records deficiencies, which "are often seen in broker-dealers" as well, she said.
She lauded members of NASAA's advisory council, notably FSI, for their input into NASAA's "model act" for handling incidences of elder financial abuse, which includes the ability to delay disbursements from an elderly client's account — along with "immunity for that delay" — when there is evidence of either fraud or diminished mental capacity. Language in that model act would "require reporting" such evidence to state regulators or adult protective services authorities.
