Blog Masonry Full Width

Investment advisory firms and related individuals provide “disciplinary disclosures” to the public and the regulators though registration and reporting filings, which include for example and as applicable, Form ADV Parts 1A, 2A, and 2B, and Forms U4 and U5. Firms and individuals have respective obligations to correctly answer all questions on the registration and reporting documents and, at times beyond that, as fiduciaries to “make full disclosure to clients of all material facts relating to the advisory relationship.” However, not every disciplinary or legal situation requires a “disciplinary disclosure,” and some firms and individuals prefer not to disclose where not mandated by the question or fiduciary principles. We provide some insight below and remind firms and individuals to promptly analyze and understand “disciplinary disclosure” obligations whenever one becomes the subject of or connected to a complaint, investigation, examination, arbitration, proceeding, or the like.

Regulatory Concerns for Data Loss Prevention

How confident are you in your firm’s information technology controls to prevent privacy breaches? The Securities and Exchange Commission is focusing its sights on investment advisers’ use of and increasing reliance upon technology – technology which simultaneously improves efficiency and introduces additional complexity to enterprise risk. As the SEC’s National Examination Program (NEP) examination priorities for 20131 indicate, regulators are keenly interested in the privacy and security issues surrounding the increased reliance upon information technology by investment advisers.

50 Due Diligence Questions to Ask Your Cloud Services Provider

You’ve made the decision to use cloud-based services. Selecting the right vendor is just as important.

In the financial services world, we frequently hear the mantra that advisers, as fiduciaries, have an obligation to seek “best execution” in relation to their clients’ transactions. In meeting this obligation, an adviser must execute securities transactions for clients in such a manner that the clients’ total cost or proceeds in each transaction is the most favorable under the circumstances. In assessing whether this standard is met, an adviser should consider the full range and quality of a broker’s services when placing trades, including, among other things, execution capability, commission rate, financial responsibility, responsiveness to the adviser, and the value of any research services provided.

It’s Monday morning. You’ve barely had time to set your coffee down on your desk and pull up your email when the head of technology steps into your office unannounced. His breathless, panic-stricken voice can barely get the words out, yet you somehow know why he’s there before he opens his mouth to utter the words you’ve been dreading: “I think we’ve had a breach.” You’re suddenly at a loss for words, managing only a slight response, as if the question will make the issue go away: “A breach?” Almost instinctively the two of you look at each other and simultaneously ask, “What do we do?”

The breadth and destructive force of Hurricane Sandy, which in October 2012 spread across 15 states as the largest Atlantic hurricane on record, tested the financial industry’s best-laid plans for business continuity management (BCM). Regulatory authorities, such as the Securities and Exchange Commission (SEC), the Financial System Regulatory Authority (FINRA), and the Commodity Futures Trading Commission, used this event to re-examine, re-emphasize, and re-educate the financial base concerning common weaknesses and lessons learned. And beyond the regulatory compliance concerns, many investment advisors learned how a disaster could severely challenge their service to clients and the stability of their businesses.