customer communication

On October 9, the UK’s Financial Conduct Authority (FCA) and the UK’s Prudential Regulation Authority (PRA) jointly published a Dear CEO letter to regulated firms regarding final preparations for the end of the Brexit transition period (the Letter).

The key areas addressed by the FCA and PRA in the Letter include:
Continue Reading FCA and PRA Publishes Dear CEO Letter on Final Preparations for the End of Brexit Transition Period

National Futures Association (NFA) has provided limited relief to commodity trading advisors (CTAs) who are also registered investment advisers from compliance with certain portions of NFA Rule 2-29 “Communications with the Public and Promotional Material” and a related Interpretive Notice. Generally, CTAs presenting past performance in promotional materials are required to include performance net of all commissions, fees and expenses. With this relief, CTAs who are also registered as investment advisers with the Securities and Exchange Commission may present past performance to eligible contract participants (ECPs) on a gross basis in non-public one-on-one presentations, if the CTA:
Continue Reading NFA Published Amendments to Its Advertising Rules

On October 16, the Financial Industry Regulatory Authority (FINRA) published its 2019 Report on Examination Findings and Observations (Report). Unlike previous years, the Report delineates between examination “findings” and examination “observations.” “Findings” describe violations of a rule or regulation, whereas “observations” refer to suggestions regarding how firms can improve controls and mitigate risk. The annual Report summarizes various findings and observations from recent examinations of its member firms on a range of topics, including the following:
Continue Reading FINRA Issues 2019 Report on Examination Findings and Observations

On September 26, the Securities and Exchange Commission adopted a new rule to allow all issuers, not just emerging growth companies, to utilize “test-the-waters” communications in connection with an initial public offering or other securities offering.

The rule implements the proposal put forth by the SEC in February 2019, discussed in the March 1, 2019 edition of Corporate & Financial Weekly Digest.
Continue Reading New SEC Rule Expands “Test-the-Waters” to All Issuers

On September 19, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-31 (Notice) addressing disclosure innovations in advertising and other communications with the public. The Notice responds specifically to questions that FINRA has received from member firms about how they can comply with FINRA rules when communicating with their customers. FINRA’s goal in issuing the Notice is to help facilitate simplified and more effective disclosures.
Continue Reading FINRA Issues Regulatory Notice on Disclosure Innovations for Advertisements and Other Public Communications

On May 14, the Joint Audit Committee (JAC), a representative committee of US futures exchanges and the National Futures Association (NFA), released two regulatory alerts of particular importance to futures commission merchants (FCMs) that clear for customers whose accounts are managed by third-party advisers. The regulatory alerts “reconfirm and reiterate” the JAC’s view of existing law regarding guarantees against loss and margin in the context of multiple accounts of a single beneficial owner at an FCM, which accounts are managed by different advisers and/or traded pursuant to different programs of the same adviser.
Continue Reading Joint Audit Committee Releases Two Regulatory Alerts

National Futures Association (NFA), Futures Industry Association (FIA) and other industry professionals have collaborated to launch an FIA training course on safeguarding customer funds. The course, which is designed to assist futures commission merchants in meeting their training requirements under Commodity Futures Trading Commission Rule 1.11, covers the basics of segregation, residual interest, investment of

On April 7, the UK Financial Conduct Authority (FCA) updated part of its website on the meaning of “durable medium,” aiming to clarify the meaning and intention of the phrase as well as to explain its origin in EU law.

Various EU regulatory provisions require that a firm must provide certain information to a client in writing, either on paper or in another “durable medium.” Many recordkeeping requirements, including under the revised Markets in Financial Instruments Directive (MiFID II), also require firms to store information in a durable medium. Citing the lack of clarity on how innovative and new forms of media could meet the durable medium standard, the FCA states that it will update its handbook definition of the term.
Continue Reading FCA Explores Meaning of “Durable Medium” on Website