Investment Management & Securities

On December 22, 2020, the U.S. Securities and Exchange Commission adopted amendments to the rules under the Investment Advisers Act of 1940 relating to advertisements. A copy of the adopting release is available here. This alert is to provide you with a high-level overview of the amendments and the new rule. Firms will have roughly 18 months to get into compliance with the new rules and we will be available to assist them with (i) updating their policies and procedures to comply with the new marketing rules, (ii) reviewing any collateral advertisements, (iii) assisting them with reviewing their solicitation arrangements, and (iv) addressing any questions they may have relating to testimonials, endorsements, third-party ratings, recordkeeping, or their Form ADV.

Continue Reading SEC Amends Advertising and Solicitation Rules: Numerous changes to start digesting and implementing.

President Trump issued an Executive Order (the “Order”) on November 12, 2020 prohibiting “U.S. persons” from trading in securities, both in the U.S. and abroad, that finance Communist Chinese military companies (generally defined as companies owned or controlled by Chinese military or government services and supporting military services, manufacturing or production). There were about 30 companies initially identified by the U.S. government, but the list is fluid and is likely to expand over time. “U.S. person” is broadly defined as “any United Citizen, permanent resident alien, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches), or any person in the United States.” Thus, the Order impacts both RIAs and individual investors.

Continue Reading U.S. Set to Bar Investments in Communist Chinese Military Companies

On December 1, 2020, the New York Attorney General announced amendments to the New York Investment Advisory Act (the “Rules”) that will require investment adviser representatives (“IARs”) to register with the state of New York. If you render investment advice from a place of business in New York, now is the time to begin reviewing the rule and your registration obligations. This new law applies even if you previously filed a NY-IAQ on behalf of a state-registered investment adviser.

Continue Reading New York Investment Adviser Representatives Now Subject to Registration

The Securities and Exchange Commission’s (“SEC”) Supplement to Commission Guidance regarding Proxy Voting Responsibilities of Investment Advisers (“Guidance”) became effective on September 3, 2020. Additionally, the SEC final rules governing Proxy Advisors (“Amendments”), intended to improve the accuracy and transparency of information provided by proxy advisory firms, will go into effect on November 2, 2020 with a required compliance date of December 1, 2021, for certain provisions and full compliance by the 2022 proxy season. The Guidance and the Amendments are part of the SEC’s continued efforts to promote transparency, accountability and disclosure to investors during the proxy voting process.

Continue Reading Supplemental Guidance Regarding the Proxy Voting Responsibilities of Investment Advisers

Many investment adviser representatives (“IARs”) employed by or associated with state-registered and SEC-registered/“federal covered” investment advisers have been required to conduct business from their home or other temporary office location in the face of COVID-19. If those displaced IARs are not currently licensed by the states where they are temporarily providing advisory services, firms should quickly analyze whether they must license these individuals under the respective and applicable state law.

Continue Reading State Regulators to Require Licensing for Investment Adviser Representatives Displaced by COVID-19

As you may already be aware, Stark & Stark has assisted countless investment advisers with regulatory, legal, and compliance matters over the past thirty plus years. We have assisted our clients with registration issues, preparing policies and procedures, interpreting and advising on new rules and regulations, avoiding and defending litigation, and serving as counselors. We look forward to continuing to be able to serve our clients in this manner for countless more years to come.

Continue Reading Outsourced Compliance Services

Since it first announced its “Cybersecurity Initiative” in April 2014, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has been relentlessly setting its sights on RIA’s information security programs. In fact, as recently as its 2020 Examination Priorities, OCIE noted it will “continue to prioritize information security in each of its five examination programs.” I spoke to my partner, and our cyber expert, Cary Kvitka, regarding this ever-increasing important issue.

We’ve been helping RIAs draft customized cybersecurity policies and procedures under Regulation S-P, Rule 30(a) since April 2014. Among other things, it broadly requires RIAs to adopt written policies and procedures addressing technical safeguards to protect their clients’ data “against any anticipated threats or hazards to the security or integrity of customer records and information; and protect against unauthorized access to or use of customer records or information that could result in substantial harm or inconvenience to any customer.” Therefore, when we customize written cybersecurity policies and procedures for our clients, we have turned to OCIE’s published guidance to help identify and address their expectations.


Continue Reading Cybersecurity Amid the Current Pandemic

As workplaces across the country look to adapt to the pressing need to slow the transmission of the COVID-19 outbreak, many employers are turning to remote work to keep their businesses afloat while reducing the possibility of transmission.

Many large tech employers such as Google and Amazon are already prepared for the needs of a remote workforce, but for others, the wide scale adoption of remote working comes with some real challenges. In the scramble to ensure the safety of others, it’s important that businesses don’t overlook the need to ensure cybersecurity as well.


Continue Reading Employee Remote Working: Cybersecurity Concerns

The presence of the Novel Coronavirus (“2019-nCoV” or more commonly known as “COVID-19”) is unprecedented in modern day times, as most of us have never experienced a global health threat. There are many unknowns with COVID-19 including, to what extent businesses are permitted to collect and share personal information and data in order to protect and preserve the public welfare. Currently, there are no overarching federal data privacy laws or protections to guide businesses on how to handle personal information and data during a pandemic. Specifically, how will your business balance collecting and sharing protected health information, employment data and location data in order to help control the rapid spread and ultimate containment of COVID-19.

Continue Reading COVID-19: Balancing Privacy Laws and Privacy Rights with Public Welfare

California Assembly Bill 5 (the “Bill”) was passed in Senate on September 9, 2019 after passing the Assembly back in May. According to reporting by the New York Times, it is expected that California Governor, Gavin Newsom, will sign the bill.

The Bill changes the status quo on the classification of employees and independent contractors. As the preamble to the Bill makes clear, California courts currently follow the common law rules for determining whether an employer-employee relationship exists or whether a person is an independent contractor. That test has numerous parts, but one of the important elements for a person to be considered an independent contractor is that the person must be free to control the performance of their work.


Continue Reading California Assembly Bill 5 and the (Non-)Impact on the Financial Services Industry