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Welcome, thank you all of joining our webinar today hosted by MyComplianceOffice and Cipperman Compliance Services. Let me introduce Todd Cipperman. Todd is the founding principal of Cipperman Compliance Services. Todd has over two decades of experience in the investment management, and financial services industry. With that I'll hand it over to Todd. Thank you.

 

Has been a real hot topic with the SEC through multiple administrations, and multiple SEC chairs, so some of these cases I'm really interested to talk about, some of these are fairly new cases, but the principals they espouse are not particularly new. This idea of revenue sharing, and revenue sharing enforcement in pay to play have been SEC hot buttons for a very long period of time. Many of these cases that we're going to talk about today in these principals really come back to disclosure, and whether or not the payer or the recipient as the case may be has adequately disclosed all that is important to end clients about the revenue sharing going back and forth, the sort of pyramid of revenue sharing that goes on in the financial services industry. What's really interesting is we're going to address a little bit that even if you have full, and fair disclosure I'm going to ask the question will that really be enough, or is there more going on here.

 

I do want to talk about wrap programs a little bit today. Not because this webinar is really about wrap programs, but there have been so many cases recently around wrap, and wrap the issues are really revolve around revenue sharing, and really a lot of wrap programs were based on sort of loose joint ventures between different organizations. One being product, and one being distribution, and those kind of cases. If you look at some of the wrap enforcement cases you're going to see that revenue sharing plays a big part. A little bit of pay to play. I'm going to start with revenue sharing, and then move to pay to play. What I find very interesting about the whole pay to play world, and to define that this is the idea of sort of investment managers paying third parties to somehow secure government plan business, sort of paying to play in the traditional political sense.

 

Traditionally, that has been the providence of state lobbying laws. What's interesting about rule 20645 which we'll talk about under the Advisors Act and the anti pay to play rule is the SEC, a federal securities regulator taking essentially jurisdiction over the whole pay to play world, and that is new, and we also are going to have FINRA jumping in later this year. Also I think what's really important on this webinar, you can read all these rules, but what's really sort of interesting about this area is there are some things here that are not going to be so obvious to you. Where the SEC and FINRA see conflicts of interest that maybe on the face you don't really necessarily see it, or even in your own organizations you may have not seen that conflict of interest. As I said, the other sort of trending point is FINRA. You're going to see new FINRA rules come out later this year.

 

I think one of the points which is sort of outside the scope of this is what's going to happen with the regulators if the new administration sort of deemphasizes SEC enforcement and regulation will other regulators such as FINRA or the states jump in where they used to be. We certainly saw that back in the day for those who were around during market timing. It wasn't the SEC that first brought the market timing cases it was then Attorney General Elliott Spitzer of New York that really jumped in when the SEC didn't. It'd be very interesting to see what happens if the SEC does pull back it's enforcement.

 
 
 
 
 
 
 
 
 
 
 
 

This webinar was co-hosted with Cipperman Compliance Services, LLC

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