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Compliance 2017 Identifies Top Regulatory Issues for Investment Advisers


Camp Hill, PA - At yesterday’s Compliance 2017 conference in Camp Hill, regulators, investment advisers, legal, and compliance professionals identified the top regulatory issues facing the Pennsylvania securities industry. Compliance 2017 was designed to keep investment professionals and their firms up-to-date on changes to federal and state securities laws and regulations.

Following panel discussions and individual presentations from members of the Department of Banking and Securities and other state securities regulators, the Financial Industry Regulatory Authority (FINRA), the North American Securities Administrators Association (NASAA), and representatives of private firms, Secretary of Banking and Securities Robin L. Wiessmann identified the most important issues that investment advisers should be addressing:

Failure to supervise is one of the two most likely issues to result in enforcement orders. Panelists urged the investment community to ensure they have updated and effective strategies and policies regarding supervision of client-facing professionals, and that they exercise the necessary due diligence of these strategies and policies, including paying close attention to records of client communications.

The other issue most likely to result in enforcement orders involves the recommendation and sale of unsuitable investment products, especially to older investors. Panelists identified structured, complex, illiquid products such as non-traded Real Estate Investment Trusts, leveraged/inverse exchange traded funds, derivatives, oil and gas leases, and hedge funds as unsuitable for some investors. Investment firms were urged to keep tight controls on these often-risky investments, ensure that proper disclosures are made to investors, follow closely concentration risks, and provide investment advisers training to ensure that they understand the products being sold.

Forthcoming FINRA Rule 2165, which will become effective in February 2018, will make it easier for broker-dealers to protect their clients with diminished capacity from elder financial abuse. Investment advisers are often on the front lines of the underreported crime of elder financial abuse, and Wiessmann urged investment advisers to make themselves familiar with the new rule and to consider that a senior citizen who is the target of financial abuse may also be the victim of physical, emotional, or mental abuse. Anyone can call local law enforcement or the Department of Aging’s 24-hour hotline 1-800-490-8505 to report suspicions of elder abuse.

Several presentations focused on the necessity of investment advisers and their firms to make cybersecurity a top priority. Advisers and their firms were urged to educate themselves about red flags of scams, be sensitive to cybersecurity concerns in communications with their clients, and to work with clients to protect sensitive client information. Panelists recommended that advisers and their firms take advantage of the resources offered by the Department of Banking and Securities Cybersecurity Task Force and the Financial Services Information Share and Analysis Center:

“The goals of our regulatory communications and guidance are to be clear and consistent,” Wiessmann stated at the conference. “We welcome questions and discussions. We strive to be firm, fair, and consistent. Governor Wolf and I are interested in the success of Pennsylvania’s securities industry.”

The PA Department of Banking and Securities registers more than 200,000 broker-dealers, broker-dealer agents, investment advisers, investment adviser representatives, and notice filers who conduct securities-related business in Pennsylvania. Members of the securities industry are invited to connect to the department through its website (, Facebook and Twitter, and subscribing to the department’s newsletter.

MEDIA CONTACT: Ed Novak - 717-783-4721

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