Tuesday, November 18, 2014

FINRA Security Update - Changing Administrator (SAA)

FINRA is finally catching up with the realities of cybersecurity. They are implementing much needed verification controls to ensure that the Super Account Administrator ("SAA") cannot be changed without proper authorization. Prior to 11/19/14, FINRA would provide access to anyone that mailed or faxed them a document (without any real verification). Yes - your social security and personal information has been at risk for a long time!

Below is a summary of the FINRA communication.

Effective November 19, 2014, FINRA will implement new controls to enhance the security of the entitlement process for firms seeking to replace their Super Account Administrator (SAA) or update a current SAA’s information. If your firm is not seeking to change its SAA or update the name or email address of the current SAA, no action is required at this time.

Under the new entitlement process, firms must complete an Update/Replace SAA Form to replace or update the name or email address of their current SAA. This new form is not available online and must be requested by an Authorized Signatory of your organization by contacting FINRA’s Gateway Call Center at (240) 386-4848.

For more information on Authorized Signatories for firms and how to update or replace an existing SAA on or after November 19, please visit the FINRA Entitlement Program – Super Account Administrator page.

If you have any questions, please contact AdvisorAssist at support@advisorassist.com.

Tuesday, November 4, 2014

FINRA E-Bill Enhancements (Refunds & Alerts)

FINRA is finally adding some needed features to their E-Bill system.

Effective November 4, 2014, FINRA has updated E-Bill to allow entitled users to request a refund from the Advisor's Flex-Funding Account via E-Bill. Also, you can now subscribe to receive email alerts related to your firm's CRD Renewals Account, such as when the preliminary or final renewal statement is available, when a final statement is paid in full and when a final statement is due. To configure these alerts, go to the Alert Settings tab on E-Bill.

As always, if you have any questions, please email us at support@advisorassist.com.

Client Geography Review

As we prepare for annual renewal season, we strongly suggest that you run a client geography report to determine if you have clients outside your home state that exceed the de minimis threshold for that state.

Most states have set the de minimis threshold at 5 clients, meaning, if you do not have a place of business in that state, you may have up to 5 clients before you need to register or notice file. The are four (4) states that are exception, including:

  • Louisiana
  • Texas
  • Nebraska
  • New Hampshire

These states generally require firms to notice file (SEC) or register (state) prior to doing any business. Investment Advisor Representatives may also be required to register.

AdvisorAssist will analyze your geography report and determine which states you are required to be registered based on the report and the nuances of the various state regulations. You can submit these reports from your Advisor Portal under Compliance Activities > Submit Support Request.

It is best to complete these reports prior to November 10, 2014, as Preliminary Renewal Statements are released by FINRA on that date.

If you have any questions, please contact your AdvisorAssist consultant or email us at support@advisorassist.com.

Monday, October 13, 2014

Ready, Set, Renewals

Hello Advisors, it's about that time of year again for your advisory firm's Annual Renewal ADV filing!

To help get your firm prepared for the renewal season please view the 2015 Renewal Program Calendar where FINRA notes key dates regarding the Renewal Process. Key dates to note include:
  • When your Renewal Fee Statements will become available: November 10, 2014
  • When your Preliminary Renewal Statement Payments are due: December 12, 2014
  • When FINRA will automatically transfer funds from your Flex-Funding Account to cover your renweal balance: December 15, 2014
  • When final Renewal Fee Statement payments are due: January 15, 2014

On November 10th, 2014 AdvisorAssist compliance clients will receive an email with your firm's Preliminary Renewal Fee Statement to help ensure a smooth transition into 2015.

Click here for the full 2015 Renewal Program Calendar: http://www.iard.com/pdf/2015_renewal_calendar.pdf

If you have any questions please let us know at support@advisorassist.com

Monday, July 21, 2014

FINRA E-Bill - Subscribe to Notifications

Notice from FINRA re: E-Bill account notices

Effective today (July 21, 2014), entitled E-Bill users can subscribe to receive automatic email alerts regarding their FINRA Flex-Funding account and FINRA invoices.

Firms can set account balance thresholds and receive email alerts when their FINRA Flex-Funding account balance falls below and/or climbs above their pre-determined threshold. In addition, firms can subscribe to receive an alert when a new invoice is available, due within up to 30 days and past due up to 90 days.

To subscribe for an alert, click on the Alert Settings tab on E-Bill.

Monday, July 7, 2014

FYI - FINRA Payments Unavailable (7/17-7/18)

Hello all. FINR issued the following notice on July 7, 2014 regarding its payment system. ---- On Thursday, July 17, 2014, FINRA will begin upgrading its accounting system. As a result of the system upgrade, payments received on July 17 and 18, will not post to Flex-Funding Accounts until the morning of Monday, July 21. Web CRD and IARD will continue to process filings during this time as long as firms have sufficient funds available to cover the associated costs of your registration filings. ---- If you have any registration filings that require fees, please process payments prior to this date. Thank you. The AdvisorAssist Team

Wednesday, July 2, 2014

South Carolina - Compliance Program MUST be customized!

