Sam Edwards’ Post

New Blog Alert! 📢 Stay ahead in compliance with our latest blog post, "Impact of FINRA SEA Rule 17A-4 on Financial Institutions". Learn how this crucial regulation affects record retention and storage, ensuring transparency and integrity in the financial sector. Dive into the details: ✅ What is FINRA? ✅ FINRA Roles and Responsibilities ✅ Impact on Financial Industry ✅ Understanding SEA Rule 17A-4 ✅ Who Needs to Comply? https://lnkd.in/euA9ZqF8 #FINRA #Compliance #FinancialRegulations #SEA17A4 #FinancialInstitutions #ASC

Regulation Best Interest will continue to be a “priority area” for the Financial Industry Regulatory Authority this year, according to the broker-dealer self-regulator’s enforcement chief, Bill St. Louis. (quoted from the article) FINRA has “brought a number of cases involving the duty of care, excessive trading cases, cases involving products that were perhaps overconcentrated or products that were recommended to investors,” St. Louis said in just-released episode of FINRA’s Unscripted podcast. “But the brokers really didn’t understand key aspects of the product, which led to investor harm.” Further, St. Louis explained, “there are a number of cases in the pipeline focused on the duty of care” as it relates to Reg BI compliance. “We also have brought and have other cases focused on other obligations of Regulation Best Interest. We have compliance obligation cases. We have disclosure obligation cases.” An example are cases involving failures to disclose certain conflicts “that people at the firm were being compensated by an issuer or people at the firm had a financial interest in an issuer that was perhaps like a private placement being conducted by the firm,” St. Louis explained. FINRA will also continue its look at complex products, St. Louis said — “how they’re recommended, Regulation Best Interest, and also how they’re marketed.” Rules around advertising “and making sure the communications are not misleading, etc.” as well as anti-money laundering, or AML, will also be a priorities for FINRA, St. Louis added. #regbi #complexproducts #communications #amlcompliance

'Tis the season for regulatory cheer, as FINRA releases Regulatory Notice 23-20 that's stuffed full of Reg BI guidance for all to enjoy! Read details about the release, which includes helpful guidance and resources, here: https://lnkd.in/gPnfukph #regbi #FINRA #regulatorycompliance

Unwrap FINRA's Latest Treasure: Regulatory Notice 23-20 Brims with Reg BI Insights! FINRA has just released Regulatory Notice 23-20, a comprehensive guide overflowing with valuable guidance on Regulation Best Interest (Reg BI). This critical resource is designed to enlighten industry professionals with crucial information and tools. Dive into the details of this release and discover the essential guidance and resources provided. For an in-depth understanding, you can access the full notice [here](https://lnkd.in/gPnfukph). #FINRA #SEC #NSCP #compliance #complianceofficer #brokerdealers #investmentadvisor #investmentadvisers #regulatorycompliance #questce #complianceconsulting #IACCP

The SEC adopted an expanded definition of “dealer” today which will impose additional compliance burdens on entities now covered by the definition. Of particular interest (at least to me), the SEC swept some private funds and/or the advisers to those funds into the definition. In doing so, the SEC “acknowledge[d] that complying with a new rule set may require market participants to revise their business models,” and concluded that the trade off in increased regulation was worth the “associated costs” (that will be borne by the investors in those funds). At the same time, the SEC suggested there is uncertainty regarding just how many funds or advisers will need to change their business models, stating that its estimate of affected parties is subject to “significant caveats,” relies on an “imperfect proxy,” and “face[s] other limitations.” The last several years have witnessed increasing regulatory obligations imposed on private funds and their advisers, and today’s action is a continuation of that trend. I expect there will be much more to come as the industry digs into this new rule.

SEC Significantly Broadens "Dealer" Definition   Two new rules that significantly expand who may be required to register as a "dealer" or a "government securities dealer" were adopted by the Securities and Exchange Commission (SEC) on February 6, 2024.1 As a result of this significant expansion, many market participants previously considered "traders" will be considered "dealers" under the new rules and required to register with the SEC as broker-dealers.   https://lnkd.in/eGmNnkUX Network 1 Financial Securities, Inc.  

The SEC explained proprietary trading firms that are dealers will have to comply with numerous rules and regulations and be subject to examination by the SEC, in addition to requirements related to #FINRA membership discussed above.42 Proprietary trading firms registered as broker-dealers also will face larger constraints on risk-taking.43 Among other things, proprietary trading firms registered as dealers will have to comply with the Market Access Rule,44 and have additional reporting obligations to the Consolidated Audit Trail and the Trade Reporting and Compliance Engine.45 In addition, as noted above, proprietary trading firms registered as dealers may be able to benefit from more favorable capital treatment under SEC Rule 15c3-1(a)(6) with respect to its bona fide market making activities so long as it meets the conditions in paragraph (a)(6)

What is SEC ? The Securities and Exchange Commission (SEC) plays a crucial role in the financial markets, ensuring fairness and transparency. Let's explore what the SEC is, why it matters, and how it impacts investors and companies. What is the SEC? The SEC is a U.S. government agency established in 1934 by the Securities Exchange Act. Its primary mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. In simple terms, the SEC ensures that the financial markets operate smoothly and that investors are treated fairly. Key Functions of the SEC Protecting Investors: The SEC’s top priority is to safeguard investors from fraudulent and manipulative practices. It ensures that investors have access to essential information about the securities they buy or sell. Maintaining Fair Markets: The SEC works to maintain fair and efficient markets. This means making sure that all market participants, big or small, operate on a level playing field. Facilitating Capital Formation: The SEC helps companies raise money by selling shares to the public. This is crucial for business growth and economic development. How Does the SEC Operate? Registration of Securities: Companies that want to sell their shares to the public must register their securities with the SEC. This involves providing detailed information about the company’s business, financial condition, and the risks involved in investing in the company. Regulating Securities Markets: The SEC oversees key participants in the securities world, including securities exchanges, brokers and dealers, investment advisors, and mutual funds. It ensures these entities comply with the rules and regulations designed to protect investors. Enforcement Actions: The SEC has the authority to enforce securities laws. It can bring civil enforcement actions against individuals and companies that violate these laws. This might involve fraud, insider trading, or other misconduct. Why is the SEC Important? Investor Confidence: By enforcing laws and regulations, the SEC helps maintain investor confidence in the integrity of the securities markets. This confidence is vital for the proper functioning of the economy. Transparency and Disclosure: The SEC requires companies to disclose important financial information, allowing investors to make informed decisions. This transparency helps prevent fraud and ensures that all investors have access to the same information. Preventing Fraud: Through its enforcement actions, the SEC deters and punishes fraudulent activities, protecting investors from scams and unethical practices.

The SEC adopted rules today that will require firms that meet the definition of “dealer” or “government securities dealer” to: (1) register with the SEC; (2) become a member of an SRO; and (3) comply with applicable federal securities laws and SRO rules. That being said, there are some caveats and exceptions in the final rule that are worth considering before taking active steps to come into compliance with these new mandates. https://lnkd.in/eg8PHdgF

FINRA Final Statements 🗞 Statements are available for viewing annual state firm, rep, and notice filing fees paid and any refunds/credits issued. https://lnkd.in/dkBeEyfq #finra #fincompliance #annualreport #state #filing