Brian Rubin and Adam Pollet of Sutherland provide summary from our co-hosted webinar with Sutherland on Decemeber 8th. You can view videos and download the slides from that webinar here.
2016 will be remembered as an historic year. We saw records broken at the Olympics, the Chicago-Cleveland World Series, and the Presidential election. As we approach the end of 2016, it’s time to reflect on other historic records that occurred in the regulatory world of SEC and FINRA and also ponder whether 2017 will “Trump” 2016’s record-setting year.
The SEC brought more enforcement actions than ever before (868), including a record number of actions against Investment Advisers / Investment Companies (160). In addition, the SEC assessed more than $4 billion in disgorgement and penalties. Throughout the year, the SEC continued its concerted focus on analyzing “big data” to build enforcement cases, addressing conflicts of interests at investment advisers (no matter how small), and ensuring registrants have adequate cybersecurity controls to protect customer information.
Meanwhile, FINRA is on pace to have its own record-breaking year, reporting more than $145 million in fines through November, including 25 “supersized” fines of $1 million or more. FINRA also reported more than $41 million in restitution over the same period. This year, FINRA has focused heavily on variable annuities, anti-money laundering, suitability, and due diligence.
But with new administrations in the White House, the SEC, and FINRA, the question on everyone’s mind is: What will 2017 bring? At the SEC, the new chair selected by President-elect Trump will set his/her own priorities and likely discontinue the prosecutorial bent and record-setting cases established by outgoing Chair Mary Jo White. At FINRA, however, the historic pace shows no signs of slowing down even with a new Chair and CEO taking the reins. Indeed, there is a real possibility that FINRA will step in to fill any enforcement void at the SEC under the new administration.
Regardless of the overall impact of the pending Trump administration, the SEC and FINRA will continue to discipline broker-dealers and investment advisers in 2017. Possible enforcement priorities include a continued focus on conflicts of interest, anti-money laundering, 529 plans, and cybersecurity as well as protecting senior investors and addressing the hiring of problematic brokers. Questions may abound, but 2017 will surely provide some answers soon.
Are you prepared for an SEC exam? Read our short blog post on the does and donts of an SEC exam here.