The South Carolina Securities Division made it very clear to advisors in its July 2, 2014 email (below). As you may be aware, you compliance program must be customized to reflect your business model and activities. It must be customized. Please see the attached notice.

Note: While other states have not yet required submission of these documents, they do expect the same level of customization.

From: SC Securities Division
Subject: Policies and Procedures Manual Review-Action Required
Date: July 2, 2014 at 4:21:03 PM EDT

When the South Carolina Securities Division is examining investment advisers, we frequently find weaknesses in adviser compliance and supervisory programs as documented in their policies and procedures manual. As a state-registered investment adviser, you are required to maintain written policies and procedures that are reasonably designed to prevent violations of the South Carolina Uniform Securities Act from occurring, detect violations that have occurred, and promptly correct such violations.

Given the weaknesses we have seen in the manuals that we have reviewed as part of our examination process, we are requiring that all state-registered investment advisers review their policies and procedures manual at this point in time to ensure that it is complete and up-to-date, and provide an electronic copy via return email to this address by Monday August 4. We will review the responses at a high level to get a better understanding of your firm’s operations as we schedule our on-site examinations, and a more detailed review will be conducted and comments regarding deficiencies will be provided when we conduct our on-site examinations.

Common deficiencies we have encountered include manuals that are out of date, are too generic and have not been tailored to the advisor’s business, include references to regulations other than the South Carolina Uniform Securities Act, or are incomplete. In other cases, we have seen very good manuals, but no evidence of any ongoing review of the manual or completion of any of the forms required by the manual.

Policies and procedures manuals are not required to contain specific elements. Rather, advisers should analyze their operations and identify conflicts and other factors that create risks, then design policies and procedures that address those risks. The Securities Division expects that adviser policies and procedures, at a minimum, address the following issues to the extent that they are relevant to your business:

  • Portfolio management processes, including allocation of investment opportunities among clients and consistency of portfolios with clients’ investment objectives, your disclosures to clients, and applicable regulatory restrictions;
  • Trading practices, including procedures by which you satisfy your best execution obligation, use of client brokerage to obtain research and other services (“soft dollar arrangements”), allocation of aggregated trades among clients, and correction of trading errors;
  • Procedures to ensure client suitability information is gathered and maintained in writing throughout the time during which the adviser works with the client;
  • The accuracy and timeliness of disclosures to clients and regulators, including account statements, advertisements, and the Form ADV Parts 1 and 2;
  • The accurate creation of required books and records and their maintenance in a manner that secures them from unauthorized alteration or use and protects them from untimely destruction;
  • Proprietary trading by you and the personal trading activities of your supervised persons;
  • Supervisory procedures, including review and written approval of new accounts, transactions, correspondence and handling of client complaints;
  • Processes to value client holdings and assess fees based on those valuations;
  • Portfolio performance reporting and performance advertising including methods of calculation, use of results, appropriate comparisons, and disclosure of limitations on information, methodology and relevance;
  • Proxy voting
  • Insider trading;
  • Safeguarding of client assets from conversion or inappropriate use by your personnel;
  • Safeguards for the privacy protection of client records and information;
  • Marketing advisory services, including the use of solicitors; and
  • Business continuity plans.

This manual should be a living, breathing document that is continually updated to reflect changes in the adviser’s business, rules, regulations and personnel, including documentation of a comprehensive review at least annually. The comprehensive review should be conducted by the appropriately designated person or persons, and a record created to evidence that the review has been conducted. Outdated versions should be maintained for at least the five year retention period required for the adviser’s books and records.

The adviser should provide its investment adviser representatives and employees with ongoing training of its compliance procedures, including notifying investment adviser representatives and employees when revisions are made.

We are frequently asked whether an investment advisory firm with only one investment adviser representative is required to maintain written policies and procedures, and the answer is yes. Your firm is required to maintain such policies and procedures regardless of the number of employees associated with the firm. However, since these policies and procedures need to be written to cover the compliance considerations relevant to the operations of the firm, it would be expected that smaller firms with simpler business models and few conflicting business interests would have simpler policies and procedures than a larger firm with a more complex business model or multiple conflicts of interest.

We are also asked about purchasing an “off –the-shelf” policies and procedures manual. While such a manual may be a good starting point, it must be thoroughly reviewed and revised to reflect the actual operations of your firm. Purchased manuals may be designed more for federal-registered investment advisers and reference the Investment Advisers Act of 1940, versus the South Carolina Uniform Securities Act, as required for South Carolina state-registered firms.

