August 2024, Issue 11
AdvisorAssist
Leader in driving advisor independence, AdvisorAssist provides comprehensive compliance and risk management solutions.
SEC Remains Vigilant on Share Class Selection as Deficiencies Rise
For over six years, mutual fund share classes have been a major risk consideration for Registered Investment Advisors (RIAs), and priority for the U.S. Securities and Exchange Commission (SEC). Throughout this period, AdvisorAssist has consistently updated RIAs on the SECs’s share class selection risk priority, and subsequent disclosure initiative. Given the SEC’s continued focus on mutual fund share class selection, we wanted to bring your attention to the increased number of RIAs receiving deficiencies for continuing to operate with lack of disclosure and/or inadequate policies and procedures regarding share class selection. For more information please read the AdvisorAssist Blog Post.
AML for Advisors? The Background Behind the Proposals
On January 1, 2021, Congress enacted the FY2021 National Defense Authorization Act (NDAA), which included significant reforms to US AML regulation through the Anti-Money Laundering Act of 2020 (AML Act) and Corporate Transparency Act (CTA). Although the Acts do not directly target Investment Advisors, the Act’s core seeks to strengthen, modernize, and streamline existing AML regime by promoting innovation, regulatory reform, and industry engagement with the hope of furthering national security and protecting the American people.
One of the primary directives of the Act has directly impacted the Investment Advisor industry. This directive focused on reviewing, and revising as appropriate, Currency Transaction Report (CTR) and Suspicious Activity Report (SAR) reporting requirements, and other existing Bank Secrecy Act (BSA) regulations and guidance (see additional directives here). So far in 2024, Financial Crimes Enforcement Network, US Treasury (FinCEN) has made their proposal that Investment Advisors an Exempt Reporting Advisors no longer be exempt from Anti-Money Laundering Program and Suspicious Activity Report Filing Requirements, and in a joint effort with the SEC, also proposed Customer Identification Program Requirements . ?You can review each proposal in their corresponding AdvisorAssist Blog posts above!
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Form N-PX Filing Requirements Looming, Let Us Help!
The U.S. Securities and Exchange Commission (SEC) made significant amendments to Form N-PX reporting requirements, which are particularly impactful RIAs required to file under Section 13(f) of the Securities Exchange Act. These changes are designed to enhance transparency and accountability in proxy voting, particularly on matters of executive compensation, commonly referred to as "Say on Pay." The new rule mandates that Section 13(f) filers provide detailed disclosures of their proxy voting activities, offering valuable insights into how RIAs influence corporate governance.
If you are an Advisor who needs assistance filing your 13(f) or Form N-PX, please reach out to us at [email protected].
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