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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
Investors Still in the Dark over GWG Holdings "L" Bond Payments
By George C. Miller, Partner of Shustak Reynolds & Partners, P.C. posted on Tuesday, February 22, 2022.
In January 2022, GWG Holdings Inc., promoter of its high-yield bond product GWG L Bonds, reportedly missed $13.6 million in payments to investors on its GWG L bond series. Those bonds raised money to finance the purchase of life insurance policies from policy holders on the secondary market and were offered to investors primarily through independent broker-dealers, including Emerson Equity. [...] Read More
Is My NDA Enforceable? Recent Developments in California Law
By Katherine Bowles, Partner, and Aurora Gallardo, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, February 15, 2022.
Nondisclosure and confidentiality provisions have become common in employment separation agreements as more people have been speaking up about sexual harassment and discrimination they have faced in the workplace. [...] Read More
FINRA Updates Expungement Rules
By Robert Conca, Partner, and Aurora Gallardo, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Friday, February 4, 2022.
Changes to broker expungements in arbitration seemed imminent when FINRA first proposed new rule changes of the expungement process to the SEC for approval. [...] Read More
FINRA Updates Continuing Education Program for Registered Persons
By Robert Conca, Partner, and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Thursday, February 3, 2022.
The Financial Industry Regulatory Authority (“FINRA”) recently announced important changes to its rules which deal with continuing education for registered persons. Updates to FINRA Rules 1210 and 1240 will create the new Maintaining Qualifications Program (“MQP”) [...] Read More
Ponzi Scheme Bulletin
By Joseph M. Mellano, Senior Associate Attorney of Shustak Reynolds & Partners, P.C. posted on Thursday, January 20, 2022.
Recent developments in several high-profile, Ponzi scheme cases have renewed questions about the extent of the fallout from investment fraud prosecutions and the importance of due diligence. [...] Read More
Proposed Updates to Electronic Recordkeeping Requirements for Broker Dealers
By Robert R. Boeche, Partner of Shustak Reynolds & Partners, P.C. posted on Monday, December 27, 2021.
On November 18, 2021, the U.S. Securities and Exchange Commission proposed updates to the Securities Exchange Act of 1934 rules for (i) electronic recordkeeping and (ii) prompt production of records. These updates apply to broker-dealers, security-based swap dealers, and major security-based swap participants. [...] Read More
SEC Releases Information Update to Align Existing Staff Letters with New Adviser Marketing Rule
By Robert R. Boeche, Partner of Shustak Reynolds & Partners, P.C. posted on Monday, November 22, 2021.
As discussed more fully in our earlier article, the Securities Exchange Commission (“SEC”) adopted its new Marketing Rule on December 22, 2020. The new Marketing Rule effectively merged two sets of rules to create a new paradigm that modernizes adviser marketing. [...] Read More