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Your professionally curated research and reference resource fully integrating treatise and how-to guidance with underlying laws, rules, interpretations, and hundreds of sample documents.

New Textbook Available—-Discount Code!

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We're pleased top announce that Karl is co-author of the first new textbook about the '40 Acts in over 30 years! Investment Management Regulation: An Introduction to Principles and Practices. Available now at cap-press.com. Just click on the "View More" headline to this blurb above to be taken to the publisher's site. As Members you are entitled to a 30% discount at the Carolina Academic Press's site. Please use the discount code, IMR2019. Valid until Sept. 30th, 2019. If you are a professor teaching this material, you may order a free review copy at the site.

Adviser Regulatory & Compliance News

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Caveat Emptor:  SEC’s Best Interest Fiduciary Initiatives Adopted [Updated]

September 20, 2019

It’s a matter of caveat emptor: buyer beware. After many months of consideration, investor testing/surveying, and circa 6,000 comment letters, the SEC acted in early June 2019 to enhance the protection of retail investors while not materially disrupting the existing investment industry business models and the ability of investors to choose among different types of providers such as advisers and brokers. The key measures adopted are as follows: • New Regulation BI (as in "Best Interest")…generally referred to as “Reg. BI;” • New Form CRS (i.e., "Customer Relationship Summary"); • Interpretive advice re: an investment adviser's fiduciary duties; and • An interpretation of the "solely incidental" aspect of the broker-dealer exclusion from the definition of an "investment adviser" under the Advisers Act. The new Reg. BI will go into effect in about a year (following formal publication of the new regulation). Many think that this will bring an end to the long journey and discussion regarding fiduciary duties of advisers and brokers. In reality, it really is a matter of caveat emptor both for the industry and retail investors. Much will be written in the coming months about the likely impact of the new measures. As a practical matter, advisers and brokers must review their policies and procedures (such as disclosure and customer on-boarding processes) to assure compliance in the future. PLEASE BE SURE TO CLICK THE HEADLINE TO THIS BLURB TO ACCESS AN EXTENSIVE RESOURCE COLLECTION ON THE NEW INITIATIVES. WE ARE ADDING TO THE REFERENCE LIST AS WE FIND MATERIALS.

Bloomberg:  End of Era: Passive Equity Funds Surpass Active in Epic Shift

September 12, 2019

We generally don't post news about markets and conditions. However, this is significant: the shift from active to passive management has been underway for many years, and it's accelerated this decade. According to the Bloomberg article, Morningstar data is showing that fund flows this past August tilted on balance to passive funds compared to actively managed funds. Of course, there's no knowing whether this will become a permanent trend, but it's noteworthy. Please click the headline to this blurb to be connected to the Bloomberg story.

SEC Publishes Compliance Guide for Form CRS Relationship Summary and Amendments to Form ADV

September 12, 2019

In early Sept. 2019, the SEC published a new web page designed as "A Small Entity Compliance Guide" relating to Form CRS and Form ADV compliance. The Guide provides a nicely curated set of materials and a Q&A format describing how to comply with the new requirements of Form CRS, the Client Relationship Summary adopted in June 2019 as well as related Form ADV changes. Please click the link in the headline of this article to access the original SEC document.

Investment Adviser Principal and Agency Cross Trading Compliance Issues Risk Alert

September 9, 2019

In early Sept. 2019, the SEC issued a Risk Alert by its OCIE division, providing an overview of the most common compliance issues identified by OCIE related to principal trading and agency cross transactions under Section 206(3) of the Advisers Act. These issues were identified in examinations of investment advisers over the past few years. Consistent with a series of enforcement actions for the most extreme violations, the key issues identified involve principal transactions and agency cross transactions when the adviser acts as a broker. The Risk Alert provides color and detail regarding the observed weaknesses and violations and "encourages advisers to review their written policies and procedures and the implementation of those policies and procedures to ensure that they are compliant with the principal trading and agency cross transaction provisions of the Advisers Act and the rules thereunder." Please click the headline to this article to access the complete, original Risk Alert.

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