Welcome back to the Compliance In Context podcast! On today’s show, we will be providing a comprehensive, deep-dive look at SEC Enforcement over the last twelve months—including the real story behind some of the recent numbers, distinct areas of focus, and what we’re hearing from the Paul Atkins-led SEC. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome in two expert panelists (and accomplished podcasters), Andrew Dean from Weil Gotshal and Kurt Wolfe from Quinn Emmanuel.   Show Interview with Andrew Dean and Kurt Wolfe Review of SEC Enforcement metrics over the last twelve months What are we hearing from the SEC and Chair Atkins? Reviewing the takeaways from Atkins’ recent statements on the Wells process What are we hearing from the other Commissioners? How have the cuts and departures impacted SEC Enforcement? What typically happens during a transition? Are their programmatic impacts? Understanding key differences between the Division of Exams and the Division of Enforcement How are SEC exams being resolved in the current environment? How are firms interacting with the Staff right now? What can we expect next in the area of SEC Enforcement?   Quotes 05:11 –  “So, you know, the SEC's fiscal year runs October 1 through September 30, and we don't have the final numbers yet from that period. Our friends at Cornerstone always put out a nice report at the end of the year that kind of, you know, tell the story. It will be a little complicated by the fact that this fiscal year was over the course of two commissions that have relatively different approaches to enforcement. And so the first three and a half months of the fiscal year were under Chair Gensler, and the remaining were under interim chair Uyeda, and then Chair Atkins. You know, it’s clear that the enforcement actions are dramatically lower under the Atkins Commission. If we just look at the period, this is our friends at King and Spaulding putout this, and we’re giving a lot of credit to others who have, kind of, done the math for us. Between February and July of 2025 there were 67 enforcement actions. Compare that to 198enforcement actions during the same time period in 2021 when there was another Commission transition.” – Andrew Dean 20:25 – “They should focus on cases where there's a lot of harm to investors or potential harm to investors and not just technical violations, not foot faults. I think many would say that's a different tone or strategy than what we saw in the last administration. He even went out of his out of his way to say, SEC enforcement should never feel like a gotcha game. My third point would be transparency and predictability. I think, again, this is sort of consistent with what we've heard from Chairman Atkins, you know, back when he was a commissioner even, he thinks enforcement action should be consistent. The results should be fairly predictable and tied to SEC policies and coordinated across the divisions.” – Kurt Wolfe

Welcome back to the Compliance In Context podcast! On today’s show, we will be focusing on the impact of mentorship on compliance, and how as mentors and mentees, we can become the best version of our compliance-selves.  To help guide us through the conversation, we are very pleased to welcome back to the show, attorney and former regulator (and insightful mentor), Richard Szuch. In our Headlines section, we look a notable decline in SEC enforcement actions in 2025 and review the recently announced rulemaking agenda for the SEC in upcoming months,, and finally, we close up today with another installment of Outtakes, where we see continued focus from SEC Enforcement on the Marketing Rule and accurate disclosure of conflicts of interest.   Show Headlines SEC enforcement actions drop sharply, with focus shifting to investor fraud. US SEC unveils agenda to revamp crypto policies, ease Wall Street rules   Interview with Richard Szuch How has mentorship shaped your career as a legal and securities compliance professional? Reviewing the importance of mentoring and mentorship in compliance Understanding the benefits received from mentorship for both the mentee and the mentor What were some of the lessons that you received early on as either a mentee or mentor that inspired you in this area? What are three questions every compliance professional should ask themselves? How does mentorship impact the overall productivity of a compliance team? How to find professional fulfillment in your legal/compliance role For those that are considering taking on a role as mentor or mentee, what additional advice or words of encouragement would you give them?   Outtakes SEC Charges RIA with Marketing, Books and Records, and Compliance Rule Violations   Quotes 16:00 – “Like at the prosecutor’s office. I remember John O’ Reilly saying to me once, ‘Richard, you do not need to be smart enough to know the answer to every question, but you do need tobe smart enough to know when to ask a question.’ And I think the same goes true with navigating with the people you work with.” - Richard Szuch 28:06 – “There is the law, there are the facts, and then there’s the application of judgement to what those facts mean in the legal construct. Same exact thing in compliance. There are the regs. There is the activity, you know, going on, there’s maybe not a bright line answer, and that’s when, you know, having help from older folks or people more experienced than you is really what you’re looking for, or at least as experienced as you.” - Richard Szuch

Welcome back to the Compliance In Context podcast! on today’s show, we will be tackling one of the most significant topics being discussed so far in all of 2025, namely cryptoassets and the SEC’s Crypto Task Force.  To help guide us through the conversation, we are very pleased to welcome back to the show, SEC Commissioner Hester Peirce. As the head of the task force, Commissioner Peirce shares her unique perspective regarding specific focus areas, collaboration with the industry, and other notable items from the first of 2025. In our Headlines section, FinCEN recently announced that the compliance date for the AML Rule for investment advisers is being delayed by two years, and finally, we close up today with another installment of History Has Your Back, where the story of a famous stockbroker and humanitarian demonstrates the importance of unsung heroes.   Show Headlines Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that the compliance date for the anti-money-laundering rule for investment advisers is being delayed by two years.   Interview with SEC Commissioner Hester Peirce Background on the SEC’s Crypto Task Force What areas has the Task Force been focused on of late? Has there been additional collaboration with the industry? How will the area of issuance evolving over the next few years and how can the SEC establish itself as a leader in this space both domestically and internationally? Why is the issue of custody so challenging in the crypto space? How might self-custody be a safer option for some crypto assets? How will the issue of taking self-custody of crypto assets evolve over the next several years? Is there an expectation that broker-dealers will go to market with a “super app” that offers trading in securities and non-securities and other financial services all under a single roof? Do you think further guidance or rulemaking may be helpful for enabling the listing and trading of crypto assets on national securities exchanges?   History Has Your Back Famous stockbroker Nicholas Winton demonstrates the significance and impact of unsung heroes   Quotes 11:35 - “Well, I’m glad that you highlighted Chairman Atkins’ speech because he has taken a position which has just been really refreshing for me to see, which is that this is work that we can do. It’s work that we should be doing and we’re going to do this work. And really setting the tone for wanting to create a welcoming atmosphere for innovation, but also recognizing that there are areas where our existing regulatory framework touches upon crypto and we have to apply it. Now, we do also have a lot of authority from Congress already to use exemptions as necessary to provide relief from regulatory obligations when that makes sense to do that. And so I think with respect to issuance specifically, we do think that a rulemaking would be helpful.” – Hester Peirce  19:13 - “I should say that self-custody, that term can mean different things, right? I think someone with crypto assets—does that advisor need to go to a third party custodian or can that advisor hold those crypto assets itself? One reason may be that there isn’t a third party that’s out there that’...

