COVID-19 has impacted the world’s operations tremendously. From volatile markets, to business loan grief, and overwhelming cyber threats, member firms have been forced to a new work environment, remote. Though the world entirely has been forced to a pause, FINRA has notified member firms they have used this time of uncertainty to crack down rule and regulation enforcement to protect investors.

Abra, a California-based trading app, and related firm Plutus Technologies Philippines Corp (“Plutus”), were charged by the Securities and Exchange Commission (SEC) on July 13, 2020. Abra and the related firm were charged for offering trades to non-registered investors and for failing to record all trades on a registered national exchange.

The U.S Securities and Exchange Commission (“SEC”) has focused on cybersecurity issues for many years, but with increased observation of cyber threats, the Office of Compliance Inspections and Examinations (“OCIE”) is committed to responding to such threats while also monitoring cybersecurity developments and improving operational resiliency.

ThinkAdvisor published an article on June 18, 2020 discussing the importance surrounding broker-dealers retention and review of electronic communications. FINRA took action against a firm’s Chief Compliance Officer (“CCO”) for failing to retain business communications and for using an outside email address to conduct business.

Read our Regulatory Brief on the proposed new changes to FINRA’s Continuing Education Program (“CE”). FINRA Regulatory Notice 20-05 – CE Program Proposed Changes

Read our Regulatory Brief on Regulation BI to learn more about the requirements. Asgard Regulatory Brief – Regulation Best Interest (1.28.2020)

FINRA disciplinary actions taken against firms and individuals due to violations of FINRA rules, federal securities laws and MSRB rules. Firm Fined: Dawson James Securities, Inc. The Firm was fined $20,000 as a result of Registered Representatives contacting phone numbers that appeared on a national do not call list.

Cybersecurity has become a continuous concern as hackers constantly create new ways of gaining private information from their targets, leaving firms vulnerable to attacks. Although firm’s are required to implement policies and procedures to protect customer information pursuant to SEC Regulation S-P, it is difficult to anticipate every threat or hazard that could occur.

As Summer has turned to Fall and you are getting around to that “To Do” list that may have hit the back burner all summer, it’s time to focus on your year-end compliance priorities. Plenty of people use a pen and paper, calendar, or online diary without any issues. And yet, a new to do list seems to emerge daily with important items being left behind.

On September 4, 2019, the  Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert related to principal trading and agency cross transactions under Section 206(3) of the Advisers Act. These topics were identified in recent examinations of investment advisers.

The Office of Compliance Inspections and Examinations (“OCIE”) conducts a series of examinations assessing SEC RIAs business practices, with the purpose in protecting retail investors. The OCIE has recently examined over 50 RIAs revealing a variety of deficiencies.

The Office of Compliance Inspections and Examinations (“OCIE”) conducts the SEC’s National Exam Program with a mission to protect investors by improving compliance, preventing fraud, monitoring risk and informing policy. The results of OCIE’s examination are used by the SEC to inform rule-making initiatives, identify and monitor risks, improve industry practices and pursue misconduct.

Beginning May 6, 2019, the SEC will permit an amendment to FINRA Rule 4512 allowing authorized individuals to use electronic signatures for discretionary accounts held at member firms. Presently, Firms are required to maintain manually executed signatures for all individuals authorized to exercise discretion in applicable accounts.

The following disciplinary action was taken against both Wedbush Securities, Inc and one of its registered representatives, (“RR”) due to violations of Section 17(a)(1) and (3) of the Securities Act, Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder. Firms Fined. Wedbush Securities, INC. The Firm was fined $250,000 for failing to reasonably supervise one of its RR, Timary Delorme.

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) released its 2019 examination priorities. The protection of retail investors, including seniors and those saving for retirement, remain a priority.

On Friday December 14, 2018, the Securities and Exchange Commission (“SEC”) published a Risk Alert advising Registered Investment Advisers (“RIAs”) of their obligation to revise written policies and procedures related to electronic messaging utilized by their personnel as a recent examination conducted by the Office of Compliance Inspections and Examinations (“OCIE”) identified shortfalls.

The Securities and Exchange Commission (“SEC”) settled charges against Voya Financial Advisors Inc. (VFA”), a dual FINRA member broker-dealer and SEC registered investment adviser for its failure in adopting written policies and procedures designed to protect customer information and protect customers from the risk of identity theft.

Earlier today FINRA issued Regulatory Notice 18-31 to provide member firms with information relative to the recent guidance issued by staff of the SEC’s Division of Trading and Markets with respect to the use of third-party record keeping services to preserve records pursuant to SEA Section 17(a) and SEA Rule 171-4.

As of October 1st, 2018, all Firms must have a designated Principal Financial Officer (“PFO”) and a designated Principal Operations Officer (“POO”). All designees must have the S27 (“Financial and Operations Principal” or “FINOP”) registration to act as a PFO or a POO. This new rule also includes Firms currently exempt from the requirement of having a FINOP or an Introducing Broker-Dealer Financial and Operations Principal.

Examination Restructuring: Effective October 1, 2018, the SEC is restructuring the representative-level qualification examinations by creating a general knowledge examination called the Securities Industry Essentials (“SIE”) and transforming the representative-level examinations into specialized knowledge exams.