Celebrating David Tittsworth

The investment advisory profession lost one of its most influential voices, and the IAA lost a beloved leader, when our former President & CEO David Tittsworth passed away on January 8. Since his passing, the outpouring of grief for David has been overwhelming – clearly, he touched many of us in a profound, positive and lasting way. The flood of emails and phone calls the IAA has received is a testament to how much David was loved and respected. Here, we’re sharing some of the many tributes we’ve received.
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IAA Submits Comment Letter on SEC’s Advertising and Solicitation Proposals

The SEC’s Advertising Rule proposal represents a milestone for IAA advocacy and an important first step in modernizing a rule that has not been materially amended since its adoption nearly 60 years ago, in 1961. In its just-filed comment letter, the IAA notes that the proposal addresses many themes and issues the IAA has raised over the past 20 years, especially those relating to the benefits of a principles-based approach to regulation. But we also note that certain elements of the proposal would impose significant operational and compliance burdens and unduly impede important communications with investors, especially existing clients.
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proxy.jpgIAA Objects to SEC’s Proxy Advice Proposal

Urges SEC to Address Infrastructure, Not Proxy Advisory Firms

The IAA has submitted a comment letter in response to the SEC’s proposal regarding proxy voting advice, expressing our disappointment that the Commission is focusing on proxy advisory firms, where there is no compelling evidence for a rulemaking, instead of proxy infrastructure, which is in need of urgent attention.
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SEC Investor Advisory Committee: Revise, Republish Proxy Proposals

Commissioner Roisman Addresses Criticisms in Recent Speech

The SEC’s Investor Advisory Committee (IAC) responded strongly to the SEC’s proposals regarding proxy voting advice and shareholder proposals. In a 10-5 vote, with two abstentions, the IAC made recommendations similar to those made by the IAA in its comment letter on the proposals.
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Volcker Rule Agencies Propose Changes to Covered Funds Restrictions, Responding to Concerns Raised by the IAA and Others

The five agencies charged with implementing the Volcker Rule – which is designed to limit risk taking by banks and their affiliates – are proposing additional revisions to their regulations to ease some of the restrictions on activities of bank-affiliated asset managers.
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OCIE Issues Observations of Cybersecurity and Operational Resiliency, Encourages Firms to Assess Cyber Practices

The SEC’s Office of Compliance Inspections and Examinations (OCIE) has issued a statement summarizing its observations of cybersecurity and operational resiliency practices. While emphasizing that one size does not fit all, OCIE staff encourages investment advisers and others to reflect on their own cybersecurity practices and incorporate OCIE’s observations into their assessments.
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Kelli A. Haugh,
Managing Director,

Form CRS Implementation Considerations

By Kelli A. Haugh, Managing Director, Foreside*

The Securities and Exchange Commission (“SEC”) last June adopted new rules requiring investment advisers to prepare and deliver a client relationship summary (“Form CRS”) that provides information about their investment-related services, fees, and conflicts of interest. Form CRS, also referred to as Form ADV Part 3, applies to firms who have, or offer services to, retail investors and must be filed with the SEC by June 30, 2020. The SEC has recently emphasized the importance of Form CRS by including it as one of its examination priorities for this year, saying it will include in its examination assessments the content and delivery of Form CRS, as well as policies and procedures regarding conflicts disclosures.
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Compliance Training: A Marathon Without a Finish Line

By Matthew Bromberg and Jenna Burch, Dorsey & Whitney LLP* 

Matthew Bromberg
Dorsey & Whitney LLP

Registered investment advisers are required by law to develop and follow written compliance policies and procedures that are reasonably designed to prevent violations of law and protect clients. As the responsibility to maintain compliance with SEC rules and regulations rests on all associates and supervised persons, and not only the Chief Compliance Officer (CCO), providing compliance training to all personnel is critical and contributes to a compliance and business culture where legal, ethical practices are the norm.
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Mike Oppe
Senior Vice President
Chubb Insurance
A Primer on the Difference Between Cyber and Financial Institution Fidelity Bond Insurance Policies

By Mike Oppe, Senior Vice President, Financial Institutions, Chubb Insurance*

The annual Investment Management Compliance Testing Survey results for each of the last six years (2014-2019) rank cybersecurity as the “hottest compliance topic” scored by respondents. The survey also points to an increasing uptake in the purchase rate of cyber insurance policies, increasing from 33 percent in 2016 to 66 percent in 2019. We continue to observe a significant amount of confusion regarding the perils covered by cyber policies versus other policies, particularly the fidelity bond.

A key step to sorting out the confusion is understanding what type of perils are covered and where, with a goal of achieving a more comprehensive insurance risk transfer solution.
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SEC Fines Adviser for Failing to Establish and Enforce Restricted List Policies and Procedures

The SEC has censured and fined a Wyoming-based investment adviser $150,000 for failures in connection with its written policies and procedures to prevent the misuse of material nonpublic information (MNPI Policy).
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SEC to Provide Exemption for Approval of Sub-Advisory Agreements from In-Person Board Meeting Requirements Under the Investment Company Act

The SEC plans to issue an order exempting a series of mutual funds and the funds’ investment adviser from the Investment Company Act’s requirement for board members to meet in person approve and materially amend sub-advisory agreements in person. Instead, board members could approve these agreements “by any means of communication that allows them to hear each other simultaneously during the meeting.”
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IRS Provides Relief for RMD Notifications in Connection with the SECURE Act

Because of the short time after the December enactment of the SECURE Act that financial institutions had to update their systems, the IRS has provided relief asserting that, if a financial institution sent an RMD statement to an IRA owner who will turn 70 ½ in 2020, the IRS will not consider the RMD statement to have been provided incorrectly, as long as the IRA owner is notified by the financial institution no later than April 15, 2020 that no RMD is required for 2020.
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Neil Simon
IAA Vice President for Government Relations
Jackson Departing SEC Commission; Crenshaw to be Nominated as Successor?

SEC Commissioner Robert J. Jackson, Jr. announced that he will be stepping down from his post on February 14, giving Republicans a 3-1 majority until the vacancy is filled. According to Reuters, Senate Minority Leader Chuck Schumer (D-NY) had formally requested that the White House nominate Caroline Crenshaw – currently a counsel to Commissioner Jackson – to succeed him.
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Financial Service Committee Leaders Blast Lack of Diversity on SEC Advisory Committees

Congresswoman Maxine Waters (D-Calif.), Chair of the House Financial Services Committee, and Congresswoman Joyce Beatty (D-Ohio), Chair of the Subcommittee on Diversity and Inclusion, sent a letter on January 14 to SEC Chairman Jay Clayton expressing concerns about the ongoing lack of ethnic and racial diversity on the agency’s four advisory committees, including the newest 23-member Asset Management Advisory Committee, which includes no black committee members.
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Could RETIRE Act Follow SECURE Act?

With passage of the SECURE Act, there is growing interest in gaining introduction in Congress of the RETIRE Act, which would allow electronic delivery of information about retirement accounts.
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Regulatory Proposals

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Compliance Dates

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IACCP Certification & Training

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In what’s become a regular presentation at the IAA Compliance Conference, SEC Co-Deputy Director of OCIE Daniel Kahl (center) and Enforcement Co-Director Stephanie Avakian (right) outlined their exam and enforcement priorities for 2019 to IAA General Counsel Gail Bernstein.

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