Absent extenuating circumstances, which must be communicated in writing to the Securities Division, investment advisers who fail to provide their policies and procedures manual by August 4 can expect to be referred for administrative action, which may include suspension or revocation of your license and fines.

Thank you for your assistance. If you have any questions, please contact Lisa Lomas or Pam Kirkland at (803) 734-9916.

South Carolina Securities Division

If you have any questions regarding your state or SEC compliance program, please contact AdvisorAssist at support@advisorassist.com.

Thursday, March 6, 2014

SEC Guidance on Custody for the ADV

Attention SEC Advisor Clients

You should have received an email from the SEC this week describing how to update the ADV1 (Item 9) for custody. They are addressing an area that is often confused. If your firm deducts its fees from your client's accounts, YOU HAVE CUSTODY!

Following is a copy of this letter and AdvisorAssist's correspondence with the SEC can be viewed here. (Yes, we like to get things in writing!)

To: SEC-Registered Investment Advisers,

This email is a reminder that all SEC-registered advisers that have custody of client assets should answer all questions in Item 9 of Part 1A of Form ADV. Each adviser’s answers will vary depending on facts and circumstances.

For example, advisers that have custody solely because they deduct fees from client accounts would respond “no” in Item 9.A. Additionally, these advisers would likely respond “no” in Items 9.B., and 9.D., and they likely would not need to provide information in Items 9.C. or 9.E. However, in Item 9.F., these advisers likely would need to indicate that there is at least one person acting as qualified custodian for their clients in connection with advisory services they provide to clients.

If you have questions, you may reply to this email.

U.S. Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, DC 20549-8549
Phone | 202.551.6999

Guidance provided by staff via the telephone or email is informal and is not binding on the staff or the Commission. When submitting tips, complaints, questions, or other information to the SEC, please read the Privacy Act Statement located at: www.sec.gov/privacy.htm.

What Action(s) Must Your Firm Take?

Custody ONLY due to deduction of fees:
If your firm is registered with the SEC and deducts its advisory fees from client accounts, you have custody. This is an area often confused because an advisor does not need to obtain an audit if there are certain safeguard in place with respect to this arrangement. The requirements include: 1) authorization via written agreement to deduct the fees; 2) client accounts maintained at a "qualified custodian"; and 3) each time you deduct a fee, you send an invoice to the custodian.

Custody due to other access to client accounts:

If your firm has custody of client accounts aside from just fee deduction, certain questions in Item 9 must be a "Yes" response.

Action Steps: AdvisorAssist will assist in making sure all information is accurate based on the unique situation of your firm.

For compliance clients of AdvisorAssist, we will be validating the accuracy of this ADV item. Please share any changes to your business model that might impact this analysis and filing.

Thank you.

Monday, February 3, 2014

Reminder -- ADV Amendments!!

Just a friendly reminder...

Annual ADV amendments are due on March 31, 2014.

Please complete your online questionnaire as soon as possible to ensure a timely filing.

If you have any questions, please email us at support@advisorassist.com.

Saturday, February 1, 2014

Minnesota IAR Registration window is closed

Minnesota issued an update to all Minnesota Registered Investment Advisors on February 6, 2014

As of February 1, 2014 The Minnesota Department of Commerce has closed the initial Investment Advisor registration window. This allowed investment advisors to register with the State of Minnesota without first meeting an exam requirement per the Amended Order (.pdf) issued on October 31st, 2013.

Any applications that have been submitted on or prior to January 31st 2014, will be reviewed and processed as outlined in the amended order. Any applications received on or after February 1, 2014 will need to comply with the requirements as outlined in Minnesota Statute 80A.58 [AA Note: which requires the Series 65 or 66 exam or specific exemption].

To date, close to 10,000 investment advisor representatives have been approved for registration and more than 2,000 refunds have been issued to firms. If you are waiting for a refund please remember to send the following information to the Securities Registration mailbox.

Firm Name/CRD Number
Individual name/CRD number
Transaction Number & Transaction Date
Posting Date
Dollar Amount
Hire Date

Please send questions or comments to: securities.commerce@state.mn.us.

For additional information please visit the Securities Registration and Enforcement Section of the Minnesota Department of Commerce website.

Please submit a support request if you have registrations in Minnesota that require attention.

Tuesday, January 14, 2014

Annual FINRA User Entitlement Certification

Friday, January 3, 2014

FINRA Bank Change - February 2014

FINRA issued a reminder notice on January 2, 2014 that they will be changing the bank used to process payments. Please see our original notification in November 2013.

A copy of the notice is below.

