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Exam Alert: Mid-sized advisers must register with the states

The SEC has modified the standards for federal investment adviser registration. They have raised the bar for federal registration from Continue reading

The SEC has modified the standards for federal investment adviser registration. They have raised the bar for federal registration from $25 million in assets under management to $100 million. Advisers with between $25 million and $100 million in assets under management fall into the new category of “mid-sized advisers,” which must register with the states unless they qualify for federal registration based on other criteria. Mid-sized advisers have until June 28, 2012 to register at the state level.

Source: SEC Release 2011-133

Exam Alert: SEC approves exemption from investment adviser registration for “family offices”

On June 22, 2011, the SEC approved an exclusion for “family offices” from the regulations of the Investment Adviser Act of 1940. The new exemption applies Continue reading

On June 22, 2011, the SEC approved an exclusion for “family offices” from the regulations of the Investment Adviser Act of 1940. The new exemption applies to a company that only provides advice to “family clients,” is wholly owned by “family clients,” and does not hold itself out to the public as an investment adviser. “Family clients” include family members, key employees, and certain other clients.

Family offices were typically covered under the exemption for advisers with fewer than 15 clients, but that exemption will be removed under Dodd-Frank changes.

Relevant to the Series 7, 6, 65, 66, 63, 24 and Series 26 exams.

Source: SEC Release 2011-134

Exam Alert: FINRA announces new submission process for Form T

Effective July 5, 2011 FINRA member firms must submit Form T electronically through FINRA’s Firm Gateway rather than email. Form T is a form FINRA requires Continue reading

Effective July 5, 2011 FINRA member firms must submit Form T electronically through FINRA’s Firm Gateway rather than email. Form T is a form FINRA requires member firms submit to report last sale reports, typically after hours trades, of OTC transactions in equity securities. Relevant to the Series 62, Series 55, Series 24, and Series 7 exams.

Source: FINRA Trade Reporting Notice – 6/3/2011

Exam Alert: FASB requires additional accounting disclosures

The Financial Accounting Standards Board (FASB) has announced new standards regarding fair value measurements and disclosure requirements. These changes Continue reading

The Financial Accounting Standards Board (FASB) has announced new standards regarding fair value measurements and disclosure requirements. These changes will take effect December 15, 2011. The disclosure requirements include needing to disclose certain information on the valuation of Level 3 assets, nonfinancial assets, and items that are not measured at a fair value. Relevant to the FINRA Series 24, Series 7 and Series 62 exams.

Source: Accounting Standards Update No. 2011-04

Highlights: Fair Value Accounting: Five New Disclosure Requirements

Podcast: May 2011, FASB Board Member Russ Golden discusses FASB Accounting Standards Update No. 2011-04

Exam Alert: SEC approves FINRA financial responsibility and operational rules

The SEC has approved new consolidated FINRA rules governing financial responsibility and operational requirements of members. The rules take effect Continue reading

The SEC has approved new consolidated FINRA rules governing financial responsibility and operational requirements of members. The rules take effect August 1, 2011, and are based in part on existing NYSE and NASD rules, though there are new provisions as well. The new rules address guarantees, flow through benefits, carrying agreements, security counts, assignment of responsibility for general ledger accounts, and identification of suspense accounts. Relevant to the Series 7 and to the Series 24 exams. Details may be found here.

Source: FINRA Regulatory Notice 11-26

Exam Alert: FINRA pushes back implementation date for higher customer care standards

FINRA has changed the date on which its new know-your-customer and suitability rules will take effect. The new effective date is Continue reading

FINRA has changed the date on which its new know-your-customer and suitability rules (previously mentioned in this exam alert) will take effect. The new effective date is July 9, 2012. FINRA has also answered questions from firms about the new rules; the questions and answers may be found here.

http://www.finra.org/Industry/Regulation/Notices/2011/P123702

FINRA Makes Changes to Series 7 Exam Outline

FINRA made changes to its Series 7 General Securities Representative Exam outline. These modifications are mostly minor and include replacing Continue reading

FINRA made changes to its Series 7 General Securities Representative Exam outline. These modifications are mostly minor and include replacing the term “specialist” with “specialist/designated market maker (DMM),” updated short sale requirements, adding the Electronic Municipal Markets Access and various FINRA/NASD/NASDAQ rule updates.

For more information, click here.

Exam Alert: SEC proposes rule to change standards for “qualified clients”

The SEC has proposed a rule to increase the dollar amount thresholds for “qualified clients” (clients that may be Continue reading

The SEC has proposed a rule to increase the dollar amount thresholds for “qualified clients” (clients that may be charged performance-based fees by an investment adviser). The current rule requires a qualified client to have $750,000 in assets under management or $1.5 million in net worth. Under the proposed rule, these thresholds will be increased to $1 million in assets under management and $2 million in net worth. This revision is required to occur by July 21, 2011. Relevant to sections 4.3.3 of the Series 24 exam, as well as the Series 63, Series 65 and Series 66 exams.

http://www.sec.gov/rules/proposed/2011/ia-3198.pdf

Exam Alert: SEC approves amendments to FINRA TRACE transaction reporting rules

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system. Effective May 16, 2011, these amendments cover several Continue reading

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system. Effective May 16, 2011, these amendments cover several specific changes. Some of these changes address the structure of the text of the rules, as well simplifying definitions and reporting requirements. The changes add alternative reporting requirements and notification requirements for certain asset-backed securities transactions. They also add the Financial Information eXchange (FIX) as a method to report transactions to TRACE.

http://www.finra.org/Industry/Regulation/Notices/2011/P123566

Exam Alert: SEC approves consolidated FINRA rules on books and records

The SEC has approved a new set of FINRA Rules governing books and records. These rules will be effective December 5, 2011. The rules state that records Continue reading

The SEC has approved a new set of FINRA Rules governing books and records. These rules will be effective December 5, 2011. The rules state that records for which no retention period is given under FINRA or Securities Exchange Act rules must be kept for six years. Firms must now record the name of the agent(s), if any, responsible for an account. Relevant to the Series 6, 7, 62, 24 and 26. Additional changes can be found here: http://www.finra.org/Industry/Regulation/Notices/2011/P123549.