Welcome back to the Compliance In Context podcast! On today’s show, on today’s show, we will be taking a topic known all too well by those in the compliance space, namely maximizing your compliance resources, doing less with more, and getting the most out of what’s available to effectively run your firm’s compliance program to the best of your ability. To help guide us through the conversation, we welcome Louis Dempsey and Bart McDonald from Renaissance Regulatory Services.  In our Headlines section, we review a some recent rule withdrawals and some leadership changes at the SEC , and finally, we close up today with another installment of Outtakes, where a recent enforcement action reminds us of the importance of having proper disclosures for fees and conflicts of interest.   Headlines SEC Withdraws 14 Rulemaking Proposals SEC Chair Atkins Fills Key Leadership Roles   Interview with Louis Dempsey and Bart McDonald Background on maximizing your compliance resources Discussing best practices to operate on a limited budget Evaluating the impact of new regulations, including the FinCEN AML Rule and Regulation S-P Analyzing compliance efficiencies in Code of Ethics, electronic communications, conflicts of interest, registration and licensing, compliance testing, and documentation of completed tasks Reviewing the significance of a strong training program. How does your firm’s registration type impact how you can best maximize compliance resources?   Outtakes Recent enforcement action reminds us of the importance of having proper disclosures for fees and conflicts of interest.   Quotes 08:48 – “Really, the risk assessments are incredibly important to help you focus where you want to put your energy and put your time and we'll get into some of that later. From a bigger picture standpoint, you want to leverage your custodians, your custodial relationship. They all have tools that they provide and can help from a compliance perspective, whether those are exception reports, trade reports—and don't forget you also most of them have discounts for other vendors—so whether it's proxy services or really a whole host of items, you want to become familiar with that, you want to stay on top of the reporting capabilities, and...you also have the NSCP. So you really want to look at joining compliance roundtables or other peer networks—that really helps from a practical standpoint.” – Bart McDonald 13:06 – “Think of compliance as a journey, as a road trip. You've got a certain amount of things that you need to get done and you've got 365 days to get them done in. Create a map, create a checklist, create a calendar on what you're going to do and when you're going to do it. Don't wait till the end of the year to do all your testing. Do things throughout the course of the year. If you're a big picture person, no matter how much you know the rules, no matter how much you know the laws, no matter how long you've been in the industry, you still have to have that. And if you're not a detailed organized person and you have the resources, hire somebody t...

Welcome back to the Compliance In Context podcast! On today’s show, we will be taking an in-depth look at one of talked compliance items from the first half of the year, the two new recently published FAQs to the SEC Marketing Rule.  To help guide us through the conversation, we welcome in Issa Hanna from Eversheds Sutherland and Ted McKutcheon from Securities Law Counsel.  In our Headlines section, we review a recent denial from the SEC of an attempt by 16 firms to revise settlements they made with the commission regarding their supervision of employees’ off-channel communications, and finally, we close up today with another installment of What’s On My Mind, where we review a quote from a famous chef and author to help provide us in the compliance space with a little bit of satisfaction and peace of mind at this time of year.   Show Headlines SEC denied an attempt by 16 firms to revise settlements they made with the commission regarding their supervision of employees’ off-channel communications   Interview with Issa Hanna and Ted McKutcheon Background regarding SEC Marketing Rule FAQs Practical challenges related to performance marketing and demonstrating gross versus net What problems did firms face with implementation? What solutions do the new Marketing Rule FAQs provide? Recap of the new Marketing Rule FAQs What specific guidance can firms takeaway from the footnotes to the Marketing Rule FAQs? What is the broader impact of the new FAQs related to performance marketing? What strategic decisions will firms need to make before utilizing the benefits of the new FAQs?   What’s On My Mind Reviewing a quote from Anthony Bourdain and the satisfaction of completing another regulatory filing season.   Quotes 13:21 – “Folks will recall that the Marketing Rule was officially adopted at the very tail end of the Clayton-era SEC…There were lots of issues that were debated from an interpretive perspective under the rule that fit there. And you had this new category of performance that the SEC seemed to have just made up out of thin air called (so-called) extracted performance. And folks were, kind of, struggling to, kind of, figure out how existing practices in the industry, particularly the private fund industry, would fit into that category of performance.” – Issa Hanna  40:53 – “Remember that, sure, we're getting some relief with respect to the net of fees requirement here, and certain circumstances. It doesn't necessarily get you an out from the Marketing Rule altogether. That's a really important thing to remember is that if the extracted performance that you're dealing with is still an offer of your advisory services or an offer of a private fund that you're advising, you know, that's still an advertisement subject to other applicable requirements of the rule, including the general prohibitions of the rule. So, you know, you do have to keep that in mind.” – Issa Hanna  44:45 – “The part of the approach that's deemed okay with respect to the principle of making fair and balanced presentations is this layered disclosure or layered approach to di...

