The Securities Compliance Podcast: Compliance In Context

Welcome back to the Compliance in Context Podcast! On today’s show, we take an in-depth look at the SEC’s new Custody rule proposal and the impact of these new requirements on investment advisers, broker-dealers, and custodians. In our Headlines section, we examine the new Cybersecurity rule proposal (also known as Rule 10) and the new proposed amendments to Reg S-P. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where in honor of Women’s History month, we look at a legendary Greek physician who helps show us how women have been breaking down barriers across the centuries. Show Headlines SEC Proposes New Cybersecurity Requirements SEC Proposes Amendments to Reg S-P SEC Proposes Expanded Application of Reg SCI Interview with Issa Hanna and Genna Garver History and background of the Custody Rule and recent developments What are the specifics of the rulemaking? Review of the scope of assets covered under the rule proposal How are real estate assets treated? What is the scope of activities covered? What is the impact on managers that have discretionary authority? Review of the written agreement and attestation requirements What is the real cost of compliance here? What does this rule tell us from a policy perspective about the focus of the SEC in this area? History Has Your Back The legend of the Greek physician Agnodice Celebrating women in the investment management space Quotes 17:20 – “I think one of the major things that they’re doing here as a part of this rule–or this rule proposal–is to bring the guidance that’s been scattered all over the place, within the text of the rule. So everyone knows where to find everything. It’s all accessible. That is something that everybody should welcome, right? Regulators should make the rules and make the guidance as accessible to everyone as possible.” – Issa Hanna 44:21 – “I just think that there is this misconception that the assets we’re talking about have to be the assets that they’re providing investment advice on. And it’s much broader than that, even under the current rule, so I think that’s something to look out for.” – Genna Garver

Welcome back to the Compliance in Context Podcast! On today’s show, we do a deep dive into the wellspring of legal and compliance issues surrounding the topic of ESG, including an analysis of all the recent rulemaking in this space and what the practical application of these rules could mean for firms and their respective compliance programs. In our Headlines section, we examine the SEC examination priorities for 2023, and finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where an old subway incident can teach us about seeing the extraordinary in the everyday and showing a little appreciation for our compliance officer family. Show Headlines 2023 Examination Priorities from the SEC Division of Examinations Interview with Sara Donaldson and Adam Aderton Introduction to ESG What is the recent impact of ESG on the broader markets? What is the rule proposal regarding Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices? What is the Names Rule proposal discussing rule changes to prevent misleading or deceptive fund names? What are the final amendments to Form N-PX and additional proxy voting disclosures? What does the active rulemaking in this space tell us about the state of the SEC broadly? What are we seeing from the SEC in the ESG enforcement space? In applying ESG, how are issues getting visibility, disclosures being drafted, and policies and procedures being written and tested? What’s On My Mind Joshua Bell plays violin in the DC Metro subway Finding the extraordinary in the everyday Quotes 16:34 – “Even if you don’t consider yourself an ESG manager, but you’ve told investors that you consider ESG factors in making investment decisions (perhaps from a financial materiality standpoint), these rules could affect you and scope you in to being an integrational fund manager, depending on how the final rule is adopted.” - Adam Aderton 41: 58 – “Yes, it is helpful because it makes a clearer roadmap in terms of what we need to do and the data needed and the expectations that the SCC has. I think it is onerous, but on the other hand, because it is so detailed, you can just get tripped up on not following one step or not doing a step that you said you were going to do cause it’s in your compliance policy. So it’s a balance, and I can respect the SCC trying to take care of the investors. But on the other hand, it’s putting a lot of work and risk on the investment advisors that are running and managing those firms.” - Sara Donaldson

Welcome back to the Compliance in Context Podcast! Today’s show is a historic one as we officially launch Season 4!! To help us celebrate such a momentous occasion, we welcome in Ranah Esmaili to do a deep dive on recent trends in the SEC examination space and kickoff the next iteration of our Lessons From The Front Lines series. An SEC alum herself, Ranah shares some invaluable insights in many critical areas affecting a firm’s compliance program including disclosures, cybersecurity and information security, off-channel business communications, private funds, mutual funds, the new Marketing Rule, and much more. Show Interview with Ranah Esmaili What are some of the general examination practices you’re seeing right now? What are some of the key areas where you’re seeing this play out in examinations today? In the areas of cyber and information security, where do you see exam teams focusing their efforts? Is the SEC focusing on the issue of off channel communications during examinations and what are they looking at? How can firms enhance their electronic communications policies, procedures and practices in anticipation for an exam? What is the focus in examinations in the private fund space? What is the focus in examinations in the mutual fund space? Now that the compliance date for the new Marketing Rule has passed, what’s the SEC doing on the exam front? What are some things firms can be doing post-Compliance date to ensure good marketing rule hygiene? Tips for firms that looking to prepare for exams Quotes 10:07 - “We’re talking about environmental, social and government investing, so ESG. The SEC has been scrutinizing ESG investing out of a concern for green washing. And that term ‘green washing’ is basically the practice of making investments look more E, S, and G friendly than they really might be.”- Ranah Esmaili 13:00 - “Compliance failures alone can really carry serious consequences. So when the SEC is focused on ESG compliance, policies, and procedures, that’s really not just an academic exercise. It can carry really serious consequences.”- Ranah Esmaili 24:04 - “Firms can send out periodic compliance reminders, just so that the issue is always at the top of employees’ minds. They can conduct training. They can require employees to certify compliance with the firm’s policies and procedures. And they can conduct electronic surveillance, looking for indicators of unauthorized communications. To the extent that the firms are identifying employee violations of their [recordkeeping] policies, they should have a thoughtful approach for dealing with those violations, particularly where they find employees that have repeat violations.” - Ranah Esmaili

Welcome back to the Compliance In Context podcast! Today’s show features two very special guests in the investment management space, Karen Barr from the Investment Adviser Association and Lisa Crossley from the National Society of Compliance Professionals, to talk to us about what’s happening in the investment adviser space, discuss the rich history of both organizations and more recent DE&I efforts, in the industry and what has helped these women become the fantastic leaders they are today. In our Headlines section, we examine the recent criminal indictment of FTX founder Samuel Bankman-Fried and some recent comments from Commissioner Peirce on ESG. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where we examine an old Navajo tradition that might help us polish the experiences over the last year and provide us with some perspective as we look toward 2023. Show Headlines DOJ, SEC and CFTC Charge FTX and Founder with Fraud (criminal indictment, SEC Complaint, CFTC Complaint) SEC Commissioner Peirce Criticizes SEC's Climate Disclosure Proposal Interview with Karen Barr and Lisa Crossley What is the mission and purpose of the IAA? What is the mission and purpose of the NSCP? Discuss the state of the registered investment adviser industry and the Investment Adviser Industry Snapshot 2022 Review key metrics from the survey and how the investment adviser industry has grown significantly over the past few years Given some of these trends, how do you see the investment adviser industry evolving in the future? Review the impact and focus of DEI initiatives within each organization and within the industry How did you get to the position you’re in now? What is some advice you would give to other women in our industry looking to take on leadership roles within their own organizations? Final Segment – History Has Your Back Examining the old Navajo tradition of polishing turquoise and how it can impact the way we view our past experiences and lead us toward a brighter tomorrow Quotes 11:00 - “The Investment Advisor Association is the leading association, advancing the interests of fiduciary investment advisory firms. And I do say ‘firms’ because we’re a trade administration. Our members represent the broader universe, both asset managers and RIAs, and they range in size from some of the largest asset managers in the world to the smaller five- and ten-person shop that really make up the core of our industry, and everything–everything–in between.” – Karen Barr 15:58 - “The mission of NSCP is to create a diverse professional community for compliance, by compliance. And I’m often asked, ‘What does that motto for compliance by compliance mean?’ NSCP is a 501C6 organization. It’s a membership organization versus the IAA, which is a trade or

Welcome back to Compliance In Context podcast! On today’s show, Given the speed and complexity of rulemaking this year from the SEC, we thought we’d give you a break from the technical, and focus on a few tips on how to handle the physical and mental parts of being a compliance officer. To help guide us through this conversation, we welcome in Debbie Hennelly, founder of Resiliti and an expert on organizational resilience by creating cultures of integrity, innovation, and inclusion. In our Headlines section, we look at the recently published SEC Enforcement numbers and review the recent rulemaking on the investment adviser oversight of service providers. And finally, we’ll wrap up today’s show with another installment of History Has Your Back, where we examine the life of Eve Ball and embracing a new perspective as we enter into the season of annual compliance reviews. Show Headlines FY 2022 SEC Enforcement Results SEC Proposes New Oversight Requirements for Certain Services Outsourced by Investment Advisers Interview with Debbie Hennelly What is mental resiliency? What is burnout and when does it occur? How can compliance officers deal with burnout? What are ways compliance professionals can prevent burnout? How do we recognize when burnout is occurring? Tips and insights on dealing with burnout How can maximize our own potential and the performance of team members? Valuable resources for dealing with burnout Final Segment – History Has Your Back Examining the life of Eve Ball and how to embrace second chance opportunities inside your compliance program and as part of your annual review Quotes 24:09 - “The transformational piece of what we do is when we get people in the organization who are outside of ethics and compliance to really own the preventive stuff and get them to understand that, even if risk management is in our job title, we’re not the ones–really–that control the risk. They do.” - Debbie Hennelly 34:34 - “When you get into ethics and compliance, the legal floor for behavior is just a floor and going beyond what the law or regulations require is when the companies values or mission or purpose, the culture, is what drives behavior or should drive behavior beyond what’s legally required.” - Debbie Hennelly

Welcome back to Compliance In Context podcast! On today’s show, we do a deep dive on the new SEC Cybersecurity Risk Management rule proposal for Investment Advisers—what it says and what you can do now to help prepare your firm for the potential updates that may be necessary comply with the new rule. In our Headlines section, we look at two recent interviews from Chair Gensler stating that most cryptoassets are securities, and what the future holds for this growing area of the financial markets and the potential impact on compliance. And finally, we’ll wrap up today’s show with another installment of Outtakes series where a recent SEC and CFTC sweep uncovered “egregious misconduct” related to off-channel business communications for 16 regulated entities, and what are some of the key lessons investment adviser and broker dealer firms should take away in order to avoid suffering the same fate. Show Headlines Chair Gensler interview with PLI regarding disclosure requirements of digital assets Chair Gensler interview with Coinbase regarding cryptoassets as securities Interview with Amber Allen and Craig Watanabe Review the evolution of the SEC’s Cybersecurity guidance Reg S-ID Reg S-P Prior enforcement actions SEC Risk Alerts Discuss the specifics of Proposed Rule 206(4)-9 Analyze the benefits of cybersecurity risk assessments Outline additional elements of the new rule in conjunction with best practices from prior guidance User Security and Access Information Protection Vendor Management Examine the use of incident response plans and applicability of cyber insurance Summarize key steps firms can take to protect their firms now and what to do when a breach occurs Final Segment – Outtakes SEC and CFTC Sweep Uncovers “Egregious Misconduct” Related to Off-Channel Business Communications Quotes 09:24 - “I think evolution is a good word and I would view this most current proposal (Rule 2064-9) as evolutionary rather than revolutionary. And in your introduction, I really picked up on one key word and I think that really characterizes what the SEC is doing, and that is codify. And I’ll take it one step further: formalize.” - Craig 12:05 - “Having the potential obligation to disclose an incident within 48 hours of that occurring could be a pretty onerous requirement for the firms, especially when they’re trying to juggle some of the things that go alongside of a data breach.” - Amber 26:32 - “One of the problems with cybersecurity is that it’s easy to talk about but hard to do. And I will say this, it’s particularly challenging because many compliance officers don’t have a lot of savviness with regard to IT and, in particular, information security.” - Craig

