FINRA details its approach to assessing firm culture. FINRA released a targeted exam letter that demonstrates how it will assess firms’ practices in establishing and implementing firm cultural values. (2/18/2016) FINRA targeted exam letter.
Municipal advisors should prepare for new pay-to-play regulations. The Municipal Securities Rulemaking Board issued a reminder that, effective August 17, 2016, new pay-to-play regulations will apply to municipal advisors. The MSRB will host an educational webinar for municipal advisors on the rule on July 7, 2016. (2/17/2016) MSRB press release.
FINRA bars brokers for marketing hedge fund with fraudulent claims. Two brokers will be barred from the securities industry for making fraudulent representations in connection with the sale of a hedge fund, according to an announcement by FINRA. FINRA alleged that the brokers misrepresented the nature of the hedge fund to investors by falsely claiming that the hedge fund was a “growth” fund based on a computer algorithm that would automatically trigger certain risk protections to limit losses. The fund, in fact, was a highly speculative investment and the Chief Investment Officer had no obligation to follow the computer algorithm. The two brokers also misrepresented the Chief Investment Officer’s professional experience in a private placement memorandum for the fund. The brokers agreed to settle FINRA’s charges without admitting or denying the allegations. (2/11/2016) FINRA press release.
NFA’s cybersecurity requirements become effective in March. The National Futures Association announced that member firms will be required to implement written policies and procedures to secure customer data and access to their electronic systems when its Cybersecurity Interpretive Notice becomes effective on March 1, 2016. (2/11/2016) NFA Notice I-16-08.