Welcome back to the Compliance In Context podcast! On today’s show, we will be reviewing a multitude of regulatory and compliance topics, including artificial intelligence, books and records, types of marketing materials, the SEC Marketing Rule, post-commitment management fees, private fund recycling, and many more fantastic issues in our first ever Compliance Grab Bag!  To help guide us through the conversation, we welcome in Christine Schleppergrell from Morgan Lewis and Christopher Mulligan from Weil Gotshal.  In our Headlines section, we review the first Advisers Act enforcement action under the new administration and what it tells us about future actions, and we close up today with another installment of What’s On My Mind, where a recent statement from Commissioner Peirce provides us deep insight into the future state of crypto and digital currencies and the road ahead.   Show Headlines First Advisers Act enforcement case under the new administration   Interview with Christine Schleppegrell and Chris Mulligan What are some of the regulatory and compliance issues you’re seeing in AI right now?  How are AI recordkeeping and marketing issues addressed during SEC exams? How are firms implementing AI inside their firms? What other SEC Marketing Rule items are in focus during SEC exams? What areas of the SEC Marketing Rule are you hoping the industry receives more guidance? What are some of the current areas of focus from the SEC as it relates to private funds? What are some of the challenges between outsourcing versus duplication of services? What other areas of focus have you seen recently from the SEC and how do you think they will be impacted by a new administration?   What’s On My Mind Reviewing “The Journey Begins” by Commissioner Hester M. Peirce and her commentary on the SEC Crypto Task Force   Quotes 15:17 - “There’s a temptation. So there are temptations on both sides, on the exam side and on the registrant side here, right? So investment advisors, obviously AI is a huge force in the economy and investing, and people what to talk about it. And that’s fine in terms of talking about, you know, how this is going to impact markets, how this is going to impact due diligence processes generally, right? You, sort of, can’t live today and not talk about AI. That’s fine. The problem is it’s easy to, sort of, fall into, it’s easy to fall into the representation of how you either use it, how you look for portfolio companies that use it, how it’s part of your management process, right? So it goes to, sort of, a high-level discussion of AI in our, sort of, you know, in, sort of, our culture and our society. And it goes into specific representations about how you are using it.” - Chris     17:25 - “I think also the other side of the coin is the use of AI for non-investment purposes, so think compliance, operational purposes, to the point that you made earlier, just assessing staffing needs and how those can be addressed, and AI can be...

Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we will be providing a comprehensive, deep-dive look at the 2024 SEC Enforcement numbers published at the end of last year—including what was behind some of the eye-popping numbers, distinct areas of focus, and what firms can expect next under a Paul Atkins-led SEC. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome a fantastic panel of experts, Brian Rubin from Eversheds Sutherland and Jim Lundy from Foley and Lardner.     Show   Interview with Brian Rubin and Jim Lundy  What were the 2024 SEC Enforcement numbers and what do they tell us?  What trends were present in areas like off-channel business communications and marketing and advertising?  Did firms get any credit for cooperating with the SEC and how did that manifest?   What can we expect from Enforcement under a Paul Atkins-led SEC?  What do you expect from Enforcement pre- and past-Wells letter and with regard to other parts of the process including virtual meetings and open jacket discovery?   Where do you see Enforcement making substantive changes to its approach under Atkins?   Can we glean anything from Atkins’ prior dissents that can give us insight into his own priorities as the new Chair?  What does the future leadership of the SEC look like and what’s next for the Division of Enforcement?    Quotes  11:22 - “Speaking of past data not being indicative of future results. In fiscal year ‘24, the commission brought cases against more than 70 firms, resulting in $600 million more in additional penalties, for those of us who’ve been living through this for the past several years. There’s no surprise that prior to January 2025, that leads to some pretty big numbers. And in the release, enforcement touted that since December of 2021, the initiatives in this space have resulted in changes against more than 100 firms and civil penalties in excess of $2 billion. As Brian mentioned, enforcement continued to be busy after the election through its first fiscal quarter for this fiscal year. And recently announced on January 13th, 12 more actions brought against nine investment advisors and three broker-dealers for off-platform books and records, record-keeping violations, and an additional $63.1 million in total penalties brought against those 12 firms” - Jim   23:17 - “We have a list of a few things that may happen. So, one of them is that there’s probably going to be a push to reduce the time that it takes to investigate cases. Everybody on the defense side and on the enforcement side thinks it takes too long and there’s a variety of reasons that it does take a while. One idea is a simple idea to just simply shorten the time period that investigations have. And although President Trump said he did not read Project 2025, which was a huge sort of white paper on things the new administration could do, one of the recommendations it contained called for statutorily limiting the time for investigations to two years.” - Brian   32:25 - “My personal view, I’m sure Brian wou...

Welcome back to the Compliance In Context podcast! On today’s show, we welcome in former NSCP Chair and current CCO of Robinhood, Norm Ashkenas, to discuss how firms can build a culture of compliance inside their firms and what it takes to build out an effective compliance team. In our Headlines section, the SEC Investor Advisory Committee considered draft recommendations on mandatory arbitration clauses and the expansion of retail investor access to alternative assets (among other items), and a dually registered firm settled SEC charges for failing to timely investigate and report suspicious transactions to FinCEN. And finally, we'll wrap up today's show with another installment of What’s On My Mind, where an old quote from Winnie the Pooh might just be the best thing we can do for our friends and loved ones during the holidays and these cold winter months.   Show Headlines The SEC Investor Advisory Committee considered draft recommendations on mandatory arbitration clauses and the expansion of retail investor access to alternative assets Dual registrant settled SEC charges for failing to timely investigate and report suspicious transactions to FinCEN   Interview with Norm Ashkenas What is a culture of compliance?  What does it mean?  How do you know it’s present? How can you build a culture of compliance? Best practices when building out your compliance team Key things to look for when sourcing and building out your compliance team The importance of diversity of thought and perspective on your compliance team How should firms think about compliance collaboration with other business units as part of the hiring process? How should firms view unique skillsets and experiences when building out their compliance team? Best practices when using pre-formed hiring questions or question banks   What’s On My Mind Using a quote inspired by Winnie the Pooh, part of building our compliance team includes letting them know we’re there for them when they need us most   Quotes 12:20 – “Somebody I didn’t know reached out to me via Slack and said, ‘Hey, so-and-so senior executive thought I should reach out to you because we’re thinking about doing A and he said ‘You should talk to Norm and compliance first to see what they think and how to get it done.’’ That’s what I want to have happen. It’s not about me, it’s about somebody else thinking of compliance when we weren’t there.” – Norm Ashkenas 22:15 – “If you’re asking questions, certainly you’re starting with the technical expertise. If you’re looking for somebody who does surveillance on municipal securities, they have to know a great deal about that space to start, if that’s what you want them to do. So certainly you’re testing for that. Obviously, you are certainly looking for culture fits, again, another overused phrase. But if your firm is the type of firm that seeks to get alignment from everybody and its a firm where they don’t want somebody to present a solution, they want to have conversations with everybody who might be a stakeholder, get them all on the same page, and then have a final discussion, you need to find people who can do that kind of thing. If it’s a firm that’s more entrepreneurial, where it’s, ‘We want you to go solve the problems and see how many people react,’ you have to try to ask quest...

