By Jody Foster, President of Symphony Consulting

Like it or not, we are living in interesting times.  The shudder that ran through the global economy as a result of the pandemic has emphasized the need for boards to work closely with fund management to determine the best way forward for the business.

A big part of what we do here at Joot is help our clients with their regulatory examinations.  At any given time, we normally have at least a few clients that are undergoing a regulatory exam from either the Securities and Exchange Commission (the “SEC”) or the Financial Industry Regulatory Authority (“FINRA”).  This gives us a certain perspective on the current areas these regulators are focusing on during their exams and what appear to be the latest “hot button” topics. 

Remember when you were in college studying for tests and you’d look for one of the fraternity/sorority test files to help you prepare?  Then you’d go into take the actual test and some of the questions were exactly the same and you knew the answer without even reading the entire question.  Well, folks, it isn’t often that the SEC gives us a sneak peak behind the exam curtain to tell us exactly what they’re looking for when they schedule a regulatory examination, but guess what?!  They just did that exact thing in one of their most recent OCIE Risk Alerts.

Recently, we’ve heard from several new and established investment advisers about launching a closed-end interval fund. These funds are alternative investments and a hybrid between mutual funds and traditional closed-end funds. We’re helping a few asset managers with these products, and the same is true for our business partners at the law firm, Practus, LLP.

As we continue to enhance our SaaS-based platform for automating compliance, we are also building out our services team. Today, another industry veteran joins Joot. John Williams, Director of Compliance Services, brings nearly three decades of regulatory compliance experience to Joot, with the last 14 as a chief compliance officer for a Broker-Dealer / RIA. He also has expertise in international operations, business continuity planning, cybersecurity and banking.

Ever since the SEC and other regulatory bodies (i.e., FINRA) identified the possibility of “significant business disruptions” many years ago and mandated that registrants create, maintain, and test a Business Continuity Plan (“BCP”), these plans have rarely been taken very seriously until they are needed.

On March 13, 2020, the SEC announced regulatory relief for investment advisers and investment companies who may be affected by the coronavirus.  The SEC is recognizing that limits on travel, reduced personnel and other business disruptions as a result of the coronavirus may cause delays in meeting regulatory filing deadlines and other regulatory obligations.

1961, Was it really a "good year?" Some of us couldn’t say for sure since we weren’t even born yet!  For those of us that were, gas was about 27 cents/gallon.  John F. Kennedy was President and about to deal with the "Bay of Pigs" debacle which would tarnish his first year in office.  East German authorities closed the border between East and West Berlin and construction of the Berlin wall would commence.  Pampers were introduced as the world’s first disposable diaper.  Oh, and the Securities and Exchange Commission published the first rule on advertising!

Financial firms, including broker-dealers and registered investment advisers, are at a high risk of cybersecurity attacks primarily because they control both their own data and the sensitive data related to clients.

In June 2019, the SEC announced Regulation Best Interest (Reg BI), the long-awaited standard that was meant to be the industry’s answer to the now-vacated Department of Labor Fiduciary Rule.  Though Reg BI impacts broker-dealers most heavily, it does have some implications for RIAs as well. In addition, Reg BI is part of a rulemaking package that adopted other new rules, including one that requires both broker-dealers AND investment advisers to provide a relationship summary document, called Form CRS, to all retail investors.

Like most legal documents, privacy policies are fairly bland , and, let’s be honest, few people read them. But the recent enactment of the California Consumer Protection Act (“CCPA”) has Joot fielding privacy policy questions from clients and service providers alike. In our previous post - Is it time to overhaul your privacy policy and notice? - we discussed whether your firm must comply with the CCPA. Today, we spend some more time focusing on the elements of a good privacy policy.