Welcome to Episode 6 of the Marketing Rule Master Class mini-series. In our final episode we are building upon the lessons learned in the prior five episodes with a focus on key compliance considerations for implementing the Marketing Rule. Moderator Carlo di Florio, ACA, along with panelists Craig Watanabe, DFPG Investments, Chas Spiros, ACA, and Julia Reyes, ACA, discuss implementation timelines and challenge, incorporating the right policies and procedures for your firm, training and educating key stakeholders inside your firm, and how technology can help with implementation, execution, and ongoing monitoring. Thank you for joining us for the Marketing Rule Master Class mini-series! Show 02:12: Implementation timelines and main challenges 17:51: Key consideration in drafting policies and procedures 31:57: Key considerations in marketing approval workflows 48:30: Setting a date for implementation and training 54:40: Suggestion for testing and monitoring 1:00:20: How can technology help with implantation, execution, and monitoring Quotes 02:27 - “It can be very helpful to break it down into distinct phases that are, maybe a little bit more manageable. So with regard to the task at hand–the marketing rule–I would break it down to four phases. 1, drafting your policies and procedures. 2, creating or modifying your marketing review workflows. 3, setting a date for implementation and training. And then 4th, performing testing and monitoring.” - Craig 6:44 – “I can summarize my thoughts in one word, that is, assessment. I think that each firm needs to do an assessment based upon how this rule will impact them and how based upon their assessment, then try to coordinate, and it might be helpful to go back to the four steps I outlined previously and design a timeline that makes sense to the firm.” - Craig 08:18 - “From a practical standpoint, one of the things that I’ve seen via our marketing reviews is really substantiation. You’ll be surprised how many firms will say, ‘We are the best at doing x, y, and z.’ And if Julia and I are in a review, we’ll say, ‘If the FCC were here on an exam, could you produce that in a relatively quick manner?’ and in most of the cases it’s no. It could be a rating, an award that they’re citing. That could be just where they’re getting some sort of impetus for why they are the best at what they do.” - Chas 20:29 – “You can make decisions to go above and beyond the rule for operational continuity, ease and what you think works best to achieve the objectives of the rule. – Carlo 21:40 – “This is a real opportunity for compliance teams to gain parity with internal business groups that had not existed in the past.” – Chas 28:31 – “For us as compliance officers, we have to expand our horizons beyond the written word." – Craig 57:16 – “There are times we have seen inception returns back to 1988. I think it might be worth taking a look at those really long histories to see if you still do have the substantiation.” – Julia Resources ACA Group Marketing Rule Res

Welcome to Episode 5 of the Marketing Rule Master Class mini-series. Episode 5 focuses on testimonials, endorsements, and third-party ratings. Moderator, Patrick Hayes, Calfee and panelists Jaqueline Hummel, ACA, Anthony Dillingham, ACA, and Matt Shepherd, ACA, delve into the nuances and traps for the weary when utilizing testimonials, endorsements and third-party ratings. While the new rule is a potential game-changer for firms, actual implementation comes with caveats and compliance burdens. We hope you enjoy this installment of the Master Class mini-series! Show Interview with Jacqueline Hummel, Anthony Dillingham, Matt Shepherd 7:11: Review of the industry (social media, adoption and entanglement, live presentation/speeches, inadvertent endorsements). 45:36: Building the right disclosures (disclosure of compensation and conflicts of interest) 1:01:40: Third Party Ratings 1:08:20: How will this area be reviewed by the Division of Examinations? Quotes 07:33 - “The prior advertising rule contained an outright prohibition against the inclusion of testimonials and over time that was supplemented by a series of no-action letters where essentially the industry was writing to the SCC and saying, ‘If we do this, is this a testimonial?’ And they would say, ‘Well, maybe but not if you do it this way.’” - Matt 10:04 - “The definition of endorsement and testimonial… They’re not the same but they are very, very similar. So, just for the sake of keeping the conversation simple, I’m going to say that they’re basically the same and what’s different between the two is the identity of the person who makes that statement.” - Matt 18:48 - “You still have to remember that no matter what you put out there you are still subject to the fraud provision of the Advisers Act.” - Jacqui 31.52 – “The degree of adoption and entanglement, whether a third-party communication is even going to be deemed an advertisement of the adviser at all, is going to be dependent on the extent the adviser has adopted or entangled itself.” – Patrick 49:57 – “There is still going to be a dichotomy between state registered investment advisers and federally registered investment advisers. So, while many states will follow the SEC’s lead, there are still exceptions.” – Jacqui 1:03:32 - “It is always best practice to disclose whatever the reader, or listener, or the watcher of that marketing material would want to know. What does this rating mean in context and how did you get it?”– Jacqui Resources ACA Group Marketing Rule Resource Library LinkedIn: ACA Group, Compliance in Context, NSCP Twitter: @acacompliance, @compliancepod Websites: ACA Group,

Welcome to Episode 4 of the Marketing Rule Master Class mini-series focused on performance. In our fourth episode of the master class, moderated by Carlo di Florio, ACA Group, you will hear from Karyn Vincent, CFA Institute, Janice Kitzman, Cascade Compliance, Julia Reyes, ACA Group, and Shivani Choudhary, ACA Group, as they discuss the various Marketing Rule performance requirements including how they compare and contrast with GIPS 2020. Our panelists will provide practical advice and insights as to how best to set your compliance program up for success. We hope you enjoy this installment of the master class series! Show Interview with Karyn Vincent, Janice Kitzman, Julia Reyes and Shivani Choudhary 3:09: Net vs Gross Performance 16:22: 1, 5, ads 10-year requirements 25:00: Related performance 40:03: Extracted performance - attribution 51:43: Hypothetical performance 1:07:15: Portability of performance 1:10:58: Recordkeeping Quotes 4:43 – “Given that the definition of performance refers to a portfolio, I think it’s reasonable to assume that performance does not include items that are meant to be analyzed or be composed for portfolio performance. For example, standard deviation and other risk measures are not the returns of a portfolio.” - Karyn 12:48 – “Whatever you are providing to a prospect investor, at the end of the day would that be construed as misleading or not is the mindset you should be thinking about.” – Julia 20:31: “I am a big believer in updating GIPS report annually and just leaving them alone. [In times of market volatility] the safest approach is to include any other performance information including year-to-date returns either in other materials or maybe as an attachment to the GIPS report. If the GIPS report is used as a standalone advertisement it has to meet all of the requirements of the Marketing Rule. This is what many firms do now and should continue with this approach.” - Karyn 31:57: “GIPS compliant firms will definitely have a leg up with the Marketing Rule because they will have already calculated composite returns that they too will consider meet the requirements of the Marketing Rule” – Karyn 57:49: “Every time someone turns around with [a] model, and it’s often a chain, that is being used within these platforms, you have to stop and say is it ok that I am giving this performance to people. There is going to come a time when you say, “no.” - Julia

In the third episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Patrick Hayes, Calfee along with our industry panelists Genna Garver, Partner, Troutman Pepper, Bree Ward Associate, Akerman LLP, Matt Shepherd, Director, ACA Group. Together, we’ll discuss the general impact of the new Marketing rule to Private Funds. We’ll dive into the requirement to present net performance, the application of related performance to private funds, and considerations around hypothetical performance. We’ll also take a look at other relevant marketing rules and prohibitions that still apply. With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! Show Interview with Genna Garver, Bree Ward, Matt Shepherd 1:50: Introductions 4:12: Impact of the new rule to Private Funds 15:08: Performance 19:15: Extracted Performance 32:18: Related Performance 43:35: Hypothetical Performance 55:10: Endorsements: Replacement of Cash Solicitation Rule, Disclosures, Cap Intro Programs, and Testimonials 1:13:10: New private fund rule proposals Quotes 07:26 –“The big take-away here is that the marketing rule is a merger of the prior cash solicitation rule and the advertising rule... Out of the gate, the combined rule, on its face because of the two-pronged definition to the term advertisement bring in pooled investment vehicle private fund, in particular investors, for compliance generally for both rules and that’s a fundamental shift for how the prior rules both operated.” – Genna 14:11 – “As a practitioner, either on the legal side or the compliance side, you have to presume that written materials or recordings are going to be deemed advertisements. – Genna 18:00 – “Historically, some information has only been presented gross because it’s either mathematically difficult or impossible to come up with a net version of that number. Or is it meaningful to present a net version of that number... The problem is that the rule creates this new definition called extracted performance… The rule explicitly says, if you show extracted performance it must be shown net and that’s a problem. “ - Matt 1:14:37 – “Get your policies and procedures drafted in a way that really tries to catch the ethos of this rule. Which is: Is it fair and balanced? Are you making disclosures? And try to capture your processes in a way that makes sense, that you can justify them, and then follow them.” – Bree Resources ACA Group Marketing Rule Resource Library LinkedIn: ACA Group, Compliance in Context, NSCP Twitter: @acacompliance, @compliancepod Websites: ACA Group,