Welcome back to the Compliance In Context podcast! On today’s show, we welcome in Ranah Esmaili and Louis Froelich to help us review the current state of crypto and digital assets, the impact of a new administration, how firms operating in this space should be thinking about custody, and what the SEC Enforcement Division is focused on as it relates to this embattled asset class. In our Headlines section, President-elect Donald Trump has named his choice to run the Securities and Exchange Commission, and finally, we’ll wrap up today’s show with another installment of Outtakes, where we examine what a recent SEC complaint against the chief investment officer of a large investment advisory firm can teach us about the importance of trade allocation and avoiding instances of cherry picking in the delivery of advisory services.   Show Headlines President-elect nominates former SEC Commissioner Paul Atkins to lead SEC   Interview with Ranah Esmaili and Louis Froelich What is the current state of crypto? What is the impact of a new administration on the SEC broadly? What is the impact on crypto, specifically? What baseline SEC rules should registrants still keep in mind? In the digital asset/crypto space, what is the current state of enforcement? What will the SEC continue to investigate (no matter the change in administration)? Do you think cases against platforms for being unregistered BDs will go away? What about custody? What is the current state of the Custody Rule proposal? What are SEC examination teams focused on when conducting examinations in the crypto/digital asset space? Are there any specific cases currently in litigation that you’re paying attention to and why? Using your crystal ball, what do you see changing in the crypto/digital asset space in 2025?   Outtakes The SEC recently sued a former CIO for allegedly orchestrating a “cherry picking scheme” allocating better performing trades to certain favored portfolios, and worse performing trades to other portfolios   Quotes 10:24 – “You know, I think [crypto] is here to stay. I also think that even in a decade from now, people maybe asking the same question. Let’s dive into where we’re at right now. Crypto is everything that you’ve said. It’s a wildly volatile asset class considered its own asset class right now. Most people still don’t really understand what the stuff does. As you know, if their businesses start to invest with it or trade with it, you know, kind of where to begin.” ~ Louis Froelich 11:50 – “The crypto lobby is a very real thing. It was one of the largest spenders in the last campaign. And so when sometimes people look at the headlines of the results or why is crypto such a thing, I don’t think it’s a coincidence, right? I think there’s a lot of people that made a lot of money in the space, had vested interests, have worked very hard and deliberately to kind of have the election results that we have and have crypto, kind of, part of the national conversation.” ~ Louis Froelich 17:42 – “So I expect we’re going to continue to see crypto asset offering fr...

Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we welcome an august panel to provide an in-depth look at the embattled DOL Fiduciary Rule—including where are we now, what’s next, and what other best practices firms should firms have in place currently regarding any investment recommendations being made and other services provided to retirement investors. To help guide us through this important topic and share some fantastic insights for our listeners, we welcome in august panel of experts—Jason Berkowitz with the Insured Retirement Institute, David Kaleda with the Groom Law Group, and Jason Roberts with the Pension Resource Institute.   Show Interview with Jason Berkowitz, David Kaleda, and Jason Roberts Reviewing the current state of the DOL Fiduciary Rule Is there a path where the DOL gets the decision reversed or where PTE 2020-02 gets separated out? With the recent DOL Fiduciary Rule getting stayed, where does that leave ERISA investment fiduciaries? What is the status quo? Understanding the 1975 regulation and PTE 2020-02 What is the impact of the Florida district court ruling? Best practices around providing investment recommendations to retirement investors What are the types of things compliance officers can build into their programs now to ensure compliance to PTE 2020-02? What about disclosures for IRAs to IRAs? What about the annual review? Reviewing Reg BI, NAIC, and the full regulatory framework and the related obligations for market participants What is the current state of enforcement in this area?   Quotes 05:57 – “Let me just start with a quick overview of what the regulatory package is, that was adopted earlier this year. It included four components. The first component is a change in the definition of who is a fiduciary under ERISA. And then the other three changes, or the other three components, rather, were changes to what are called prohibited transaction exemptions, which are essentially the rules that ERISA fiduciaries have to follow in order to receive compensation for their services. And, in effect, essentially the way that, at least for my organization and our members, we look at this final regulatory package as significantly expanding the reach of fiduciary status to reach almost any financial professional who interacts in any way with a retirement saver and create significant new burdens and hassles for those individuals in order to get paid.” – Jason Berkowitz 09:18 – “So at this point we're still waiting to see how this will be resolved. There are really two tracks here. One is just this effective date stay, and the other the next track is the merits of the case, whether the DOL even has the authority to do this in the first place. So the DOL did file a notice of interlocutory appeal, which basically means they're appealing the stay at this point and also all the parties had been working on a decision on the underlying regulation and exemptions that's being put on hold so that the DOL can at least consider what they're going to appeal. At this point, they've just noticed the court that they could appeal. Whether they do or not, I guess, remains to be seen.” – David Kaleda

