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ADVISOR ALERT: California DFPI Proposes New Rule to Adopt the NASAA’s Continuing Education Model Rules for IARs

By Robert R. Boeche, Partner, Robert D. Conca, Partner, and Andrew R. Steiger, Associate of Shustak Reynolds & Partners, P.C. posted on Friday, February 24, 2023.

On November 16, 2022, the California Department of Financial Protection and Innovation (“DFPI”) proposed new regulations under the Corporate Securities Law of 1968, which would establish annual continuing education (“CE”) requirements for Investment Adviser Representatives (“IARs”).[ ] As we recently reported[ ], the North American Securities Administrators Association (“NASAA”) designed a set of model rules for state regulators to adopt, and thereby implement, IAR CE requirements that are consistent from state to state.[ ] In its current form, the DFPI’s proposal would result in California adopting a rule substantially similar to the NASAA model rules; however, the comment period for interested persons to argue for changes to the proposed rule remains open until January 16, 2023.[ ] Read More

Proposed Updates to FINRA Expungement Rules

By Jonah A. Toleno, Partner of Shustak Reynolds & Partners, P.C. posted on Tuesday, November 29, 2022.

As part of its mission to protect investors, the Financial Industry Regulatory Authority (FINRA) gathers and discloses certain information about registered financial advisors and brokerage firms registered with FINRA, including financial advisors and broker dealers. FINRA houses this information in various databases, including but not limited its Central Registration Depository (CRD) and its publicly viewable registration information portal, BrokerCheck. Read More

Year-End Investment Adviser Compliance Reminders

By Robert R. Boeche, Partner; Robert D. Conca, Partner; and Andrew Steiger, Associate Attorney of Shustak Reynolds & Partners, P.C. posted on Wednesday, November 9, 2022.

Each year registered investment advisers (“RIAs”) must undertake a range of compliance tasks and obligations. While tasks can vary dependent upon the operations and registrations of the firm, all RIAs should examine their compliance program no less than annually.  Read More

Shustak Reynolds Headline Sponsor of IR 2022 Global Annual Conference in Barcelona

By Erwin J. Shustak, Partner of Shustak Reynolds & Partners, P.C. posted on Thursday, November 10, 2022.

Our firm was one of the principal sponsors of IR Global’s 2022 Annual Conference held in the exciting city of Barcelona last month. Partners Erwin Shustak and Paul Reynolds attended the conference, along with 350 other IR Global members from around the world. The theme of this year’s conference was “Shaping the Future” and speakers and discussion focused on how the pandemic has changed work habits, offices, global business, and impacted other aspects of our professional and business lives. Read More

SEC Registered Firms Must Comply With New Marketing Rule By November 4, 2022

By Robert R. Boeche, Partner and Robert D. Conca, Partner of Shustak Reynolds & Partners, P.C. posted on Thursday, August 25, 2022.

As you know, in 2021, the SEC’s new Marketing Rule became effective with an outside compliance date of November 4, 2022. The new Marketing Rule contains numerous updates to the rules relating to how SEC registered investment advisers (“RIAs”) will need to conduct marketing and advertising activities. Read More

Jobs Act 4.0: What It Means

By Robert R. Boeche, Partner and Shahrzad Borna, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Monday, August 22, 2022.

On the tenth anniversary of the 2012 “JOBS Act,” the Senate Banking Committee has proposed a new legislation, the “JOBS Act 4.0.” The new Act could potentially adjust SEC regulations to increase access to high-growth investment opportunities for everyday investors and reduce the costs of raising capital for small businesses. It also could have repercussions for licensed professionals operating pooled investment vehicles or otherwise conducting private investments. Read More

California A.B. 85 Waives First Year Taxes for Businesses Formed Before January 2024

By Robert D. Conca, Partner & Shahrzad Borna, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Monday, August 8, 2022.

In the wake of the COVID-19 pandemic, California enacted Assembly Bill 85 (“AB 85”) [1] during the 2020-2021 legislative session to make certain changes to the California Revenue Taxation Code[2]. Among those changes was the elimination of the first-year annual tax for Limited Liability Companies (“LLCs”), Limited Liability Partnerships (“LLPs”), and Limited Partnerships (“LPs”), that organize, register, or file with the Secretary of State after January 1, 2021 and before January 1, 2024. Read More

SEC Warns Broker-Dealers and Advisers About Disclosing Conflicts of Interest

By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Thursday, August 4, 2022.

Under both Regulation Best Interest (“Reg BI”) and the Investment Adviser fiduciary standard, firms and financial professionals should provide recommendations only when they have a “reasonable basis to believe that the recommendation or advice is in the retail investor’s best interest.” According to a recent SEC staff bulletin, complying with Reg BI and the fiduciary standard requires broker-dealers and investment advisers to identify and disclose conflicts of interest—particularly those tied to adviser compensation. The common practice of “checking a box” on forms, which generically disclose conflicts to clients, is not enough. [...] Read More

The Importance of Annual Reviews and Where to Start

By Robert D. Conca, Partner of Shustak Reynolds & Partners, P.C. posted on Thursday, June 16, 2022.

As most of us know, the SEC has remained active during the “COVID Era” and has been continuously examining, investigating, and enforcing the Investment Advisers Act of 1940, as amended (“Advisers Act”). A primary objective of the SEC's Division of Examinations' oversight activities is to determine whether registered investment advisers ("RIAs") are complying with regulatory requirements [...] Read More

FA Transition Bonuses On the Rise: What Was Old is New Again

By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Friday, March 11, 2022.

Five years ago, Merrill Lynch, Morgan Stanley, UBS, and other large broker-dealers announced sweeping changes to their compensation policies, including a move away from the large, up-front recruiting “transition” bonuses that dominated the recruiting space over the prior decade. Those “bonuses,” often paid in the form of forgivable promissory notes with back- and front-end payouts regularly exceeding $1-2 million, resulted in firms holding billions of dollars in outstanding loans on their balance sheets. [...] Read More