Welcome back! In the second episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Carlo di Florio of ACA Group along with our industry panelists Issa Hanna, Partner, Eversheds Sutherland, Amber Allen, VP and General Counsel, Fairview Investment Services, and Chas Spiros, Principal Consultant, ACA Group. Together, we’ll provide additional insights on the new rule, including misconceptions, key definitions, timelines, ADV changes, and key features. We’ll also cover tricky legal aspects like promoter vs. solicitor and the withdrawal of no-action letters. With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! Show Interview with Issa Hanna, Amber Allen, and Chas Spiros 2:30: Overview of the rule and additional insights 8:30: Practical application of the rule: What is and isn’t an advertisement? 14:17: Prohibitions: What will be prohibited under the new rule? 20:30: Solicitors and Promoters: How does solicitation fit within the framework? 35:25: Performance: What the requirements that apply to performance? 53:45: Form ADV and Books and Records: Are there changes to other rules? Quotes 5:30 – “They made the rule more evergreen so it could withstand the test of time; and to the extent that mediums of communication change overtime … the rule is equipped to handle that.” - Issa 10:00 – “What I think firms will have to get used to and what is new are the compensated testimonials, and endorsements, and third-party ratings. Firms are going to have to have a mechanism for reviewing this material and memorializing it from a books and records perspective which will be really critical.” – Chas 15:28 – “Instead, firms should use a layered disclosure approach. If you’re going to highlight a benefit of your advisory services, for example, you should also be talking about the material risks that are associated with that benefit. And the risks should be discussed within the “four corners” of the ad.”- Amber 17:09 – “If you’re trying to rely on something being an opinion, you want to make sure that your advertising piece is couching that statement like “in our BU” or “we believe.”” – Amber 25: 33 – “When it comes to testimonials and endorsements, just because something falls within the definition of a testimonial or endorsement doesn’t necessarily make it a prong 1 or prong 2 endorsement under the rule. It has to be compensated, adopted, or entangled by the advisor. There has to be one of those things going on before the endorsement or testimonial becomes an advertisement under the rule and the requirements of the rule kick in.” – Issa 48:53 – “One important component of the application of the new rule is going to be the training component. So with all of these changes with how firms are presenting performance it’s really important to make sure your marketing team is trained well in advance of that November 4 deadline.” - Amber Resources

Welcome back to Compliance In Context podcast! We are incredibly pleased to announce the release of our new master class series on the new SEC Marketing Rule! In our first episode of the master class, you’ll hear from our co-hosts, Patrick Hayes, Calfee and Carlo di Florio, ACA Group along with our industry panelists from the SEC, Steven Levine and Chris Mulligan, as we provide background on the new SEC Marketing Rule and why it was developed. We’ll cover key nuances to the rule, the founding principles behind the rule, and feedback that the SEC has received from the industry. We’ll also explore how the Division of Examinations has prepared to examine for the new rule and lessons learned from early adopters. With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! Show Interview with Steven Levine and Chris Mulligan 2:30: Motivation for the new SEC Marketing Rule 8:00: Fundamental principles 10:49: Key Nuances and FAQs 20:00: Feedback from the industry 23:11: Impact of comment letters 28:13: Impact of the new rule on SEC Examinations 32:47: Review of policies and procedures during examinations 48:00: Application to compliance programs Quotes 03:13 – “The existing regulatory regime that we were working with was potentially a bit dated. The advertising rule that was in existence before this most recent rule adoption, was adopted in 1961. So we were dealing with an advertising rule from 1961 and there was a cash solicitation rule that was adopted in 1979. Decades have gone by since those rule adoptions.” – Steven 04:33 – “One of the motivators for this most recent marketing rule was to put everything in one place. Eliminate the system that we currently had where there were a bunch of pieces of relief all over the place and just codify everything at the commission-level into a single rule. The hope there is that everyone would be on the same page in the industry as to what the guideposts are for operating at this space.” – Steven 13:00 – “And that FAQ basically says that an advisor may–but is not required–to comply with the new marketing rule in advance to the new compliance date. However, if an advisor chooses to comply with any part of the new marketing rule, it must shift it’s compliance program over too. Basically, it must comply with all of the rule, not only part of it.” – Steven 18:30 – “In order to demonstrate to the SEC staff that a particular advertisement complies with the rule, pointing to a no-action letter is no longer an acceptable way to do that. There has to be something within the rule itself or be adopting release that justifies the underlying content that is being questioned.” – Steven 32:47 – “I think any tips I could give is, start with your policies and procedures. Start with your policies and procedures. That’s where we’re going to look at first, right? You have to, at least, acknowledge, like, we’re going to want to know that you’ve acknowledged that the world has changed and there’s a new rule, right? And that is kind of expressed through your policies and procedures.” – Chris 49:37 – &ldq

Welcome back to Compliance In Context podcast! On today’s show, we’re going to be focusing our attention on gamification—what is it, why are regulators and investors concerned about it, what are the benefits of it, and most importantly, what are the key things you should be considering from a compliance perspective? In our Headlines section, we look at Chair Gensler’s Spring 2022 Agency Rule list, what it means, and the overall impact to the industry. And finally, we’ll wrap up today’s show with another installment of Outtakes where an old compliance violation takes on a brand new look in crypto. Show Interview with Tanner Dowdy Introduction to gamification Background on relevant factors affecting gamification Key themes of Tanner’s law review article The Gamestop phenomenon Consumer protection and market stability versus freedom of choice and the democratization of the financial markets Retail traders versus institutional finance Key harms of gamification and impact of Reg BI Key benefits of gamification How gamification impacts the future of the financial markets Quotes 12:34 – “There is a distinction in academia (based on what I’ve read researching my article)between “gamification” (you know, in air quotes) and, more broadly, digital engagement practices. ... DEPs are a little broader than gamification, you know, robo-advisors would fall into the DEPs. Anything that’s more, pressing the future edge of aligning digital technology with brokerage services or investment advisor services.” – Tanner 17:28 – “Based on my research and what I’ve seen, it depends on who you ask. I think you bring up a great point in that gamification, there are layers of competing interest and so, right off the top, consumer protection versus democratization is the headline one, if you will. Then there is another layer of (you, kind of, hinted at this) retail trader versus institutional finance.” – Tanner Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter: @compliancepod Compliance in Context

Welcome back to Compliance In Context podcast! Today’s show is the first of its kind as we look to add a little colorful storytelling into our typical compliance discussion. In this episode of the podcast, we welcome in Miriam Lefkowitz and John Walsh to review legends and myths from cultures around the world that teach us a lesson about life (and compliance) and help shine a light on some of the nuances and best practices we can glean from those stories to improve the compliance programs inside our respective firms. In our Headlines section, we look at the recent rulemaking on ESG Disclosures and Investment Company naming conventions. And finally, we’ll wrap up today’s show with another installment of Outtakes where we look at a new version of a pandemic fraud that provides compliance professionals with similar lessons to communicate inside our respective firms. Show Interview with Miriam Lefkowitz and John Walsh 7:11: Introduction to compliance in mythology 12:48: Background on classical mythology 15:30: The mythological tale of Metis 19:54: Securities compliance lessons we can learn from the tale of Metis 31:20: The mythological tale of Bodhisattva Guan Yin 36:20: Securities compliance lessons we can learn from the tale of Bodhisattva Guan Yin 46:34: The mythological tale of Anansi the clever spider 51:33: Securities compliance lessons we can learn from the tale of Anansi the clever spider Quotes 21:07 - “If we start with that approach and think about how we can build structure around that. Recognize that there are some elements, right, there are talents and weaknesses that often exist in people and I think that’s interesting. We can put some people in that corner. And then we bring in Metis, and Metis is a really interesting character. She’s prudence. I like thinking of compliance as having a lot of the qualities of Metis—prudence and wisdom to start.” - Miriam 23:24 - “When you have a new product or a new business line or a new offering, what you need is a combination of both the cleverness and the wisdom of compliance and then the business. You need both elements to partner together to persuasively move forward.” - Miriam 40:33 - “The King may not be an impressive character early on but he recognizes the error of his ways and he learns and it’s an extreme example, but all right, that’s what makes it a myth. I think it’s helpful that compliance can actually be a model and that it can be learned from.” - Miriam 40:59 - “I like the idea that she’s open to all who call out to her. And the idea that all who suffer can reach out—call out to the Bodhisattva. And, Patrick, I suspect it’s not part of the original story, but I really like the term “compliance suffering.” It’s a new phrase, but it’s one I’m going to tell you right now, I will try to remember to attribute it to you, but I’m going to use it a lot. I like it. I may even reach out to the celestial Bodhisattva of compliance suffering from time to time.” - John 43:50 - “With the right attitude you realize that, that’s the cost of doing business in a highly regulated industry. Regulations are designe

Welcome back to the Compliance in Context Podcast! This episode of the Compliance In Context Podcast marks another iteration of our Lessons From The Front Lines series where we welcome in digital asset and FinTech and RegTech expert Chuck Senatore to explore the origins of cryptocurrencies and digital assets, their impact on the financial markets, and how the regulatory landscape is evolving to address the unique challenges and compliance issues involved as we face the frontier of decentralized finance and crypto. Show Interview with Chuck Senatore 8:30: What is the origin story of crypto? 11:58: What is a merkle root? 14:08: What is a distributed ledger? 15:15: What are the various assets and investment vehicles that are included in the “crypto” bucket 20:10: What are NFTs and alternative tokens? 25:30: What are the challenges with these types of assets and what is the value proposition of these assets? 31:33: What is decentralized finance and how could it disrupt the marketplace? 40:05: What is the state of regulatory oversight for digital assets and the impact of President Biden’s executive order? 47:20: What are the some of the challenges with stablecoins? 51:53: What in the marketplace have we seen the most significant adoption of cryptoassets? 59:00: What are the specific considerations compliance officers need to address as it relates to cryptoassets? 62:52: In the digital asset space, what are the gamification and suitability challenges? Quotes 14:08 - “The other thing that’s important about BitCoin that is important for a number of other developments is the concept of having a distributive ledger that everybody has a copy of. Everybody has it. Every single transaction. Whether in this case it’s the blockchain or we’ll talk about other blockchains that form the foundation of ethereum and smart contracts. The secret sauce is that everybody can see it.” - Chuck Senatore 16:02 - “[Ethereum] is kind of the next most important possible coin because what ethereum has is ethereum tokens. The ethereum system is really the ecosystem that creates the ability to actually create decentralized apps.” - Chuck Senatore 21:54 - “So you have these non-fungible tokens–and the reason that they’re called non-fungible because they have a digital signature that says, ‘You know what? There’s only one of these.’ As opposed to Bitcoin can be fungible and other sorts of things that can be repeated and aren’t necessarily unique. Essentially what makes it non-fungible is it’s uniqueness.” - Chuck Senatore Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter: @compliancepod Compliance in Context

