Investment Management & Securities

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

On March 20, 2019, the Massachusetts Securities Division, Enforcement Section (the “Division”) filed a complaint against an investment adviser located in Massachusetts. The complaint alleged that the firm’s two owners and financial professionals “gambled away millions of dollars in client assets through high risk bets on the oil and gas market.”[1] This author vehemently disagrees with the Division’s complaint and the message it sends to the industry.

Continue Reading Massachusetts Securities Division Changes the Law Applicable to Investment Advisers Overnight

My name is Max Schatzow and I am an attorney with the law firm of Stark & Stark in Lawrenceville, New Jersey. When we first saw the press release issued by Governor Murphy back in September announcing his intentions, we knew that we wanted to participate in this process, because the Investment Management practice group at Stark & Stark represents numerous broker-dealers and countless investment advisers registered with the United States Securities and Exchange Commission and the New Jersey Bureau of Securities on regulatory and compliance matters.

Our clients are extremely varied and range from those providing investment advice to private investment funds and registered investment companies to retail individuals. However, our most common client is an individual or group of individuals who have broken away from a larger financial institution, such as Morgan Stanley or Merrill Lynch to start their own boutique investment advisory firm. We then help those firms address their legal and compliance needs and serve as outside counsel and compliance officers as they grow their business.


Continue Reading Statement of Max Schatzow on behalf of Clients before the New Jersey Bureau of Securities

In April 2018, California’s Department of Business Oversight (“DBO”) announced that, beginning in October, it will begin conducting an online questionnaire-based examination of certain investment advisers registered with the DBO. This digital examination will be in addition to the DBO’s onsite examination program. The DBO recently sent registered investment advisers a reminder of this pending initiative. It is unclear from the DBO’s communications whether this online examination will be required for every investment adviser on an annual basis or only after an investment adviser receives an examination request.

Continue Reading California to Conduct Written Electronic Examination of State-Registered Investment Advisers