AdvisorAssist strongly encourages advisors to use the new E-Bill funding account instead of mailing and wiring money. We often encounter issues with FINRA mistakes with these manual payment processes.

If you must mail a check or make a wire, but very careful to follow the instructions and formally follow-up to ensure the funds reached your account.

For instructions on the new E-Bill system, please visit the AdvisorAssist Blog.

As a reminder, in February 2014, FINRA will switch its banking services to a new bank. As part of this transition, FINRA will simplify the methods firms use to make payments to us.

First, FINRA will consolidate all check payment addresses, with the exception of GASB payments, into a single payment address. This change will allow for a more efficient check payment and deposit process.

Second, to ensure your firm's payments are applied to the correct invoice in a timely manner, firms must include invoice numbers on all check remittances, and include it as the reference number on ACH and wire payments. Note: If a firm submits a payment without an invoice number, FINRA will apply the funds to the firm's FINRA Flex-Funding account, which is accessible via E-Bill. Someone at your firm must then transfer the funds to the appropriate invoice in order for the invoice to be closed.

Starting in February, you must use the following information to make payments to FINRA.

Mailing Address

To mail a check to FINRA, include the invoice number on the check and mail the payment to:

All payments (except GASB payments)
  Bank of America Lockbox Services   FINRA 418911   MA5-527-02-07   2 Morrissey Blvd.   Dorchester, MA 02125

GASB payments
  Bank of America Lockbox Services   GASB 418925   MA5-527-02-07   2 Morrissey Blvd.   Dorchester, MA 02125

Wiring Instructions

To wire a payment to FINRA, provide your firm's bank with the following information:

FINRA and subsidiaries (except GASB payments)
  Transfer funds to: FINRA   Wire ABA Number: 026009593   ACH ABA Number: 054001204   Beneficiary: FINRA   FINRA Account Number: 226005684771   Reference Number: Invoice number

GASB payments
  Transfer funds to: FINRA   Wire ABA Number: 026009593   ACH ABA Number: 054001204   Beneficiary: FINRA   FINRA Account Number: 226005684823   Reference Number: Invoice number

W-9 Information

Please see the attached W-9 for the relevant information to update your Accounts Payable system.

As a reminder, firms can view and pay invoices through E-Bill, FINRA's electronic billing system.

If you have any questions, please contact the FINRA Accounts Receivable Department at (240) 386-5909.

Thursday, January 2, 2014

FINRA - 2014 Final Renewal Statement

Happy New Year!

We hope you had a nice holiday season.

As the final step in the 2014 Renewal Fee process, AdvisorAssist is reviewing your accounts to ensure proper processing of your fees. If during the preliminary renewal process, we made additions to filings or removal of filings, there are adjustments that will need to be made to your account. You may have an additional balance due by January 10, 2013 or be due a refund.

You may have received the following generic notice from FINRA. We will inform or any action required as soon as we review your account this week.

Your firm's Final Renewal Statement, which reflects the final registration statuses of your investment adviser firm and representatives as of December 31, 2013, is now available in IARD. Adjustments resulting from registration approvals or terminations subsequent to the posting of the Preliminary Renewal Statement on November 11, 2013, have been made in this final, reconciled statement. Retrieve your online statement by logging onto IARD and selecting the Renewal Statement link from the Accounting section of the site map.

Please note the following with respect to your statement:

  • If your firm's Final Renewal Statement reflects 'Paid in Full' and the 'Amount Due' is $0, then either:
    • your firm is not required to submit any additional payment because no adjustments were made after the Preliminary Renewal Statement; or
    • your firm overpaid its renewal fees and the funds were transferred to your firm's FINRA Flex-Funding Account, which you can verify in your firm's Flex-Funding Account Transfer Detail. You may request a refund or leave the funds in your Flex-Funding Account for future registration-related fees.
  • If you have an amount due, your payment must be received by FINRA and posted to your Renewal Account by January 10, 2014. Visit the IARD website for detailed renewal payment instructions.
  • If your firm has any renewal discrepancies, you should report them in writing to FINRA.

For complete renewal information, visit the IARD Renewal Program Web page and review the IARD Renewal Program Bulletin. If you have questions, please contact the IARD Call Center at (240) 386-4848 or email iard@finra.org.

The IARD Renewal Program facilitates the annual renewal of IA firms and their representatives' registrations with jurisdictions/states. As the operator of IARD, FINRA collects the renewal fees of electronic IA filers on behalf of the jurisdictions. Important note to SEC-registered IA firms: The IARD Renewal Program does not include fees associated with your firm's SEC registration.

Problems logging onto IARD?
If you have not logged onto IARD in the past 120 days, your password has expired. To obtain a new password, select the Forgot Password? link on the login screen and a new password will be emailed to you.