Welcome back to the Compliance in Context Podcast! On this episode of the Compliance In Context Podcast, we explore the hidden nuances and key differences in the new 2022 Report on FINRA’s Examination and Risk Monitoring Program with Susan Schroeder—former head of enforcement at FINRA and current partner at Wilmer Hale—who sits down with us to review the report and its impact on compliance professionals everywhere. In our Headlines section, we look at the recently released annual priorities issued by the SEC Division of Examinations. And finally, we’ll wrap up today’s show with another installment of History Has Your Back series where we look at the legendary kung fu martial artist, Bruce Lee, and a quote to help inspire you and provide peace of mind for the securities compliance professional. Show Headlines 1:14: Digesting the Annual Priorities from the SEC Division of Examination Interview with Susan Schroeder 7:38: Introduction & General Remarks on the 2022 FINRA Report 11:27: “Reasonableness” and Testing AML Programs 16:16: Tackling Cybersecurity and Technology Governance 23:30: Mobile Devices and Investing 32:13: How Best Execution Standards are Changing 37:21: Challenges Surrounding Trusted Contact Information History Has Your Back 45:43: Using Bruce Lee’s words as inspiration to elevate our firms and provide peace of mind Quotes 09:45: “On a really high level, my reaction to the report when I read it was that the report reflects the enormous amount of innovation and disruption that is rippling throughout the industry. Right? I think we’ve all heard a lot about new business models through fin-tech businesses for example, that are changing the way people invest. Changing the shape of investment relationships.” - Susan Schroeder 10:20: “One of the things you can also see emerging is the fact that FINRA’s rules are not written for the way business is done today and some of their observations and some of their priorities really reflect a disconnect between rules that might be seventy years old and practices that are very 2022.” - Susan Schroeder 12:16: ““I think now though, a lot of the challenge you’ll see across the industry is that the industry has room. Right? With the proliferation of new technologies, with people doing app-based trading on their phones, you’ll see events like the Gamestop event last year where the amount of trading that is done in a single day just eclipses previous records.” - Susan Schroeder 17:02: “I think, the fact that we talk about technology governance as if it’s a known thing is already a big indicator that your firm should be worried because that is a framework to exist. Right? No one was talking about that, even, for years ago. And this notion of technology governance is that the business is obligated to supervise the technology. Right? I think it’s a new concept and one that has not been well built-out by the regulators.” - Susan Schroeder 26:57: “The mobile app gives everybody access to…real time information. It is funny to me that t

Welcome back to the Compliance in Context Podcast! In this episode, we discuss the recent private fund rule proposals and explore how their adoption would affect the industry. For an in depth review of the proposals, we are joined by Jeff Blumberg—Partner at Faegre Drinker and Chair Elect of the NSCP. Our conversation spans Form PF, rule amendments for private funds under the Advisors Act, and what Jeff deems to be problem points for private funds in the future. In the Headlines section, we cover President Biden’s recent Executive Order on Digital Assets, as well as the recent leadership changes underway at the SEC. Finally, we wrap up the show with another installment of Outtakes, where a recent disciplinary action can provide the perfect punch list to make sure your broker-dealer firm is meeting its requirements to obtain best execution. Headlines 1:09 – The Digital Assets Executive Order from President Biden 4:26 – Leadership Changes at the SEC Interview 6:20 – General Remarks on Chair Gensler’s comments before the ILPA 12:40 – New Reporting Requirements in Form PF 17:40 – Sections 5 and 6 in the New Form PF 20:40 – Response to the Proposed Amendments in Reporting Requirements 22:30 – The Ongoing Importance of Documenting Process 25:16 – Impressions from the SEC’s January 2022 Risk Alert 33:41 – The New Rule Amendments for Private Funds under the Advisors Act 40:04 – Changes to Side Letter Provisions 44:15 – The Comments Period Time Crunch 46:18 – Looking Forward for Private Funds 51:20 – Jeff’s Favorite 2022 Super Bowl Commercial Outtakes 53:50 – Using FINRA settlements to understand best execution standards for broker-dealer firms Quotes: 10:30 “A lot of these rule proposals they are coming up with, these are solutions looking for a problem, because a lot of these suggestions are already being pushed by the institutional investing population.” ~ Jeff Blumberg 16:37 “If the SEC could justify the time and expense these managers are going through to put this information together and say here is what we learned by looking at last quarter’s Form PF filings, that would absolutely be something the industry would appreciate.” ~ Jeff Blumberg 23:41 “I’ve never seen the SEC come in and say you didn’t get best execution. What I’ve seen is them say you don’t have a process for pursuing best execution. I think you have the same kind of situation here, which is, it’s not so much they’re going to say this was material so you’re going to get in trouble; they’re going to say we think it’s material, you didn’t, but because you took a reasonable process and put it in place, the next time the same thing comes up you should treat it as material.” ~ Jeff Blumberg Resources: Compliance in C

Welcome back to the Compliance In Context Podcast! Today’s episode features the fifth in a series of shows we refer to as the Lessons From The Front Lines series. These shows focus on real-life, tough-to-tackle subjects that other industry professionals and regulators have faced on the front lines of our industry. Today we have the pleasure of speaking with Enforcement and Investigations Chief Richard Szuch of the New Jersey Bureau of Securities to discuss one of the most critical issues affecting the investment management industry—namely—how firms can address issues and challenges with senior investors and investors with diminished capacity. Interview The importance of investor protection What is the Bressler Map and what is its purpose? What is the mission of the NASAA Senior Diminished Capacity Committee? How has the “NASAA Model Act to Protect Vulnerable Adults from Financial Exploitation” impacted the industry? What expectations should firms have in order to properly supervise these activities? Enforcement trends in the area of senior investor exploitation How will investor protection continue developing in the future, both from an industry side and a legal/compliance side? Quotes: “I would say, from the very beginning I was keeping an eye on victims, their profiles, and how they could be exploited. We definitely had cases, when I was a prosecutor, that were ‘white collar type crimes.’ And obviously bad actors are looking to exploit people that are vulnerable, whether it’s their age or if they have some other vulnerability.” - Richard Szuch “Every state had a law that applies to exploitation to older people but it’s usually about their personal safety, whether their home is secure, whether they’re physically okay. Some states have exploitation regarding finances in their laws. But then there’s been a new group of laws that have developed with the advent of NASAA’s Model Act.” - Richard Szuch “40 or 50 percent of the investment advisory firms surveyed had not really changed their way of doing business in the past five years. So if I were to say that there was one thing that really needs to get out there, it’s education for the investors and for the firms, about the importance of this structure to be put around their business.” - Richard Szuch “NASAA just put out (with the SCC and FINRA) a training module that, in essence, mimics what I used to do when I was in private practice, to train firms about what they needed to know.” - Richard Szuch Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter: @compliancepod Compliance in Context

Welcome back to the Compliance In Context Podcast! This episode, we welcome in Carlo di Florio, Chief Services Officer at ACA Group and Brian Rubin, a partner and leader of the Eversheds Sutherland securities enforcement practice to discuss the issue of CCO liability and the newly proposed NSCP Firm and CCO Liability Framework. In our Headlines section, we look the recent attention and rulemaking onslaught in the private funds space and discuss cryptocurrency enforcement trends. And finally, we’ll wrap up today’s show with another installment of History Has Your Back series where we honor the legendary Chinese workman and builder Yi Kaizhan to teach us a compliance lesson about precision. Headlines Proposed Amendments to Form PF and private fund Risk Alert SEC Proposed Amendments for Private Fund Advisers Interview NSCP Regulatory Advisory Committee Commentary from regulators on CCO liability NYCBA Framework How will the Framework impact firms and firm leadership? How will the Framework impact examination teams and the examination process? What is the impact of the Framework on regulator enforcement? History Has Your Back Jiayuguan Pass of the Great Wall The wall stabilizing brick The value of precision in compliance Quotes: “The two key principles of the framework (that you noted on the outset), impact the overall exam process. Right? So one is, I think the NSC framework does a really good job of emphasizing, taking a holistic approach to looking at the compliance program, and the culture within the firm, overall. And then two, doing so earlier in the regulatory exam or the enforcement of the investigative process.” – Carlo di Florio “We hope that FINRA and the SEC (and other regulators) might be able to use this Framework as a solid foundation by which to conduct parts of their investigation processes. But then again, another benefit would be for a persons (like yourself and others) that might be thinking about how to defend against an enforcement action, just to be able to show that there were other mitigating circumstances involved.” – Patrick Hayes Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter: @compliancepod Compliance in Context

Welcome back to the Compliance In Context Podcast! On today’s show, we welcome the return of former NSCP Board Chair and all-around compliance expert, Craig Watanabe, to analyze some recent comments from SEC Chair Gensler around cybersecurity, and reveal some practical tips firms can use to enhance the cybersecurity measures inside their own firms. In our Headlines section, we look at the new NSCP Firm and CCO Liability Framework and its broader application to the industry. And finally, we wrap up today’s show with another installment of What’s On My Mind where we examine what an 80s classic song from Mike and the Mechanics and the life of John Madden can teach us about being the best compliance officer and CCO for your respective firms. Headlines NSCP Firm and CCO Liability Framework Interview Reaction to SEC Chair Gensler’s Speech at Northwestern Pritzker School of Law’s Annual Securities Regulation Institute Reviewing “Twelve Tips for Teleworking Cybersecurity” in May 2020 edition of Currents What is the Windows 11 upgrade? Usability vs. Security What is the Trusted Platform Module? What are the best tips for cybersecurity and user awareness training? What is cyber hygiene? What are some other best practices you’ve seen in cybersecurity lately? How best to leverage cyber insurance and related expertise? What’s On My Mind? “Living Years” by Mike + The Mechanics The Life of John Madden Fastidious preparation as compliance coach Living with a sense of appreciation Quotes: “Cybersecurity is almost always at the top or near the top of the list in terms of risks and I think that’s going to be the case for some time for this foreseeable future so it’s going to be a big risk for everyone, a big risk for the industry.” – Craig Watanabe 10:12 - “I think Regulation SP is somewhat of a misnomer because the S stands for safeguarding and the P stands for privacy. But if you ask most people, ‘Reg SP?’ ‘Oh, yeah! Privacy.’ We kinda forget Section 30, which is the safeguarding part of the rule. And that’s where all cybersecurity regulation basically resides.” – Craig Watanabe “In the Fortress Model, the idea is you create this fortress. Everything on the inside of the fortress, all the interior is safe and you try to keep all the unknowns (all the bad stuff) out. That model works really well when you have a centralized work environment and you have a centralized IP. It’s a perfectly reasonable, very usable, and a very functional model. That model, however, doesn’t work as well in a remote or hybrid work environment.” – Craig Watanabe “I think there has been a paradigm shift at Microsoft and other big vendors, with an emphasis on security. That’s clear to me. I don’t think Microsoft would have done these things prior.” – Craig Watanabe Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter: @compliancepod

