Resources/ Updates - June 2016

The SDDco Client Update

The SDDco Client Update is an action oriented email prepared in-house, tailored to client needs, and sent as an adjunct to our online newsletter.  Verified newsletter subscribers receive our Client Update once each month.

The SDDco Client Update is intended to provide general information only. It is not intended as, and should not be taken as, financial, tax, accounting, legal, consulting or any other type of advice specific to you or your firm. Users of the SDDco Client Update should not act or refrain from acting on the basis of information provided on the sddco.com website. Always check with your accountant and/or attorney.

Jun30

RIA Got a BCP? Transition Plan Too? SEC Floats New Rule

The SEC proposed a new rule, on June, 28, 2016, to mandate that SEC registered investment advisors (“RIAs”) maintain and annually review a written business continuity plan (“BCP”) and a transition plan, each holding specified components.  If adopted, approximately 12,000 RIAs would be impacted. Proposed Rule 206(4)-4 The SEC is proposing a new rule and

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Jun29

A Doozy of Checklist ~ Cybersecurity for Small Financial Services Firms

FINRA has developed, in Excel format, a robust Small Firm Cybersecurity Checklist. The new “Checklist” helps FINRA member firms and other financial service professional set up a customized cybersecurity program to protect investor and firm information from a technology compromise.    While use of the Checklist is optional, compliance with industry regulations is not. Cybersecurity practices are

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Jun23

SEC Approves Revisions to Adviser Registration Reqs ~ per JOBS & FAST Acts

The SEC approved amendments in May 2016, to revise rules covering investment adviser registration thresholds and registration termination, and suspension of reporting under Section 12(g) of the Securities Exchange Act of 1934.  The amendments reflect the new, higher thresholds prescribed in the Jumpstart Our Business Startups Act (JOBS Act) and the Fixing America’s Surface Transportation

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Jun23

DOL Entitles More White Collar Workers to Overtime Pay

To fortify overtime protections for white collar employees, the Department of Labor (DOL) amended overtime regulations, doubling the salary required to trigger the overtime pay exemption under the Fair Labor Standards Act (FLSA). This change, approved on May 18, 2016, will extend overtime pay protections to over 4 million workers in year one alone. Effective

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Jun21

Do You Read the Mutual Fund Prospectus? Here’s How

The SEC’s Office of Investor Education and Advocacy (OIEA) issued three Investor Bulletins to convey key information found in a prospectus. Mutual fund prospectuses provide important info to help investors to understand how a fund works and to compare it with other funds.  Do read the prospectus before buying or selling shares in a mutual

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Jun20

Municipal Advisers ~ Core Conduct Obligations Effective June 23, 2016

The Municipal Securities Rulemaking Board (MSRB) reminds municipal advisors that MSRB Rule G-42 (on duties of non-solicitor municipal advisors) and related amendments to MSRB Rule G-8 (on required recordkeeping) become effective on June 23, 2016. New Rule G-42 establishes core standards of conduct for municipal advisors engaging in municipal advisory activities, other than municipal advisory solicitation

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Jun19

Security-Based Credit Default Swaps ~ Margin Requirements Extended Another Year

FINRA filed with the SEC, on June 15, 2016, to amend once more the effective period of FINRA Rule 4240 (Margin Requirements for Credit Default Swaps), asking for another one-year extension. FINRA proposed immediate effectiveness on July 18, 2016, with an expiration date of July 18, 2017. Backfill FINRA Rule 4240 (the “Rule”) implemented an

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Jun13

Broker-Dealers ~ Fines to FINRA are NOT Tax Deductible

According to an Internal Revenue Service (IRS) Memorandum issued on June 3, 2016, penalties and fines paid to the Financial Industry Regulatory Authority (FINRA) cannot  be considered tax-deductible. This recent judgment could cost brokerage firms required to pay fines to FINRA dearly.  According to the FINRA 2014 Annual Report, FINRA—the self regulating agency (SRO) for the securities

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Jun07

SEC Targets PE Firms ~ Acting as Unregistered BDs & Misusing Expenses

On June 1, 2016, the SEC penalized and fined a Maryland private equity fund advisory firm and owner (“Firm”) more than of $3.1 million for violations (Section 15(a) of the Securities Exchange Act of 1934, the Investment Advisers Act of 1940 and Rules 206(4)-7 and 206(4)-8).  Per the executive order, the Firm: Acted as a

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Jun06

CFTC Supplements Its 2013 Position Limits Rule Proposal

The CFTC voted unanimously, on May 26, 2016, to propose a supplement to its December 2013 position limits proposal regarding 28 identified commodity futures contracts (“Supplemental Proposal”). Key Changes The Supplemental Proposal holds three main changes to the 2013 Proposed Rule: New Process: the Supplemental Proposal would modify the procedures for exchanges, subject to CFTC

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Jun04

Retail Broker-Dealers ~ It’s Time to Link to BrokerCheck

The SEC approved a FINRA rule amendment, in October 2015, mandating all retail broker-dealer websites to display a hyperlink to FINRA Broker Check on: The initial web page that the firm intends to be viewed by investors Any other web page that includes a professional profile of one or more registered persons who conduct business

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Jun03

2016 GASB Fee ~ for MSRB Reporting Broker-Dealers

Pursuant to an SEC order, in 2012 FINRA implemented an accounting support fee, designed to adequately fund the annual budget of the Governmental Accounting Standards Board (GASB).   The fee is collected from member firms that report trades quarterly to the Municipal Securities Rulemaking Board (MSRB). How Fee is Calculated As of April 2016, FINRA will

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Jun02

FINRA Requires Educational Info to Customers of a Transferring Representative

FINRA released Regulatory Notice 16-18  in May 2016, to outline a newly adopted FINRA Rule governing recruitment practices by broker-dealer firms and their representatives.  FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers) requires that education communication be provided to recruited former customers of a transferring representative. The rule becomes effective on

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Jun01

SEC Investor Bulletin: Master Limited Partnerships

This Investor Bulletin issued by the SEC’s Office of Investor Education tackles the topic of Master Limited Partnerships (MLPs), hoping to shed some light on perhaps an unfamiliar matter. What is an MLP? A master limited partnership (MLP) is a type of exchange-traded investment focused on the exploration, development, mining, processing, or transportation of minerals

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