Friday, September 21, 2018

SEC to Offer Assistance Post-Florence

SEC to Offer Assistance Post-Florence

On September 19, 2018, the SEC issued a press release stating that it would provide relief to certain entities affected by Hurricane Florence. The SEC recognizes that the storm and its aftermath have resulted in the loss of property, electricity, and mail service, which affects both individuals and businesses.

Assistance is coming in the form of conditionally exempting affected entities from certain filing requirements, including Section 13 Filings, for periods following the hurricane. The SEC has also extended the filing deadline for certain reports and forms.

While the relief was designed primarily for publicly traded companies, investment companies, accountants, transfer agents, and municipal advisors, it is appropriate for registered investment advisors to be aware of the assistance/filing extensions as this may impact certain filings undertaken by your firm.

To read the full press release please go to Click here

AdvisorAssist Team

Monday, March 5, 2018

Do you have licensed insurance agents in New York?

Failure to File Certification of Compliance

On March 3rd, 2018, a notification was sent to those individuals who are licensed with the New York State Department of Financial Services ("DFS"). The DFS is the regulatory body that supervises banks, mortgage originators, and insurance companies/agents, among others. However, the DFS does not supervise registered investment advisors or broker-dealers.

Therefore, if you received the notification of “Failure to File Certification of Compliance”, it is most likely because you or a member of your firm are insurance licensed in New York.

The vast majority of the recipients of the Failure to File Certification of Compliance are licensed insurance agents. As a licensed insurance agent in New York, you are subject to the regulations of the DFS. The notification was a reminder to complete the online DFS certification of compliance to their cybersecurity regulations.

We suggest that you review the implemented cybersecurity rules provided by DFS (LINK). This rule does provide a number of exemptions, where you would not be subject to the full scope of the rule (See Section 500.19 Exemptions). However, you will still be required to certify to the state of New York whether you are in full adherence to the rule or you rely on the exemption, by filing through the DFS portal (LINK).

Lastly, we suggest that you reach out to your insurance affiliates and their compliance departments to discuss the details of the DFS cybersecurity rules. They may be able to provide further assistance and guidance to this rule and how it applies to your insurance business.

AdvisorAssist Team

Wednesday, February 14, 2018

Share Class Selection Disclosure Initiative

Share Class Selectrion Disclosure Initiative

On February 12, 2018, the U.S. Securities and Exchange Commission ("SEC") released their Share Class Selection Disclosure Initiative. This communication is right on the heels of its 2018 Examination Priorities [issued February 7, 2018], where the SEC noted its focus on investors being in higher cost share classes or those with a conflict of interest not fully disclosed.

Under the Share Class Selection Disclosure Initiative, the SEC is offering amnesty to Advisors that self-report that they failed to disclose conflicts of interest related to recommendations of funds with a 12b-1 fee when lower cost share classes were available to the investor. Please note the following from the SEC’s announcement:

“The investment adviser "received" 12b-1 fees if (1) it directly received the fees, (2) its supervised persons received the fees, or (3) its affiliated broker-dealer (or its registered representatives) received the fees.”

Advisors have until June 12, 2018 to self-report as part of this initiative. By self-reporting, eligible advisors will have to pay back the difference of the 12b-1 fees versus the fees of the lower cost share class. The SEC will conduct a look back of fees earned since January 1, 2014. In return, the SEC will not impose civil penalties related to the lack of disclosures for any Advisor that self-reports.

It is important to note that Advisors already involved in an enforcement action do not qualify for this initiative. If Advisors are subject to a pending SEC examination, you are still eligible to self-report, however.

Advisor Insights:

  • Run a report of all recommendations of mutual funds where you earned a 12b-1 fee (since 2014).
  • Identify if a lower cost share class was available for the same fund at the time of the recommendation. If yes:
    • Were explicit disclosures provided to the client of the conflict of interest that you recommended a more expensive share class when a lower fee share class was available.
    • Consider conducting an analysis to calculate the difference of the 12b-1 fees earned versus the lower cost share class.
  • Investments in share classes other than the lowest share class is not necessarily an issue. For example, the Advisor may use “no transaction fee” or “NTF” funds in certain instances. As a fiduciary, it is important to evaluate what is in the best interest of the client. A smaller position or more frequently-traded position may be best suited to an NTF product. However, the SEC has raised concerns of Advisors in wrap fee programs [that absorb fees] utilizing NTF funds in a more costly wrap structure.

If Advisors have any questions on whether to self-report, AdvisorAssist recommends that you contact legal counsel. Self-reporting is done with the SEC’s Enforcement Division, who will then recommend a settlement in which the Advisor neither admits nor denies the findings. However, the Advisor will be required to consent to the institution of an administrative and cease-and-desist proceeding under Sections 203(e) and 203(k) of the Advisers Act for violations of Sections 206(2) and 207 of the Advisers Act based on the adviser's failure to disclose the conflict of interest.

If you would like additional information about the SEC’s Share Class Initiative, please refer to the SEC’s Share Class Selection Disclosure Initiative announcement or contact your Compliance Consultant or

AdvisorAssist Team

Tuesday, January 16, 2018

2018 Annual FINRA Entitlement User Account Certification

FINRA requires that the Super Account Administrator ("SAA") for your advisory firm log into your account to validate the users that have access to your filing, billing and related information. AdvisorAssist serves as the "Alternate Administrator" for your FINRA account. Typically, your Chief Compliance Officer ("CCO") serves as the SAA.

The AdvisorAssist team has emailed our instructions to certify and how to communicate back with us. If you have any questions, please contact us at

Thank you.
The AdvisorAssist Team

Below is the email you would have received from FINRA:
Subject: Annual FINRA Entitlement User Accounts Certification - [Your Firm]
Start Date: 1/8/2018
Due Date: 2/8/2018
One of the responsibilities of FINRA Super Account Administrators (SAAs) is to ensure that users in their organization who require access to applications in the FINRA Entitlement Program to perform their job responsibilities are properly entitled to these applications and the sensitive data that these applications may contain. While FINRA encourages administrators to review user accounts periodically throughout the year and to delete accounts when user terminate, FINRA conducts an annual user accounts certification program to enhance this review process. The purpose of this email is to notify you that today begins FINRA's 2018 Entitlement User Accounts Certification Period.

During this 30-day certification period, you will need to review your organization's user accounts to determine that:
  • each user has a continuing need to access FINRA application(s) on the organization's behalf;
  • each user is entitled only to the applications and privileges needed to perform current job responsibilities; and
  • only users who require access to sensitive data (e.g., Criminal History Record Information, social security or tax identification numbers, dates of birth) are entitled to access this type of data.
For your convenience, you can download your user account information into a report to send to other individuals within your organization to confirm individual's appropriate entitlement, including access to applications, privileges, and sensitive data. FINRA recommends that you certify your users on the same day you request the download to prevent having to perform a subsequent review of your users as the entitlement data may have changed since the download was requested.
If user accounts are not certified within the 30-day certification period, the capability to create, edit and clone accounts within an organization will be disabled for all Administrators and will remain disabled until an organization completes the certification process. Organizations that fail to certify their users will be referred to the appropriate regulator for follow up.
To begin the certification process, please click here. Note: At the beginning of the year while all firms are participating in the SAA certification process, user administration system response time may be a little slower than usual.
Additional entitlement information can be found on the FINRA Entitlement Program page.

For questions concerning the certification process, please contact the Gateway Call Center at:
(301) 869-6699 (Broker/Dealers)
(240) 386-4848 (Investment Advisers)

Thank you.
The AdvisorAssist Team