Welcome back to the Compliance In Context Podcast! On today’s show, we welcome the Marcia Wagner, founder of The Wagner Law Group and an expert in all things ERISA to discuss the impact of the new DOL Fiduciary Rule on the investment management industry and the upcoming compliance and enforcement deadlines. In our Headlines section, we look at recently proposed amendments from the SEC to its electronic recordkeeping requirements and the new SEC enforcement report. And finally, we’ll wrap up today’s show with another installment of the Outtakes series where we once again learn the importance of being honest and transparent with investors when it comes to disclosures. Headlines SEC recently proposed Amendments to its Electronic Recordkeeping Requirements SEC Division of Enforcement Publishes Annual Report for Fiscal Year 2020 Interview Who is an investment advice fiduciary? Why has the DOL’s interpretation of investment advice fiduciary caused controversy? What is the five-part test? What was the Deseret Letter? What is Prohibited Transaction Class Exemption 2020-02? Where does roboadvice fit under PTCE 2020-02? What types of transactions did the DOL treat as rollovers? What types of factors should be considered when recommending a rollover from a tax qualified plan to an IRA? What is the impartial conduct standard? What is the nonenforcement Policy of DOL and IRS with respect to PTCE 2020-02, and when is it scheduled to end? How will Prohibited Transaction 2020-02 be Enforced? Outtakes SEC complaint against mutual fund executives that mislead investors by misrepresenting investment risks Funds suffered losses over $1 billion Be transparent with disclosures to investors Quotes: “The DOL treated five different types of transactions as rollovers, even though only some of them would constitute a rollover under the Internal Revenue Code. These were plan-to-plan; plan to IRA; IRA to plan; IRA to IRA; and commission based account to fee based account.” – Marcia Wagner To satisfy PTCE 2020-02, financial institutions and investment professionals must acknowledge their fiduciary status in writing; disclose their services and material conflicts of interest; adhere to impartial conduct standards; adopt policies and procedures prudently designed to ensure compliance with the impartial conduct standards; document and disclose specific reasons why any rollover recommendations are in the participant’s best interest; and conduct an annual retrospective compliance review” – Marcia Wagner “[I]in determining whether a retirement investor should rollover assets from a tax-qualified plan to an IRA, the financial institution or investment professional should take into account the retirement investor’s investment objectives, risk tolerance, financial circumstances and needs. In addition, they should document the services available under the new arrangement; consider the long-term impact of any increased costs, determine why the rollover is appropriate notwithstanding any additional costs, and the impact of any economically significant investment features such as surrender schedules; index annuity caps, and participant rates.” – Marcia Wagner Resources: Compliance in Context Contact Form

Welcome back to the Compliance In Context Podcast! Today’s podcast features the fourth in our Lessons From The Front Lines series which focus on real-life, tough-to-tackle subjects that other industry professionals and regulators have faced on the front lines of our industry. To help guide us through today’s conversation, we welcome in Neil Maitra and Haime Workie. Whether it’s issues in AI, the cloud, custody, DEPs, crypto, gamification, and everything in between, the SEC’s FinHub and FINRA’s Office of Financial Innovation sit at the forefront of what’s happening in our industry. So sit back, relax, and enjoy the crypto conversation! Interview Background on FINRA’s Office of Financial Innovation Discussion of recent whitepapers from FINRA OFI Artificial intelligence (AI) in the securities industry What are the implications of the cloud for the securities industry Background on SEC’s FinHub Digital assets and custody Breaking down Bitcoin ETPs An in-depth look at gamification Quotes: “Our Office of Financial Innovation was actually only opened up about two and a half years ago. And its overarching mandate is really to facilitate innovation in a way that supports investor protection and market integrity, which is the overall mandate of FINRA.” – Haime Workie “So this idea of being excited about something new that you’re doing, that carries a bit of risk. But also having the ability to step back a little bit and say, ‘Look, you know, here are things we need to think about before we take on this new adventure.’ In a similar vein, as technology gets introduced to the marketplace, there’s a lot of excitement to be had about the potential ways it can benefit the investor, the firm, the marketplace. But it’s also important to step back and think about what are the risks that are being introduced into the system? And what are the implications of those?” – Haime Workie “[I]t's [SEC’s FinHub is] really kind of an all-arms group within the Commission itself...it really coordinates the SEC oversight and response regarding emerging technologies and financial regulatory and supervisory systems. Including specifically I think in the areas of distributed ledger technology. blockchain which forms are large part of our work, but also automated investment advice or what what's popularly called robo-advice digital marketplace financing and artificial intelligence machine learning. Those are also areas where we where we often get involved.” – Neel Maitra “But what's been really introduced I would say, and it's fairly recent introduction in the past four or five years and kind of ramping up in the in the past one or two years, is this process where you have these app-based systems that provide nudges or provide influences that potentially steer investors a certain way. Many of these nudges or influences maybe things that are short of recommendations. But at least in my view, they are definitely designed to elicit certain types of behaviors and what we've heard is frequently firms will do A-B type of testing to see what type of behaviors are being elicited and which things, which ways of kind of having the APP interface is more effective in terms of eliciting those types of behaviors.” – Neel Maitra Resources: Compliance in Context Contact Form Complianc

Welcome back to the Compliance In Context Podcast! On today’s episode, we welcome in the President of the North American Securities Administrators Association, Melanie Lubin, for an insider’s look into what’s happening at NASAA including new areas of focus like continuing education, Reg BI, senior investors, and much more. In our Headlines section, the first-ever bitcoin-linked exchange-traded fund will began trading recently and the SEC provided comments on the regulatory issues involving GameStop trading from January of earlier this year. Finally, we’ll wrap up today’s show with another installment of History Has Your Back, as we review a posthumous quote from one of the world’s most well-traveled chefs to better understand how we can maximize our knowledge in compliance. Topics: Headlines The first-ever bitcoin-linked exchange-traded fund (ProShares) began trading on 10/19/21. Four proposed bitcoin ETFs are in line for an October decision from the SEC on whether to approve, deny or delay their submissions (Valkyrie Investments, Invesco, and VanEck) In a new report, the SEC reviewed regulatory issues involving GameStop trading in January 2021. SEC Commissioners Hester M. Peirce and Elad L. Roisman criticized the report as too narrative Chair Gensler stated the review of the GameStop event presented the SEC with opportunities to further make the equity markets as fair, orderly, and efficient as possible. Interview What is the NASAA and how was it formed? What is the mission of NASAA? What are some of the current initiatives the NASAA is really focused on now? Where does the IARC stand now? What did Phase I of NASAA’s Reg BI efforts look like? What changes have firms made since Reg BI has been adopted? What is NASAA working on in the senior investors space? What about Report and Hold? How can compliance officers can be the best defense in this area? What is the Whistleblower Act? What is the background on the Restitution Pool for defrauded? History Has Your Back Quote from celebrity chef Anthony Bourdain demonstrates empathy and many of the soft skills important for compliance officers Taking the time to connect and understand our colleagues will pay dividends personally and professionally. The 2021 NSCP National Conference is just around the corner! Quotes: “And really the ultimate goal is for us to make a determination about whether the rule as it stands is really moving has raised the bar for how brokers act in relationship to their clients and is it really driving the behavior towards the customers best interest.” - Melanie Lubin “This is important—here's the explanation: customers, particularly elderly customers, tend to be worried that somebody's going to get their hands on their money and all the things that we've taught them to be worried about—But [we] want them to understand that a trusted contact is not a power of attorney, but it's someone that if you’re the person you have a professional relationship with starts to get a little bit worried about what's going on, they could pick up the phone and call that other person.” - Melanie Lubin Resources: Compliance in Context Contact Form

Welcome back to the Compliance In Context Podcast! On today’s episode, we welcome in Jennifer Selliers, Director of Internal Compliance for the State of Tennessee Department of Treasury and current NSCP board member, for an authentic look at how to find your own career path in compliance (and everywhere). In our Headlines section, the SEC seeks comment on Broker-Dealer and Investment Adviser Digital Engagement practices, we look to we look at a recent SEC Investor Advisory Committee meeting to demonstrate contrasting views on market regulation, and close with a quick update on the SEC’s telework timeline. Finally, we’ll wrap up today’s show with another installment of Outtakes, as we look to showcase how even an exempt reporting adviser can find itself in hot water with the SEC and its LP investors, particularly where an auditor isn’t involved Headlines SEC seeking comment on Digital Engagement Practices (DEPs) SEC Investor Advisory Committee meeting offers contrasting views on market regulation from SEC Chair Gensler and SEC Commissioner Peirce SEC recently updated its COVID-19 Telework Operations Status Interview How to stay motivated in your compliance job? What’s better to focus on in your career—technical or professional development? What’s the “right” degree or accreditation to have as a compliance officer? Were there certain things that you considered when you were coming up? What are the best ways to onboard a new compliance employee? As a manager, how are you able to effectively able to lead a team during this challenging environment? Discuss the benefits of the apprenticeship model Goal Setting / Professional Development – 3-year professional development plan Outtakes Exempt Reporting Adviser and related private fund were investigated by the SEC for securities laws violations When recommending or doing due diligence on private fund investments, make sure there is an auditor involved. Quotes: “I think one of the things that helps me stay motivated is remembering that I’m responsible for driving my own career, whether that’s in compliance or if that’s a whole career shift (and I know there’s a lot of people who are contemplating that and taking that big leap). But I own that. That’s mine.” - Jennifer Selliers “There’s people in my life that are my cheering squad, right? When I need that pick-me-up, I know I can call them and they’re going to be like, ‘You know, buck up camper! You got this! You just take that bull by the horns! Run with it! You’re making the right decision!’ right? And then there’s some other days when I feel like, ‘I’m feeling like I need to do this. I need to talk this out with somebody. And I’ve got another group of people that’ll be like, ‘I don’t know what you’re thinking but you’ve got to take that back to the table.’ [laughs] Right? You can see those types of people, along with other types of people that just help you build and round out your professional and your career goals.” - Jennifer Selliers Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn 

Welcome back to the Compliance In Context Podcast! On today’s episode, we we welcome in Melissa Loner, the Executive Vice President of Advisor Services at Premiere Wealth Management and current NSCP board member. With a background in compliance but with a focus now on running the business, Melissa is the perfect person to share with us all the best practices when it comes to fees, expenses, and firm compensation, and the types of questions should be asking themselves when setting up a billing system. In our Headlines section, we examine yet another FINRA warning about a new Phishing Email Campaign targeting BD and RIA firms and discuss some changes in leadership at the CFTC. And finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where we explore how a key element of acoustic design could be a critical component of your defense during an SEC examination. Headlines FINRA recently alerted members to another phishing campaign involving the use of fraudulent FINRA domain names: “@finrar-reporting.org,” “@Finpro-finrar.org,” and “@gateway2-finra.org.” CFTC Commissioner Brian Quintenz who recently announced that he will be leaving the office at the end of August 2021. Quintenz has been a notable crypto advocate for the duration of his term In his statement upon departure, he highlighted his work on cryptocurrency issues Interview In your mind, what are the biggest challenges with billing and issues around fees and expenses? What are some of the best ways an adviser can mitigate these challenges and issues? NSCP Compliance Forum discussing the threshold for refunds to be paid out Should firms need to disclose all the situations in which they’re not going to refund fees under a certain amount? What were the lessons learned from the Share Class Disclosure Initiative? What are some best practices around documentation? What types of activities are included here? What are hallmarks of a successful billing program? What’s on My Mind The history of unwanted sound The job of acoustic design Using acoustical privacy as a key line of defense during an SEC exam Quotes: “The best thing I can tell people is processes and disclosures. As you were asking the question we talked a little bit about, ‘Is there a monthly fee or a quarterly fee? Is it charged in advance or is it charged arrear? Is it charged on a 360 day or a 365 day? Is it refunded at what period of time?’ So there’s a lot of what ifs that come into place and I think that’s what gets people hung up.” - Melissa Loner “The more flexibility you have, which you want to have for advisors and advisors want to have that for clients, but it puts in a larger risk to not have everything that’s needed to be done. I know you’re going to ask about this later but it goes to disclosure, it goes back to processes, it goes back to consistency.” - Melissa Loner “Disclosures is a big one because that’s the first place that the regulators are going to go. They’re going to go to your disclosure and then they’re going to match that up to the billing that you’ve been doing. And, in addition to that, they’re also going to match that up to your supervisory procedures or your clients’ manual or your operations procedural to ensure that you’re following that consistently.” - Melissa Loner “So one of the best practices that I largel