Welcome back to the Compliance in Context Podcast! On today’s show, we feature a Lessons From The Front Lines episode where we welcome two very special guests, namely Ms. Alpa Patel and Mr. Igor Rozenblit, to share their fantastic insights and help us unpack the Loper Bright and Corner Post decisions, PFAR getting vacated, and what’s next on the examination and enforcement front. Show Interview with Alpa Patel and Igor Rozenblit Reviewing recent judicial developments What happened in Loper Bright Enters. v. Raimondo What does the end of Chevron mean and what are the key takeaways? How does the decision in Corner Post, Inc. v. Bd. of Governors of the Fed. Resrv. Sys. extend the impact of Loper Bright/end of Chevron and potential future agency rule challenges? Reviewing the Private Fund Adviser Rules being vacated What happened in Nat’l Ass’n of Private Fund Managers v. SEC? How do you see this impacting SEC Examinations and Enforcement? Where are the key areas that you expect to see a continued focus from the Staff? Discussion of recent SEC Enforcement, including the focus on recordkeeping Analyzing the current regulatory environment, the industry’s appetite to challenge the SEC on certain issues, and the impact of the upcoming presidential election   Quotes 12:10 – “The rules expanded over the years, and it was always in reaction to litigation, right? Sothis will just be more. PFAR being dropped, and that was obviously more on a statutory authority side. But when you have a rule that’s struck down for being arbitrary and capricious, which is normally how these rules go, the answer to that is, well, let me give you more reasons. And that is why, you know, our releases ended up just writing more. The more you can draft, the better because you’re trying to counteract the idea that you did not address some random issue that a commenter raised, you know, in their 600-page comment letter. So that’s, that is the give and take and sort of the beauty of the Administrative Procedures Act of, well, okay, you’re telling me I didn’t do enough. I will do more. And that’s exactly where you’re going to end up more here.” – Alpa Patel 23:55 – “I think the vacation of PFAR didn’t really change the examination approach of the commission at the moment. I think, had PFAR stood, there was a pretty good probability that exams would have changed pretty significantly and would have transformed into a group that tests a lot of the PFAR disclosures that were required, but that did not happen. In terms of the areas that PFAR covered, those areas are traditional exam risk areas, and that is why they were in PFAR. It really didn’t work the other way around. So in terms of what exam does now, it’s really a version of what they’ve always been doing, which is identifying potential conflicts of interest, identifying potential technical violations of certain rules, including the books and records rule, which is kind of a hot topic right now, and pursuing thos...

Welcome back to the Compliance In Context podcast! On today’s show, we perform a comprehensive review a of rule proposal from 2024 with the biggest long-term impact to the RIA community—namely AML rule proposal from FinCEN. In our Headlines section, we review recent decision from the Fifth Circuit court to stay the new DOL Fiduciary Rule that was issued earlier this year. And finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where we take a quick moment to visit the 2024 Paris Olympics and review how some of the greatest athletes in the world can give us a critical insight into being the best versions of ourselves and building our own firm’s best compliance program. Show Headlines New DOL Fiduciary Rule and the amendments to PTE 2020-02 and PTE 84-24 stayed by two district courts in Texas   Interview with Ed Wegener and Laura Goldzung Reviewing the FinCEN Rule Proposal to apply AML/CFT (Countering the Financing of Terrorism) requirements pursuant to the Bank Secrecy Act What does the rule proposal say? What will investment advisers need to do? What kind of training should be performed in this area? What other preparations will advisers need to make? What about dual registrants? Can the AML programs of broker-dealer affiliates be leveraged? What are some key factors that RIAs will need to keep in mind if the proposal is adopted? What kind of expectations should be in place from a compliance perspective? Is there required testing that needs to be performed? What requirements are placed on AML Officers? What kind of ongoing due diligence will be necessary or expected? What is the cost of compliance in this area?  Do you anticipate the regulatory focus and related costs going up or down in the future?   What’s On My Mind What can Olympic athletes teach us about developing the best compliance program possible and not letting immediate perfection becoming an impediment to growth   Quotes 10:26 – “Earlier this year, FinCEN proposed adding investment advisors as designated financial institution for AML and CFT purposes. And then additionally following on that, FinCEN and the SEC issued a joint proposal that would require investment advisors to comply with the customer identification and verification requirements, as well as the requirements to identify and verify identities of certain beneficial owners of legal entity customers. So in a nutshell, the impact will be that once this rule becomes effective and we meet the implementation date, investment advisors are going to have virtually the same requirements that certain other financial institutions have with respect to AML programs, including broker dealers. So many investment advisors who have affiliated broker dealers are well aware of those requirements, but we’re working with all of our investment advisor clients to understand what those expectations and requirements may be and how they can prepare for that.” ~ Ed Wegener 20:54 – “In the proposal, Vincent talked about the training needing to be designed based on the roles of the individuals that are being trained. So you have to distinguish different roles....

Welcome back to the Compliance In Context podcast! On today’s show, we look at the evolution of compliance through the lens of the NSCP, analyzing key growth milestones, identifying new resources and building for the future, and reviewing what’s up next for the organization in 2024. In our Headlines section, we review recent decisions from the Supreme Court in the Loper Bright case and the long-term impact federal agencies’ rulemaking interpretations. And finally, we’ll wrap up today’s show with another installment of Outtakes, where a recent SEC Enforcement action provides us significant insight and also raises more questions regarding the SEC’s stance on cybersecurity controls.   Show Headlines Reviewing the Loper Bright case and the long-term impact federal agencies’ rulemaking interpretations   Interview with Lisa Crossley and Melissa Loner Background and history on the founding of the NSCP How did compliance evolve within the NSCP and what disciplines were added? How is the NSCP building for the future of compliance?  Reviewing recent resource and staff additions Discussing expanded member offerings and volunteer opportunities How is the NSCP Planning for the future of compliance? New and exciting developments for the 2024 NSCP National Conference   Outtakes SEC charges global provider of business communications and marketing services for internal control and accounting failures charges relating to cybersecurity incidents and alerts in late 2021.   Quotes 22:58 – “I think the community is what runs deep through NSCP and what makes it so special. I mean, I have wonderful friends that I’ve met through NSCP. I’ve had job opportunities that with the help of members of NSCP, it is a very strong community. There’s so many ways to be involved, whether, you know, whether it’s very micro to being on NSCP’s board. So that’s something that Melissa will talk about in terms of volunteer development. But I can speak from my own experience that I felt that, you know, immediately there was a group of members who just were there to help me along the I introduced me to other people got me involved, like whether it was speaking or being on a committee, just being able to have those connections is so important, similar to having your social connections. So that’s something that I’ve always tried very hard to make sure that we maintain and we would maintain those opportunities in various work for our members ~ Lisa Crossley 30:50 – “You look at how the NSCP has evolved over the last couple of years with adding podcasts, adding more virtual sessions, right? We still hear about COVID and how people had to switch up from that and get more creative. We’re sort of in that realm again. We’ve also talked about that with the compliance officer of the future, right? How many of us back in the day thought that we would need to know so much about cybersecurity or any of that type of technology? We have AI, right? That’s a huge initiative all over. So just looking at how we continue to evolve in the subject matter, because the compliance professional of the past is not going to be the compliance professional of the future, right? And so looking at AI, I know that is also a big initiative of Lisa’s is to see not just how we can offer continued resources and AI to our members, but how do we encompass and integrate AI into the National Society of Compliance Professi...

