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If You Didn’t Already Get It Done: Don’t Forget About the Initial Department of Labor Retrospective Review
By Robert R. Boeche, Partner; Robert D. Conca, Partner; and Andrew Steiger, Associate of Shustak Reynolds & Partners, P.C. posted on Wednesday, July 12, 2023.
As described in our prior article on the Requirements of New Prohibited Transaction Exemption PTE 2020-02, on December 18, 2020, the U.S. Department of Labor’s Prohibited Transaction Exemption 2020-02 (the “Exemption”) became effective. Among other things, this rule requires advisers relying upon this exemption to perform an annual Retrospective Review (the “Review”). The Exemption requires that the Review be reasonably designed to: (1) detect and prevent violations of the Impartial Conduct Standards, and (2) achieve internal compliance with the Policies & Procedures enacting those Impartial Conduct Standards. The Review consists broadly of two components, the methodology and the results, which are to be memorialized as part of a written report. Read More
California DFPI Securities Regulator Censures Morgan Stanley for Acting as Unlicensed Lender
By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Thursday, June 15, 2023.
The California Department of Financial Protection and Innovation (“DFPI”) has censured a subsidiary entity of Morgan Stanley, Morgan Stanley Smith Barney FA Notes Holdings, LLC (“MSSBFA”) and issued a $1 million fine for acting as an unlicensed, unregistered lender within the State of California. Read More
First Republic Financial Advisors Impacted by Bank’s Failure
By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Friday, May 12, 2023.
First Republic Bank’s May 1, 2023, collapse marked the largest U.S. bank failure since the 2008 Great Recession, when Washington Mutual imploded. Regulators were forced to step in, and J.P. Morgan Chase acquired the bank’s deposits and a majority of its remaining assets. First Republic’s 84 branch offices will remain open, at least for now, having been rebranded as JPMorgan Chase Bank. But what about the hundreds of financial advisors affiliated with First Republic’s subsidiary broker-dealer and investment advisory firms? Read More
SEC Approves New FINRA Expungement Rules
By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Wednesday, May 3, 2023.
On April 12, 2023, the SEC approved long-anticipated changes to FINRA’s expungement rules that will make the expungement process more challenging, and likely more expensive, for registered representatives. While the SEC has approved the new rules, FINRA has not yet announced when they take effect. Read More
SEC Division of Examinations Announces 2023 Exam Priorities
By Robert R. Boeche, Partner, Robert D. Conca, Partner, and Andrew R. Steiger, Associate Attorney of Shustak Reynolds & Partners, P.C. posted on Tuesday, April 11, 2023.
On February 7, 2023, the Securities and Exchange Commission’s Division of Examinations (“DOE”), formerly the Office of Compliance Investigations and Examinations (“OCIE”), announced its annual exam priorities. DOE Director Richard R. Best said, “[w]e will emphasize compliance with new SEC rules applicable to investment advisers and investment companies as well as continue our focus on emerging issues and rules aimed at protecting retail investors.” Read More
Get Inside the Amendments to Insider Trading Safe Harbor Rules
By Robert R. Boeche, Partner, Robert D. Conca, Partner, and Andrew R. Steiger, Associate Attorney of Shustak Reynolds & Partners, P.C. posted on Friday, March 17, 2023.
On December 14, 2022, the Securities and Exchange Commission adopted amendments[1] to Rule 10b5-1 of the Securities Exchange Act of 1934 (“Exchange Act”), and to Regulations S-K and S-T. The final rules substantially expand the insider trading safe harbor requirements of Rule 10b5-1, and impose new reporting and disclosure requirements for directors, officers, issuers, and other persons who implement 10b5-1 trading plans. The final rules became effective February 27, 2023.[2] Smaller reporting companies[3] have an additional six months to comply, until August 27, 2023.[4] Read More
I Live and Work in California. Am I Bound by the Non-solicitation and Non-compete Clause I Signed With My Employer?
By Mahdi M. Ibrahim, Senior Associate of Shustak Reynolds & Partners, P.C. posted on Tuesday, March 14, 2023.
Many employees have faced this situation. You have accepted a new position with a new employer. On your first day, you are handed a stack of forms and documents and asked to review and sign them. It is your first day at the new job and your head is swimming. Aside from tax withholdings, health insurance, and myriad other new employee selections and forms, you most likely are asked to review and sign an Employment Agreement. You are not a lawyer and don’t want to start off on the wrong foot in your new job. You sign the agreements given to you. But if the Employment Agreement contains a non-solicitation and/or noncompete provision, what do you do? Call a lawyer and schedule a meeting the first day of the new job or just sign what you are handed? And if you do sign a noncompete, non-solicitation agreement, will you be bound by what you signed if and when your new employment ends? What are you signing that you may be “stuck with?” Read More
California Insurance Licensees Must Now Include License Number on Emails
By Robert R. Boeche, Partner, Robert D. Conca, Partner, and Andrew R. Steiger, Associate Attorney of Shustak Reynolds & Partners, P.C. posted on Friday, March 10, 2023.
Starting on January 1, 2023, an update to the California Insurance Code took effect requiring certain insurance license holders to include their license number on each email they send that involves their licensed activities. These changes will impact investment advisers, broker-dealers, and other financial professionals who provide insurance services as part of their overall client offerings. Read More
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