Fiduciary Duty and FINRA Enforcement | Patrick Chism Insights
Vigilant Insights
Introduction
Vigilant Managing Director, Patrick Chism, was quoted in a recent Ignites article related to the FINRA investigation of a Firm for its use of fee-waivers.
The Firm has agreed to pay restitution to the clients, which could amount to over $500,000.
There also have been investigations into the revenue-sharing practices and use of off-channel communications.
Patrick Chism Insights
It is noted that many times these failures are found during routine examinations of policies and procedures. However, in response to this investigation, Patrick says that Funds are likely to be pressured by Distributors to provide information about rights of reinstatement, which would include providing more transparency in filings.
For this situation, he mentions that the root cause will affect the outcome; a systems issue isn’t ideal, but any willful actions will be treated with a heavier hand.
Vigilant’s Conclusion
As regulators continue to increase their investigations and penalties, it is vital for a Firm’s success that their compliance department is up to date with industry standards.
In a dynamic environment, it can be difficult to find efficient ways to limit regulatory risk while trying to reach business goals. Vigilant provides cost-effective solutions to Firms that can help relieve some of the regulatory burdens faced by those trying to create a strong culture of compliance.
Reach out to us today for any continued support you may need.