Welcome back to the Compliance In Context podcast! On today’s show, we review an incredibly important topic for all SEC-registered broker-dealers and investment advisers, namely third-party due diligence of service providers—what situations require it, regulatory considerations, and what are the basic building blocks for establishing a successful due diligence program inside your firm. In our Headlines section, we review the recent SEC rulemaking amending Regulation S-P. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where an old quote from an ancient stoic might just help you make the best of a bad situation when things in your compliance program don’t go exactly as planned.   Show Headlines   SEC adopts rule amendments to Regulation S-P to enhance protection of customer information   Interview with Kevin Gleason   Reviewing the importance of third-party due diligence in the investment management space What are the basic building blocks of a successful third-party due diligence program? What key elements of service provider agreements should be reviewed? What risk factors should be considered when building your due diligence program? What are some of the common situations requiring third-party due diligence and what regulatory considerations should be examined? How can firms make sure to avoid regulatory enforcement in this area? When designing your firm’s due diligence program, what key considerations can help support proper supervision and ongoing monitoring? Are there other business units outside of compliance that should be involved in the process? Establishing a frequency of review that works with your firm’s compliance program Understanding the value of third-party due diligence and how to navigate challenges in the process Reviewing practical takeaways and lessons learned   History Has Your Back   Examining a famous quote from the Stoic philosopher Epictetus and what it can teach us about dealing with the pressures of compliance   Quotes 17:20 – “Does the level of scrutiny need to be the same for, you know, someone that, you know, provides you maybe some training and content for your employees as it does for someone who, you know, maybe executes trades or who, you know, performs sort of risk analytics, maybe a fact set or someone or, you know, right? You know, I'm not here to say it does or doesn't, but to be able to do all of those people and provide the same sort of level of rigor, I think, is rather would be rather difficult for firms.” – Kevin Gleason   25:43 – “I mean, that is sort of the next step, I think, in the process, which is working on developing a questionnaire. With regards to sub-advisors, at least in my mind, right, they provide a similar service. It may be in regard to different asset types or asset classes. It may be taking different risks but really, they manage assets on behalf of your clients or on behalf of a fund or account. Where, I think, it’s more challenging is, now you have lots of other service providers outside of that same sort of function, in terms of a sub-advisor. You have...

Welcome back to the Compliance In Context podcast! On today’s show, we review one of the most important topics impacting broker-dealers this year, namely the issue of remote supervision and how to address the new Residential Supervisory Location Designation and the Remote Inspections Pilot Program. In our Headlines section, we review the recent Supreme Court decision impacting 10b-5 disclosures and a recent FinCEN report tracking new information and trends surrounding elder financial exploitation. And finally, we’ll wrap up today’s show with another installment of Outtakes, where we look at the recent risk alert from the Division of Examinations focusing on new SEC Marketing Rule violations. Headlines Supreme Court decision impacting 10b-5 disclosures FinCEN Issues Analysis on Elder Financial Exploitation Show Interview with Ben Marzouk and Andrew Mount Reviewing the history of remote work and related compliance monitoring and supervision What does FINRA consider an office? What are the implications of how that’s defined? How FINRA is managing remote work in general? What is Regulatory Notice 24-02? Discussing the impact of FINRA Rule 3110.19 (Residential Supervisory Location) and FINRA Rule 3110.18 (Remote Inspections Pilot Program) What are the practical applications of these new rules? How do you see the issue or remote work evolving throughout the course 2024? Outtakes SEC Risk Alert: Initial Observations Regarding Advisers Act Marketing Rule Compliance Quotes 14:50 – “People soon realized that no one was really going back to the way things used to be five days a week in a set physical office location. To some extent, people were going to continue to work from home for some period of time, even at the pandemic subsided. So with that in mind, FINRA reminded firms that, ‘hey, if you’re going to continue to allow people to operate their home and do brokerage business from their homes, you’re going to need to supervise that location.’ And that supervision would mean inspection on some regular set schedule. It would also mean, and we can get into it later, thinking about your membership agreement.” – Ben Marzouk 20:13 – “If an associated person works two days a week from home and three days from the office, FINRA’s staff has said that that would mean towards being a regularly working at home arrangement, and you’d have to count that residential location and as a person. office. I would say that that’s not to say that just because someone’s one day at home and four days in the office during the week you don’t need to count the one day at home, you need to look at the locations where your associated persons work on a routine and predictable schedule with a firm’s knowledge and some sort of formalized arrangement and, you know, make that determination. by case basis. It’s a really a facts and circumstances analysis. You know, that FINRA, as staff has said recently, at least, that of locations that you use on an ad hoc basis, so I’m thinking locations where you work from the office five days a week, but you stay at home on Friday because you have a contractor coming or your kids are coming.” – Ben Marzouk 28:10 – “The one area where FINRA’s managemen...