Welcome back to the Compliance In Context Podcast! On today’s episode, we have the distinct pleasure of chatting with Jim Downing, the current Chair-Elect of the NSCP Board of Directors and current Chief Compliance Officer for Morningstar, who shares with us his Five Fundamentals of Compliance, and provides some fantastic insight into how best to run a compliance program that has multiple business lines and a global customer base. In our Headlines section, we do another dive into some recent buzz and regulatory activity surrounding cryptoassets, we’ll cover a defense of family offices from a couple key regulators, and finally, we’ll wrap up today’s show with another installment of What’s On My Mind, where in the spirit of this year’s Olympic games, we look back at a quote from the greatest sprinter of our generation to help provide peace of mind to compliance officers everywhere, no matter the stage in their career. Headlines Letter from Senator Warren to SEC Chair Gensler Expanding the authority of the SEC or the CFTC to regulate cryptocurrency exchanges Bloomberg Op-Ed from SEC Commissioner Hester Peirce and CFTC Commissioner Brian Quintenz focused on the regulation of family offices Examining the risks involved in the failure Archegos Capital Management Interview How to build a diverse and global compliance program Developing a culture of compliance Understanding the Five Fundamentals of Compliance Identifying and mitigating conflicts of interest in multi-faceted firms What’s on My Mind Quote from Usain Bolt on setting the proper expectations Understanding and overcoming the challenges in running a compliance program Quotes: “One of the first things to do is to check your ego at the door. So when it comes to a global compliance program, I have to realize what I don’t know. And so when we look at, let’s say, Aon or my current position at MorningStar, there were several jurisdictions where I could--in no way--consider myself an expert. So what’s really important there is you make sure you have the right talent onboard.” “It’s so important to, number one, when you first get there and you first start meeting these executives or heads of sales or product, or operations, or finance, or all the various compartments, is to really take some time and to sit down and to listen to them.” “Because that’s the advice that we're giving the business on kind of a day-to-day basis you know. When they come to us “Hey what should I do about this?” or “I'm thinking about doing this, what do you think?” And that advice should be drawing from all of these five different fundamentals, you know it should be drawing from where's our where's what's our most risky behavior? It should be drawing from what do our policies and procedures say? It should be drawing from, well, you know, we tested that process and they’re talking about they want to increase the capacity of that and that wasn't very good or hey we had a recent exam or there’s an outstanding issue or whatever it is.” Resources: Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter:

Welcome back to The Securities Compliance Podcast! We have a fantastic episode ahead that shines a light on a very difficult topic—ESG. To do this, we continue the third installment of our Lessons From the Front Lines series. Much like our regular shows, this series will provide same excellent content to help you put Compliance In Context, but will deliver that content in a more narrative form—like a fireside conversation with an industry pro. The show will focus on providing practical advice and takeaways that focus on real-life, tough lessons other industry professionals and regulators have learned on the front lines of our industry. To help guide us through today’s conversation, we welcome in David Curran, the Chief Sustainability and ESG Officer at Paul Weiss. For anyone wanting to learn more about ESG or struggling with implementing ESG policies inside your firm’s compliance program, you won’t want to miss this episode. Listen in as David provides invaluable insights from his experiences on the front lines of the ESG space. And if you have an idea for a future Lessons From the Front Lines episode, reach out to us on LinkedIn and Twitter or at complianceincontextpodcast.com. We’d love to hear from you! Interview Reviewing the frameworks of ESG How can we demysitify ESG? Why do firms struggle with ESG so much? Having a technology process to address ESG controls Biggest challenges in moving the ESG conversation forward How best to respond when you identify a deficiency Detailing the attitude shift on ESG in the investment management space Quotes: “[I]f you are taking a position on something that you believe in, that is essential to your corporation terms of its commitment, how are you governing it is really the essential issue. So to demystify it, for example, with compliance and legal executives, is to think of it like a compliance and legal regime. Governance is governance and governance means, how do you have a policy and procedure? How do you track, measure, monitor, and report on progress against these obligations? It's not any more complicated than that.” “[Governance] is at the core of virtually every major corporation’s business agenda today. It is not esoteric. It is not out in left field. It is existential.” “And so the demystification is to take it into its component parts. And part of that is to disassemble ESG, look at the governance part, flip the acronym and say, ‘Whatever you’re doing in the S category, whatever you’re doing in the E category, how are you governing them?” Because if you're not governing it, it doesn't get done.” Resources: David Curran, Paul, Weiss, Rifkind, Wharton & Garrison LLP Compliance in Context Contact Form Compliance in Context, LinkedIn Twitter:

Welcome back to the Compliance In Context Podcast! On today’s show, we have the distinct pleasure of chatting with Patty Cushing, Director of Compliance at the NFA, for an insider’s look at the examination process with the NFA, new areas of focus for the SRO, ideas around remote supervision, and much more. In our Headlines section, we do a deep dive into the recent buzz and regulatory activity surrounding cryptoassets, and finally, we’ll wrap up today’s show with another installment of the What’s On My Mind segment, where we look at the impact of gamification on the investment industry and the potential for new regulation. Strap in for another informative and exciting episode! Topics: Headlines Timeline of regulatory activity surrounding crypto and digital assets Views from SEC Chair Gensler Identifying the risks and opportunities in crypto El Salvador becomes the first country in the world to adopt Bitcoin as legal tender Interview Background and mission of the NFA. The NFA examination process. The importance of educating member-firms. New NFA initiatives for 2021. Trends in enforcement How the NFA adjusted to COVID-19 work restrictions. Thoughts on remote supervision What’s on My Mind Reviewing the issue of Gamification and its impact on the market Finding the balance between investor protections versus overregulation Quotes: “Our mission is officially to safeguard the integrity of the derivatives markets by and protect investors and ensure that our Members are meeting their regulatory responsibilities” “It really has been a focus my entire career and it started from the top, I mean our Presidents and CEOs say to us, you know, one of our functions is education, and that includes Member education. If our if our mission is to safeguard the integrity of the derivatives markets and protect customers, the best way to do that is to have Member firms who are in compliance with the rules and regulations. Most Members want to do the right thing and so it's our job to make sure they understand what the rules and regulations require and if they do it. But it's also our job for those firms who don't want to follow the regulations that we identify them quickly and get them disciplined.” “We’ve been successfully doing our jobs remotely and these inspections have been going well remotely. So, do we have to go back to what things were like pre-pandemic?” Resources: Compliance in Context

