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A former broker at a national brokerage firm was recently sanctioned by FINRA after accepting instructions to transfer assets out of a client account. The problem? The instructions were actually sent by an imposter who had obtained access to the client’s account, presumably through some form of cyber-crime.  Unfortunately, the broker unwittingly contributed to the imposter’s malfeasance by not only accepting the instructions but by also taking pro-active steps to circumvent his brokerage firm’s controls.
Continue Reading Cybersecurity: Don’t Become a Different Kind of Victim

Financial services firms occasionally implement programs for their representatives to receive incentives in connection with specific product or service offerings. For as long as firms have used such programs, securities regulators have scrutinized them. The latest iteration of regulatory attention to sale incentives, however, signals a shift in strategy that carries broader implications for financial

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The Massachusetts Securities Division (MSD) recently announced that it is seeking comments on a proposed format to standardize the disclosure of investment advisory fees.[1]  This step should be noted by investment advisers across the country.

After all, fee transparency is generally not a controversial objective—especially because fees are publicly disclosed on advisers’ Form ADV Part 2.  Further, regulators and clients may view the publication of simplified fee tables as a means to recognize efficiencies by disrupting existing business models.  Moreover, the focus on fee disclosures lines up with the broader conversation about fiduciary duties in the financial services industry.  Finally, the MSD is viewed as a leader amongst securities regulators and has previously led a similar fee disclosure effort for broker-dealers.  These realities suggest it may not be long before your state’s securities regulator considers a similar approach for registered investment advisers.  While the utility of a public, standardized “fee table” is debated, investment advisers should prepare for scrutiny—in the near term—on the form and quality of their fee disclosures.…

Continue Reading Investment Advisers and Fee Disclosures