Welcome back to the Compliance In Context podcast! On today’s show, we feature a Lessons From The Front Lines episode with renowned retirement plan fiduciary expert, Mr. Fred Reish, to help us through another groundbreaking DOL Fiduciary Rule and unpacking where and how it will affect investment adviser and broker-dealer firms across the country. This is an episode you won’t want to miss!   Show Interview with Fred Reish Reviewing the evolving standards of care (Reg BI, RIA, DOL, NAIC) How have disclosures evolved to comply with the differentiated standards of care? What does the new DOL Fiduciary Rule say and what’s changing? Who is going to be impacted by the changes to this new rule? What are the impartial conduct standards? Are there disclosures and other exemptions out there to help mitigate the conflicts noted in the new rule and how can firms comply with them? What triggers an investment recommendation under the new rule? Is there a wholesaler exception? What is the compliance date for the new rule? What kinds of information does an individual need to review in order to effectively perform a comparative analysis between for an IRA recommendation?   Quotes 7:54 – “If you look at both of those, I think Reg BI for broker dealers is actually a tougher standard. I know that’s going to surprise some investment advisers to hear, that but, and part of that’s because the interpretation for investment advisors is really principles, truly principles-based. And, you know, the SEC said the duty of care and the duty of loyalty for investment advisors together is a best-interest standard of care, but very principles-based. If you get into Reg BI, the standard of care is principles-based, but then there are a bunch of rules-based parts to Reg BI, so for no other reason other than just the volume of rules alone under Reg BI make it a more complicated and more demanding set of requirements.” – Fred Reish 21:32 – “Number one, the advisor has to satisfy the impartial conduct standards. Well, what are impartial conduct standards? That's a label from the Department of Labor. It has meaning, though. You have to act with a duty of care, sort of thing of a fiduciary duty, and a duty of loyalty. Similarly, a fiduciary duty. You can't put your interest ahead of the investors. No more than reasonable compensation relative to the services provided, no materially misleading statements. There is a group of things like that that are called the impartial conduct standards.” – Fred Reish

Welcome back to the Compliance In Context podcast! On today’s show, I am thrilled to welcome back to the show, Mr. Rob Tull, who talks us through what’s in the complete toolkit every CCO needs to build an effective compliance program. In our Headlines section, we review recent comments from the SEC’s Enforcement Division responding to criticisms from the crypto industry. And finally, we’ll wrap up today’s show with another installment of Outtakes, we look at the first-of-its-kind enforcement action against investment advisers for misleading statements about their use of artificial intelligence.   Show Headlines SEC Division of Enforcement Director Gurbir S. Grewal responded to criticisms by the crypto industry challenging the agency’s authority and motivations regarding the treatment of cryptoassets.   Interview with Rob Tull What’s the complete CCO toolkit needed to build an effective compliance program? What skills help make a great CCO? Simple steps CCOs can take to improve detection of issues How can you enhance your ability to communicate and process information? What can I do to help ensure my firm empowers me in my role as CCO? What are some best practices to maximize the resources I have available? How understanding the firm’s strategic plan can significantly help your compliance program and your role as CCO.   Final Segment – Outtakes SEC settled charges against two investment advisers for making false and misleading statements about their use of artificial intelligence in a first-of-its-kind enforcement action   Quotes 11:58 – “So if I had to stack these things in priority, the first thing is, do I know the rules? Am I knowledgeable? So is a compliance officer knowledgeable? That’s kind of, it’s rough. There are layers to that. The first thing is, do you know the regs that apply to your business? And that’s where, you know, that’s where there’s a ton of content from NSCP, from law firms, from consulting firms—like, we get that, we get the knowledge. But then there’s two layers on top of that. Then there’s also, do you know the industry you’re in? Like, it’s one thing to know the rules, but do you know what’s going on in the industry? What’s happening for investment managers and broker-dealers in aggregate? And then what’s happening in your business? Like you need to know your business. And that’s kind of like the foundation, like that knowledge piece.” – Rob Tull 20:29 – “The beauty about empowerment is we tend to think, once I’m the named CCO, I am, by default, empowered. That’s the way we tend to get because the rules are title-focused, we get title-focused. But what we forget is that title has nothing to do other than who gets to wear the target. What it really talks to in our ability to be empowered is our ability to demonstrate–it’s how well we demonstrate our competence and our knowledge. And it’s not an ivory tower task. It is a ‘what do you bring to the business as a value-add, to take compliance from a checklist to make it something that is additive to the business. And that is the most important thing. And it’s not just–and this is beyond the concept of profitability, beyond that concept–it is how do you make the organization better top to bottom.” – Rob Tull

Welcome back to the Compliance In Context podcast! On today’s show, we have with us two very special guests in the investment management space, Karen Barr from the Investment Adviser Association and Lisa Crossley from the National Society of Compliance Professionals, to discuss the current state of the Investment Adviser industry, what new regulations impacting investment advisers are on the horizon for 2024, and other priorities both organizations are focusing on in 2024. In our Headlines section, we look at a new FinCEN proposal to include “investment adviser” in the definition of “financial institution” under the Bank Secrecy Act (“BSA”) and a new FAQ for registered investment advisers relating to the SEC Marketing Rule. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where we revisit a famous quote from a tennis legend provides us some inspirational words heading into a busy regulatory filing season.   Show Headlines FinCEN proposed to include “investment adviser” in the definition of “financial institution” under the Bank Secrecy Act (“BSA”) SEC”) issued an updated FAQ for investment advisers relating to SEC Rule 206(4)-1 (the “Marketing Rule”), and the reporting of gross and net performance within advertisements   Interview with Karen Barr and Lisa Crossley General overview of the IAA and the NSCP What is the state of the investment adviser industry? What were some of the key metrics from the Investment Adviser Industry Snapshot 2023? What are some of the current policy initiatives coming out of the SEC and where do these proposals stand now? What are some of the sleeper policy initiatives you anticipate hearing about in 2024? What are 2024 organizational initiatives for the NSCP? What are 2024 organizational initiatives for the IAA?   Final Segment – History Has Your Back Understanding what Billie Jean King meant when she said “Pressure is a Privilege” and what it can teach all compliance officers heading into a busy 2024   Quotes 11:18 - “I think one of the things that I heard in both of your quick responses there and thinking about both organizations that I personally love, being someone who’s obviously very involved in the space, is this idea of community. With the IAA, it is the community of those that are providing services in that trade. On the NSCP side, it’s those that are kind of practicing the specific trade inside of the firms doing compliance. You build these fantastic communities that really help lift each other up in a lot of different ways.” – Patrick Hayes  23:52 - “It’s very important to let folks know that they need to advocate on this issue. And I just want to say we appreciate that advocacy. It’s your advocacy that inherently helps NSCP members, especially on that issue and so I just wanted to add one thing that we did a little bit differently than this year. It was always–When I was a CCO, I never understood why there was an educational bridge between the SEC and the compliance professionals. And I was fortunate this year to get the ear of Marshall Gandy, who is the Associate Director of the Division of Examinations and to discuss that, and I said ‘How about if your staff came to our conference to sort of get an inside look...