Welcome back to the Securities Compliance podcast. On today’s show, we do a deep dive on the 2021 Investment Adviser Section Report from the North American Securities Administrators Association highlighting 2020 activities for NASAA and its broader application to the compliance profession. For our interview segment, we welcome in Lilian Morvay to provide our listeners with valuable insights on the impact of insurance on compliance and how varying types of insurance (D&O, E&O, Cybersecurity, Professional Liability Insurance) affect how broker-dealers and RIAs are doing business today. Finally, we’ll wrap up today’s show with another installment of the History Has Your Back segment, where we look back at the life of fireman hero Ed Pulaski, and the importance of finding the right tool. Headlines NASAA April 2021 Investment Adviser Section Report highlighting 2020 activities Metrics surrounding state registrants Model Rule on Written Policies and Procedures Compliance Grid Cybersecurity Checklist and additional guidance Interview What is the purpose of insurance and the importance of risk transfer? Detailing different types of insurance impacting broker-dealers and RIAs The intricate details surrounding cybersecurity insurance What to consider when purchasing professional liability insurance What do you do if you have a claim? What’s on My Mind Reviewing the life of hero firefighter Ed Pulaski The Pulaski Axe Why having the right tool can make all the difference Quotes: “One thing to consider from a client perspective, do you want to do business with a company that has not protected itself with a policy?” “If you think about have professional companies protect themselves, think about yourdentist, think about your doctor, think about your attorney, think about your accountant—these individuals are providing a professional service, and there are times when they will commit a negligent act; they will inadvertently cause injury to their client. And the clients, have the opportunity to recover any damages or any losses related to that injury. Those services are insured by professional liability policy. Professional liability insurance policies are also available to companies that are in the financial sector—broker dealers, registered investment advisers.” “It’s very important for broker-dealers when they are considering pursuing professional liability insurance, number one, to make sure that they have an insurance broker who’s very familiar with that type of policy.” “Fortunately, there are a number of carriers that are extending coverage for broker-dealers and RIA’s for cyber.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! Today’s show is going to be a great one. In the Headlines section, we’ll review recent recommendations from multiple SEC Commissioners on how to improve access to private capital. For our interview segment, we have the distinct pleasure of speaking with Mark Kim, CEO of the Municipal Securities Rulemaking Board about the exciting developments happening at the MSRB, particularly on the technology and data side of the industry. Finally, we’ll wrap up today’s show with another edition of Outtakes where we look at a Ponzi scheme and related emergency enforcement that unfortunately for the investors involved, wasn’t something that could only be made in Hollywood. Headlines SEC Commissioners weigh in on how certain underrepresented founders and investors can get access to capital Commissioner Lee suggested the SEC evaluate how its regulations impact such communities Commissioner Peirce recommended that the SEC provide greater flexibility to the accredited investor definition and individuals serving as “finders” Interview The mission of the Municipal Securities Rulemaking Board. The pillars upholding the MSRB. Providing infrastructure to MSRB The business case for cloud migration Data privacy and information security Transition away from LIBOR and related challenges ESG in the municipal securities market Outtakes SEC issued emergency enforcement action against an alleged Ponzi scheme straight out of Hollywood Quotes: “But that's not the only thing that Congress mandated us to do. Reading the Exchange Act, Congress also mandated the MSRB to establish information systems that promote a fair and efficient market, that facilitate capital formation. And those information systems, is what I mean by our core pillar of technology. It's the technology systems that undergird the market.” “Technology is fundamentally intertwined with compliance.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! As we kick off Season 2, we begin by reviewing a recent report from the Congressional Research Service looking at the SEC’s current guidance on ESG and help break down an incredibly challenging couple months in this area. For our feature interview, we welcome in New York City Attorney and compliance expert, Richard Chen. Together we discuss the practical tilt of running an effective compliance program and how compliance officers can be more productive. To wrap up the first episode of Season 2, we offer another installment of the History Has Your Back segment where we look back at the dating life of Warren Buffett, a quote from the most famous citizen of Motunui, and a good lesson in both life and compliance. Headlines CRS Reviews SEC Disclosure Policy and Practice on Climate Risk Recent Timeline of SEC statements regarding ESG Future state of ESG and avoiding regulation by enforcement Interview Setting priorities using the Eisenhower principle. Compliance calendars and time management. Identifying the Proper Allocation of Resources: Automation and the use of technology Cutting and delegating compliance responsibilities Collaborating with firm leadership and other business units How CCOs can protect themselves Fostering a culture of compliance within your organization History Has Your Back Pitfalls in the dating life of Warren Buffett Navigating the separation between work and personal life Quotes: ““I think that one of the helpful frameworks I use is called the Eisenhower Principle, which categorizes tasks based on whether they’re important or urgent.” “...As compliance professionals, we are collaborative. We all want to get to the same place and so, it’s important for us to each put in what we know best about what’s going on, in order to perform effectively.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! In today’s bonus episode, we preview some of our fantastic Season 2 guests and look back at some of the amazing moments from Season 1. The even better news? The first full episode of Season 2 drops later this week. Let’s light this candle! Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! In the final episode of Season 1, we begin by discussing recent remarks from SEC Commissioner Peirce regarding the Game Stop situation and how it might impact the industry moving forward, as well as a warning from securities regulators to help raise awareness about the threats of social isolation and investment fraud. For our feature interview, we welcome in former NSCP Board Member Rob Tull for an in-depth conversation focusing on the stress and demands inherent in being a legal and compliance professional that can lead to personal and career burnout, and what you can do to reclaim your sanity and energy, and even increase your creativity for problem-solving. Finally, we’ll wrap up today’s show with another installment of the What’s On My Mind segment, where we do a deep dive on newborn babies, sleep deprivation, and compliance. Headlines Commissioner Peirce Reaffirms SEC Mission to improve the way markets work and to make them work for more people in Light of GameStop SEC, NASAA, FINRA raise awareness regarding social isolation and Rrsk of investment fraud Interview Demands of being a legal/compliance professional can lead to personal and career burnout Understanding the causes and impact of stress Managing the challenging expectations of compliance professionals. The fallacy of stress Stressful environments and the impact on decision making Getting comfortable with risks and deep water survivors Best practice recommendations to stay grounded and increasing your creativity for problem-solving What’s on My Mind Newborn babies and the notion of banking sleep Acclimating yourself to a stressful or challenging environment Training your compliance program to perform at its best Quotes: “Stress is actually a form of a threat response.” “Deep water survivors are the kind of people that if you were at the beach, they seem like the crazy person that swims way past out the breakers and you're just like “Where are you going? You’re going to drown.” And what I found in people that are like that is that they have an equation for risk which basically says my risk of a problem exists in the first 10 feet of water. Everything else below that is irrelevant. If I solve the top 10 feet of water I'm not drowning, so it doesn't matter how deep the water is. And so that got me thinking about in risk solving...you get so wrapped up in the details that you forget the fundamentals, which is if I do these core things at the top—and again if I just rely on compliance principles, not necessarily the specifics of the rules, but if I know my principles, and I can nail my principles down—then I shouldn't have to worry about how deep the risk is, if I can do the basics, I will survive. It might not be pretty, but I'll survive.” “So what I found for me is when we're stressed out, we're running on depleted resources. And not only that there's a burnout factor, and it's like it's a question of “What are you willing to lose in the process of burning out?” And, we have to, we have to be willing to step out of that situation.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! On today’s show, we continue our Lessons From the Front Lines series. Much like our regular shows, this series will provide same excellent content to help you put Compliance In Context™, but will deliver that content in a more narrative form—like a fireside conversation with an industry pro. In this way, the Lessons From the Front Lines series will provide you with practical advice and takeaways that focus on a real-life, tough lessons other compliance professionals and regulators have learned on the front lines of our industry. To help guide us through today’s show, we welcome in Ed Wegener, the former Senior VP and Midwest Regional Director of FINRA to discuss some real lessons learned on the front lines of the investigation and enforcement process. Topics: Reviewing the life cycle of a regulatory investigation Analysis of findings from routine examinations, cause examinations or enforcement investigations. Use of data analytics in the investigation process Conclusion of the Investigation Referral to enforcement and escalation of findings Enhanced focus on the impact the supervisory process and requisite due diligence of products, OBAs, private transactions, borrowing from customers, etc. Discussion of policies and procedures and related training protocols How does the firm monitor for compliance with its policy? Reviewing the FINRA 2021 Annual Regulatory and Exam Priorities Industry innovations to enhance the process of investigations and enforcement Quotes: “When they do conduct an examination, they have been getting really good at taking that information that they gather through things like electronic blotters—putting that through their analytical systems and using that to identify areas of potential focus. And so the way we used to think about it was, it’s trying to find needles in haystacks and the analytics aren’t necessarily going to find the needles for you, but they're going to tell you that if there are needles they're probably in this part of the haystack.” “I think as an examiner at FINRA, what I really want to know is not particularly what I find on the examination, but when I leave the firm, what are they going to be doing to make sure they have controls over the risks that I’m concerned about.” “You know it’s interesting I’m not sure that Reg BI is changing the landscape in terms of that from the perspective of really understanding the products that you're selling. I think there's always been that expectation, you know whether it was reasonable basis—suitability requirement or the care obligation with respect to Reg BI but the important thing is that firms before they start recommending products that they understand those products. They understand the features and the risks and that the people who are selling them understand them as well.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast! On today’s show, we officially launch the Lessons From the Front Lines series. Much like our regular shows, this series will provide the same excellent content to help you put Compliance In Context™, but will deliver that content in a more narrative form—like a fireside conversation with an industry pro. In this way, the Lessons From the Front Lines series will provide you with practical advice and takeaways that focus on real-life, tough lessons other compliance professionals and regulators have learned on the front lines of our industry. To help guide us through today's conversation, we welcome in Rob Kaplan and Bruce Karpati. In sharing their experiences as former Co-Chiefs of the Asset Management Unit, Bruce and Rob discuss the role of SEC Enforcement and its impact on the industry. Topics: What is the role of the Division of Enforcement in the industry, and how does the SEC send a strong message in enforcement cases? Review the concept of “regulation through enforcement” Were there consistent failures or compliance violations in the cases you saw in the Asset Management Unit? Discussion of how negotiations that occur in an enforcement case can result in unintended consequences affecting the industry Analyzing the lines between clearly violative activity and “minor” violations Identifying the top one or two lessons learned from each of these cases and the biggest takeaways for compliance Quotes: “The good public policy way...is when an enforcement matter comes out and it says you cannot do X, right. You cannot have loans to affiliates that are not properly documented because we don't like that. It's when next time somebody comes to the chief compliance officer and says, hey, we're thinking about making this loan to affiliates that they say you know what “[t]here's this enforcement case that says you can't do that,” or the CEO has been waiting or other compliance professional or the GC has been waiting for a case to come out on point to be able to arm them in discussions with the business side to help set the standards.” “If you’re sitting on the compliance side and you read one of these summaries of these orders and you’re still confused as to what you actually have to do, that’s a real problem.” “That to me is the risk: Is that you don’t take something small seriously. You have disclosures that ignore it, it snowballs, and then you have a pattern and practice as it goes on, that you could have really avoided and you don’t know how to get yourself clean.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast. In today’s special episode, we welcome in SEC Commissioner Hester M. Peirce for an in-depth conversation focusing on the controversial topic of Chief Compliance Officer (CCO) liability. In addition, we discuss the role of outsourced CCOs, the new Marketing Rule, and broker-dealer custody of digital asset securities and cryptocurrencies. She also spoke about the new presidential administration, which will bring in a new SEC Chair and Head of Enforcement, and whether she anticipates a slowdown in dialogue that’s taken place between the regulators and the industry. Interview Discussing the motivation to help move the conversation on CCO liability forward Biggest takeaway from the NSCP CCO Liability survey Concerns over whether personal liability will be imposed in cases of simple negligence Thoughts on outsourced Chief Compliance Officers Discussing the impact of a new Administration, SEC Chair, and Head of Enforcement Thoughts on the new SEC Marketing Rule including key takeaways Review the SEC request allowing limited purpose BDs to custody “digital asset securities” Focus areas for Commissioner Peirce in 2021 Career advice for new compliance professionals Quotes: “And I think the compliance people at a firm play a really important role in being a bridge and saying to the operational people at the firm, the people who are providing the advice, or doing the day-

Welcome back to the Securities Compliance podcast. In today’s episode, we discuss the recently adopted amendments to the Investment Adviser Marketing Rule and a new statement from the SEC alerting investors to a rising number of investment scams. For our interview segment, we welcome in former NSCP Chair and teleworking compliance expert Craig Watanabe to do a deep dive on how firms can best prepare their compliance programs for the increase in teleworking and the types of supervision, cybersecurity, and data privacy issues that are involved there. Finally, we’ll wrap up today’s show with another installment of the What’s On My Mind series, where we’ll look at the new DOL prohibited transaction exemption for investment advice fiduciaries and the greatest comedy centered around Punxsutawney, Pennsylvania. Headlines SEC Alerts Investors to Rising Number of Investment Scams SEC Adopts Amendments to Investment Adviser Marketing Rule Interview Review the trend toward decentralization and the impact of the pandemic Compliance challenges that teleworking introduced Fortress versus endpoint security model and teleworking cybersecurity Other tips and recommendations for teleworking cybersecurity Best practices for handling remote supervision Review of regulatory guidance for remote audits What’s on My Mind Groundhog Day, déjà vu, and the new DOL Prohibited Transaction Exemption for Investment Advice Fiduciaries Quotes: “And of course, our industry is no exception. We are seeing strong trends toward decentralization, which were evident as you mentioned, prior to the pandemic, but I think just got a huge kick forward with the pandemic and what I think is interesting is most experts believe that this trend will have a residual impact. In other words, when this pandemic is ultimately over, we probably will not go all the way back to baseline, pre-pandemic levels.” “And so the evolution that we are seeing is, we're seeing cybersecurity evolve from a fortress model to an endpoint security model.” “...Going over and above and being a great compliance department, I think that was all part and parcel of that idea of being not just a good compliance department, but being a great compliance department.” Resources: Compliance in Context

