What Do Investigations Mean For You?

The Certified Financial Planner Board released a newsletter on July 15th to update the industry on exactly what they’ve been doing and while they had many exciting new events and ventures to announce, there was also a serious undertone to the whole newsletter.?

The headline story was the 40 people they sanctioned, half of which were due to the historical investigations they had completed over the past 2 years. The punishments for these individuals ranged from Public Censures, Suspensions, Temporary Bars, Permanent Bars and Revocations of the right to use the CFP? marks.

While some of these may seem extreme, the CFP Board is actually looking to create more severe consequences for those found guilty of misconduct. In fact a public zoom forum was held on July 16th 2021 to discuss the changes to regulations and consequences for those found guilty.?

However, compared to other regulators, some of these consequences are fairly light. For example the SEC, often pursues litigation ainst people found guilty of knowingly or accidentally breaching their regulations.?

With regulators across the board cracking down on RIAs, what can you do to ensure your firm remains compliant and stays safe from all of these possible consequences??

1. Get Involved: Being involved with your regulators and actively participating in public forums helps you stay on the cutting edge when it comes to regulations changes and how this may affect the industry. The CFP Board has more public networking and announcement events occurring across the next few months, so check out their website to find out more on these events.?
2. Get A Mock Review/Audit: My RIA Lawyer offers services where they can act as the regulator and come in to audit your business so that you can fix any potential sticking spots before it’s time for your next examination or audit.?
3. Update Your Contracts: Contracts help keep you safe from potential arbitration claims as well as set the expectations within your employee and client relationships. Make sure each year to check for expired contracts or contracts that may need to be updated due to changes in circumstances.?
4. Check Regulator Websites: Regulators will often post case studies from recent examinations or investigations giving a better understanding of what regulations look like when enforced. By reading these real life examples you may know the warning signs to look out for in your own practices so you don’t make the same mistakes as somebody else. My RIA LAwyer also produces a weekly email filled with industry updates for the week that help point out changes in legislation and common mistakes popping up in the industry.?

Remember, these regulators are there to protect their industries and the wider general public. If you act in a way that is in the best interest for your company and your clients you are likely to be making good decisions, however, regulations are changing regularly and it is always good to have a professional group of experts looking out for your every step of the way.