Welcome back to the Compliance in Context Podcast! On today’s show, we welcome back in welcome in David Scalzetti, Senior Director of Regulatory Products and Strategy at ICE, for Part II of a part of a two-part program looking at the impact of data on compliance. In this program, David will focus on how data can dramatically help firms trying to navigate new regulations, especially in areas affecting mutual funds and broker dealers. In our Headlines section, we review two recently adopted rules from the SEC that expand the definition of “broker-dealer” under the SEA. And finally, we’ll wrap up today’s show with another installment of Outtakes, where we review another significant enforcement action relating to text messaging and related messaging applications.   Show Headlines The SEC adopted two new rules under the Securities Exchange Act (Rule 3a5-4 and 3a44-2) to further define the term “as a part of a regular business.” The new rules expand the scope of firms that are required to register as broker-dealers and as government securities broker-dealers.   Interview with David Scalzetti Background on the SEC Names Rule requiring registered investment companies whose names suggest a focus in a particular type of investment to adopt a policy to invest at least 80 percent of the value of their assets in those investments (an “80 percent investment policy”). What specifically do managers of a mutual fund need to do to comply with the Names Rule? What are some of the ways firms can do to better manage the data to ensure compliance with the Names Rule? How can data assist in the portfolio management process to benchmark against how other firms are evaluating their growth, value, or sustainable investment strategies? What are some best practices firms can utilize to comply with the Names Rule or enhance its own internal controls? Background on SEC Rule 15c2-11 (Broker Dealer Quotations over a quotation medium) What can firms do to ensure compliance in difficult areas like fixed income that carry new requirements under SEC Rule 15c2-11? How can data assist in determining which fixed income securities may be eligible for the relief provided in the SEC Staff’s December 16 No-Action Letter?   Outtakes SEC Fines 16 Firms More Than $81 Million for Off-Channel Communications   Quotes 11:24 - “So the names rule dates back to the dot.com era. Really when the SEC was finding some nefarious actors were marketing themselves as technology funds because everyone was getting in on technology. Although, they may not have been investing in true technology funds. So they introduced the requirement to have an 80 percent investment policy requirement for the use of thematic or even industry-specific or even location-specific terms implied in the fund’s name, that at least 80 percent of investments need to align with that. That rule was recently amended to add two things. Explicitly add strategy terms like value and growth which were considered exempt from the 80 percent policy.” – David Scalzetti 15:18 - “So the investm...

Welcome back to the Compliance in Context Podcast! On today’s show, we welcome in David Scalzetti, Senior Director of Regulatory Products and Strategy at ICE, as part one of a two-part program looking at the impact of data on compliance. In the first part of our interview, David will look at how data can support your firm’s compliance program in any number of areas including portfolio management, liquidity, valuation, fund reporting. In our Headlines section, we look at Commissioner Uyeda’s second term and a recent challenge from SIFMA regarding the Department of Labor’s new “Retirement Security Rule” proposal. And finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where we look at an interesting characteristic of the American bison and what it can teach us about the upcoming busy season for compliance officers.   Show Headlines Mark T. Uyeda was recently sworn in for his second term as SEC Commissioner SIFMA comment letter requesting DOL to withdraw “Retirement Security Rule” proposal   Interview with David Scalzetti How has the topic of valuation continued to evolve in the compliance space and how can data be used with valuation to enhance a firm’s compliance program? What are the compliance obligations associated with SEC Rule 2a-5 of the Investment Company Act? How can data support compliance with good faith determinations of fair value in compliance with 2a-5? How can data support compliance with valuation methodologies across investment strategies? Best practices when thinking about and establishing a valuation process The impact of data on liquidity and portfolio management Establishing a liquidity risk management program in compliance with SEC Rule 22e-4 under the Investment Company Act How can firms use data on liquidity to manage through volatile markets? How can portfolio management and liquidity data be used to substantiate compliance with the SEC Marketing Rule?   What’s On My Mind Understanding the American bison and how it faces adversity   Quotes 11:28 – “We’ve been a major consumer of underlying input data and analytics information. So collecting bids, and quotes, and tree data, and other information that is very useful to understanding the valuation. Historically, most clients just want the answer key. Like, you know, ‘I don’t care what the inputs are, just tell me what your good faith estimate of that fair value price is.’ But as we’ve evolved over time as an industry and the regulators have evolved, you’ve seen more and more requests from the regulators to better understand what went into that valuation and how they get comfortable using a particular valuation. When, in a lot of cases, the underlying input data could lead to a range of good faith estimates. So what we’ve noticed and what we’ve been focusing on is repurposing a lot of that input data into metadata that is useful for whether it’s an IPV team or a compliance officer or someone in regulation or reporting to better understand how that evaluation works.” – David Scalzetti 20:17 – “So backtesting is a huge piece…Being as large of a provider as we are and [with the] number of clients we have, we get a lot of challenges on our price, and more often than not the challenges are a function of being concerned about a particular valuation, but just getting some trigger ev...