On this episode of the Securities Compliance podcast, we’re going to discuss Stephanie Avakian’s departure from the SEC, updates on the proposed marketing and advertising rules, very interesting investment advisor metrics, and some new changes coming to New York state IAR rules. For the interview portion, I chat with Michelle Canella and Hope Brown. The three of us dive into diversity, equity, and inclusion in the financial services industry and discuss the importance of mentors and sponsors. Listen in for a better understanding about what diversity, equity, and inclusion look like in action in the financial services industry. Headlines Stephanie Avakian steps down from the SEC’s Division of Enforcement. The SEC punts on discussing the proposed advertising and cash solicitation rules Reviewing the IAA/NRS Evolution Revolution Report. Updates to the New York State’s IAR rules Interview Defining and distinguishing diversity, equity, and inclusion. Ways to implement these concepts inside your organization. How compliance professionals can take on issues of diversity and inclusion. The importance of mentorship and sponsorship in the workplace. NSCP diversity and inclusion efforts and other 2021 activities History Has Your Back Mentors create environments of trust and safety, stimulating development both personally and professionally. Elevate yourself and your firm by connecting with others to become a mentor or mentee As a tribute to mentors everywhere, a review of Rudyard Kipling’s poem, If Quotes: “Well, first and foremost, I really believe that in order to effectuate change, you should change yourself first.” ““I think that mentors and sponsors are both critical to the success of any professional, and in our particular case, compliance professionals. I think, in particular, for women and for people of color, who typically have fewer interactions with leaders within financial services organizations.” Resources: Compliance in Context

Welcome back to the Compliance In Context podcast! On today’s show, we’ll discuss Jay Clayton’s departure from the SEC and the first real cases from the SEC Enforcement Division's Exchange-Traded Products Initiative. For our interview segment, we welcome in former NSCP Chair and industry stalwart Miriam Lefkowitz to do a deep dive on how firms can best prepare for the practical application of Regulation Best Interest into their compliance programs. Finally, we’ll wrap up today’s show with another installment of the What’s On My Mind series, where our focus today will be on the recent rule proposal for “finders” and how this broker-dealer exemption could be just what we need to help struggling businesses with capital formation. Topics: Jay Clayton’s announcement of his departure from the SEC Major settlement related to improper sales of volatility-linked exchange-traded products. Interview REG BI and Form CRS preparation. Practical application of the rule after a full quarter in place How to avoid trip wires Comparing good vs. bad disclosures Methods for staying current with regulations and the NSCP Reg BI Forum What’s on My Mind SEC Commissioners Encourage Small Business Advisory Committee to Consider Proposed Registration Exemptions for “Finders.” Quotes: “I think disclosures around monitoring are challenging because there are responsibilities and duties that flow from whether your broker or whether you're an investment advisor.” “The SEC did discuss...the nature and the scope of the review, they've done to date and true to their word. They're looking for good faith efforts to comply. And for the most part they found it.” Resources: Compliance in Context

Welcome back to the Compliance In Context Podcast! In this episode, we discuss recent rulemaking from FINRA on remote inspections of broker-dealers and check in with OCIE on a risk alert highlighting deficiencies seen in adviser branch exams. Our interview segment today features SEC and FINRA enforcement guru Brian Rubin for a deep dive into recent trends from the regulators and what to look out for in the future. Finally, we continue the next installment of the Outtakes series to discuss the proper allocation of business and personal expenses. Topics: Headlines FINRA Proposes Rule Change on Remote Inspections OCIE Highlights Supervisory Deficiencies at Adviser Branch Offices Interview Reviewing recent trends in SEC and FINRA enforcement actions. Forecasting future enforcement action stemming from COVID-19 and Reg BI Discussing recent remarks from SEC Commissioner Peirce on CCO liability Detailing NSCP Currents authorship and related topics Outtakes The proper allocation of business versus personal expenses and how to avoid violations of federal securities laws Quotes: “We have heard that with regard to penalties and financial sanctions, we are looking at record numbers.” “In two, three years, I expect we’ll see enforcement actions related to Reg BI, as well.” "Ultimately, compliance is here to help elevate the services that our firms provide their respective clients...And so, we want to be able to reward those folks that are part of that process to help elevate those services.” Resources: Compliance in Context

Welcome back to The Securities Compliance Podcast. In this episode, we cover the controversial issue of Chief Compliance Officer (CCO) liability and address recent remarks and recommendations from SEC’s Commissioner Hester M. Peirce to clarify CCO responsibilities. The interview segment features Rob Kaplan and Bruce Karpati discussing the origin story of SEC’s Asset Management Unit. Finally, we continue the History Has Your Back series by taking deep look into a letter from Julius Caesar to Cicero during the Roman Civil War to shine a light on opportunities for personal and professional growth. Based on listener feedback, regular episodes of The Securities Compliance Podcast will drop every two weeks and may occasionally offer extended interviews with bonus content. In addition, the podcast will expand its offerings to include a master class miniseries for members of the National Society of Compliance Professionals (NSCP), and the future launch of the Lessons From the Frontline series. Headlines: When the Nail Fails–Remarks before the National Society of Compliance Professionals analyzing CCO liability Interview: Origin Story: Asset Management Unit’s evolution and impact SEC: Building the expertise in specialized areas, including five experts and fundamental areas of investment management Process initiatives and improvements Seeds of Collaboration: Leverage expertise across different SEC divisions Conflicts of Interest represented the foundation for issues review by the AMU NSCP Private Fund Forum Horizon issues for private funds: supervisory responsibilities and valuation issues History Has Your Back: Ancient Rome is split between two separate factions In a letter to Cicero, Julius Caesar employs a strategy of mercy and empathy as a sign of true strength. Compliance professionals can show real strength and gain credibility inside their firms through understanding and empathy Resources: Compliance in Context

Welcome back to the Securities Compliance podcast. On this episode, Today, we cover the SEC's new rule proposal regarding private issuers and raising capital and recent criticism to the amendments for Form 13F . Later, I speak with Chuck Senatore regarding the importance of FinTech and RegTech in the financial services industry and in your firm’s compliance program. Chuck is a board member and advisor to an assortment of FinTech, RegTech, and cryptocurrency companies. He currently teaches a course on compliance and regulatory strategy at the University of Chicago, and is the founder of the Boston RegTech Meetup. At the end of the show, we launch the History Has Your Back series by reviewing the keynote address during the 2016 NSCP National Conference to foreshadow the importance of FinTech/RegTech in the investment management industry. Thanks for tuning in! Headlines SEC Proposes Exemption from Broker-Dealer Registration for Small Finders Amendments to Form 13F reporting requirements. Interview Machine learning and impact of AI in financial services Harnessing technology for better insight and outcomes of compliance testing Blockchain and its impact on future examinations History has Your Back How important is FinTech/RegTech to the regulators? We go back in time to look at the National Society of Compliance Professionals 2016 National Conference keynote address by Marc Wyatt, Acting Director of the OC. Quotes: “And to the extent that you can harness the technology to bring greater insight, the more ability you have to kind of avoid the wasted time of running down ratholes to determine whether something is a false positive or not.” “While you don’t necessarily need to be a data scientist, having a working knowledge of this space and how you can best leverage data is really important.” Resources: Compliance in Context

Welcome back to the second episode of the Securities Compliance Podcast. Today, we cover breaking developments on the whistleblower front and new trends in SEC enforcement. Later, I speak with ERISA expert David Kaleda, principal at Groom Law Group, to discuss the latest developments with the new DOL Fiduciary Rule and its impact on the investment management industry. David brings a wealth of experience on all things ERISA and matters impacting the investment and plan space, and he has previously served on the Department of Labor’s ERISA Advisory Council. At the end of the show, we launch the What’s On My Mind series featuring a nuanced take on a contemporary issue affecting the investment management industry. In today’s segment, we’re looking at the convoluted and confusing area of ESG disclosures. Thank you for tuning in. We hope you subscribe and join us next time! Headlines Updates to whistleblower statutes. SEC enforcement trends Interview Breakdown the new DOL Fiduciary Rule and related Preamble Review the five-part test How to apply the proposed rule in your compliance program now Impact of the plaintiff’s bar David’s predictions for the future. What’s On My Mind The convoluted world of ESG disclosures. Quotes: “...And in that preamble, the department suggests that it’s going to change its views...on when a person acts as a fiduciary for purposes of investment advice.” “By putting this language in the preamble...theoretically, that should apply right now.” “...It’s always tough to anticipate what the government’s gonna do, but in an election year, it gets that much more challenging.” Resources: Compliance in Context

Welcome to the first full episode of the Securities Compliance Podcast! A personal master class for the securities legal and compliance professional, we started this podcast with the mission of helping people put Compliance In Context™. At the start of each episode, we will cover some of the “hottest” compliance topics of the day, focusing on the news and noteworthy events that impact your firm’s compliance program. Today’s show will review the impact of the new accredited investor rule and some recent risk alerts focusing on cybersecurity. The second segment of each show will take our master class to the next level and feature an expert guest to do a deep dive on a significant topic affecting our industry. Today, we speak with Natasha Greiner, the Associate Director of the IA/IC Examination Office within the SEC’s Office of Compliance Inspections & Examinations. Together, we discuss her work and the current state of the OCIE. The final segment of our first episode will launch the Outtakes series. If compliance were a TV show, think of this is as the bloopers reel, where we look at humorous activities carried out at financial services firms that hopefully provide us all with a roadmap of what not to do inside our firms and our compliance programs. We hope you tune in and subscribe for future episodes! Headlines SEC expanding definitions of accredited investors. Combating cybersecurity threats. Interview How OCIE has managed to remain fully operational. Conducting outreach despite the pandemic. Natasha’s work history and its impact on her current role. What’s next for OCIE? How Natasha and her family are handling quarantine. Outtakes Text messages and how to avoid violations of recordkeeping rules Quotes: "What we’ve done historically, in other times of market stress, we’ve really being trying to actively engage in ongoing outreach with registrants. And I’m really proud of this. I think we have done over three-hundred outreach events since FY 2020." - Natasha Greiner Resources: Compliance in Context

Meet Patrick Hayes, your host for The Securities Compliance Podcast. A personal master class for the securities legal and compliance professional, Patrick’s passion is to help you put Compliance In Context™ by combining the technical expertise of industry thought leaders and innovators with the practical experience of doers and key decision-makers. Listen today to help elevate your firm’s compliance program and take your career to new heights.