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Financial Services Regulatory


Overview

Carton Fields’ Financial Services Regulatory attorneys offer a wealth of practical experience and are focused in offering comprehensive regulatory and compliance counseling and thought leadership to our financial services clients.  Each primary team member has devoted at least 20 years, and many over 30 years, to counseling clients on regulatory and compliance matters. We are intimately familiar with the current as well as longstanding issues of importance to the financial services industry.  We approach issues with a scholarly attention to detail and we are dedicated to inculcating in the next generation of attorneys our commitment to exceptional service.

We practice as a team and draw on our collective experience and knowledge to benefit our clients.  We also collaborate with Carlton Fields' litigation and enforcement attorneys in helping clients to identify, evaluate and mitigate potential risk of a potential course of action.
 


Clients We Serve

  • Investment Companies and Private Funds

    Carlton Fields lawyers have decades of experience advising a broad range of investment companies including mutual funds, insurance company separate accounts and private funds, on virtually every aspect of their businesses, including, formation, registration, operation, distribution, transactions, compliance, and enforcement.

    Our clients routinely call upon us for guidance and analysis on the regulation of their products services firms under the federal securities laws and the availability of various exclusions from the Securities Act and Investment Company Act. We also regularly assist our clients in obtaining relief from regulation through the exemptive application or no-action letter process.

    Our work for investment company and private fund clients includes specific experience in the following areas:

    • Formation and organization
    • Design, structure, and operations of investment portfolios
    • Federal and state registration, regulation, disclosure, and reporting
    • Public offerings of mutual fund, closed-end, and ETF shares
    • Private offerings of private equity funds, stable value funds, and other pooled investment vehicles
    • Listing on securities exchanges
    • Advertising, marketing, and distribution
    • Administration, custodial, and other service arrangements
    • Negotiation of credit agreements 
    • Documentation of derivatives trading arrangements, including negotiation of brokerage agreements, clearing agreements, and collateral pledge and control agreements
    • Mergers, asset transfers, portfolio “lift outs,” substitutions, and other transactions
    • Board and committee meetings and independent trustee representation
    • Securities compliance
    • ERISA compliance
    • Taxation
    • Anti-money laundering and OFAC compliance
    • Regulatory examinations and investigations

    Related: Private Equity and Venture CapitalSecurities Transactions and Compliance, and Securities & Investment Companies.
     
    Key Contacts
    Richard T. Choi Ann Furman Edmund Zaharewicz Chip Lunde
    Richard T. Choi Ann B. Furman Edmund Zaharewicz Chip Lunde
  • Investment Advisers

    Carlton Fields represents investment advisers in all aspects of their business and in all stages of their development from inception and beyond.   We have extensive experience representing investment advisers on the full range of regulatory, compliance, and enforcement matters, including:

    • Formation and registration
    • Form ADV Brochure and other disclosures
    • Investment management agreements (IMAs)
    • Suitability questionnaires and Investment Policy Statements (IPSs)
    • Advertising
    • Custody
    • Codes of Ethics
    • Compliance policies and procedures, such as:
      • Advertising
      • Anti-money laundering and OFAC compliance
      • Best execution, batched trades, and other trading practices
      • Books and records
      • Cash solicitations
      • Codes of Ethics
      • Custody
      • Cybersecurity and privacy
      • Disclosure obligations
      • Insider trading
      • Reporting obligations
      • Suitability
      • Supervision
    • Compliance and risk reviews
    • Conflicts of interest
    • Due diligence
    • Employment agreements and related matters
    • Customer complaint handling and arbitrations
    • Regulatory examinations and investigations
    • Enforcement proceedings and litigation
    • Training and education
    • Adviser acquisitions and “liftouts”

    Related: Private Equity and Venture Capital, Securities Transactions and Compliance, and Securities & Investment Companies.

     
    Key Contacts
    Richard T. Choi Edmund Zaharewicz Chip Lunde
    Richard T. Choi Edmund Zaharewicz Chip Lunde
  • Broker-Dealers
    Carlton Fields represents a variety of broker-dealers, including wholesale and retail broker-dealers affiliated with life insurance companies, independent retail broker-dealers, dually registered broker-dealer/insurance agencies, and dually registered broker-dealer/registered investment advisers. Our extensive experience covers the full range of activities from the formation and registration of broker-dealers and FINRA membership matters to operational, transactional, regulatory, and compliance matters.

    Related: Securities & Investment Companies.
     
    Key Contacts
    Richard T. Choi Ann Furman Edmund Zaharewicz Ann Black
    Richard T. Choi Ann B. Furman Edmund Zaharewicz Ann Y. Black
  • Insurance Companies
    Carlton Fields represents life insurance companies, health insurance companies, and property and casualty insurance companies, as well as reinsurers, specialty insurers, agents, managing general agents, third party administrators, and other regulated entities in the insurance field. Our extensive experience covers the full range of activities from the offer and sale of insurance products to organizational, operational, transactional, regulatory, and legislative matters.
     
    Key Contacts
    Richard T. Choi Ann Furman Edmund Zaharewicz Ann Black Chip Lunde
    Richard T. Choi Ann B. Furman Edmund Zaharewicz Ann Y. Black Chip Lunde

     


Services We Provide

  • Broker-Dealer Organization, Registration, and FINRA Membership

    Carlton Fields guides clients through broker-dealer formation, registration, and FINRA new membership application (NMA) process. We also guide clients through the FINRA continuing membership application (CMA) process when there is a material change to the broker-dealer’s business. Our services also include registered representative registration filings and termination issues.

  • Broker-Dealer Regulation and Compliance

    Carlton Fields guides clients through broker-dealer regulatory and compliance issues. Our work for broker-dealer clients includes specific experience in the following areas:

    • Written supervisory procedures, supervisory control policies, and compliance procedures
    • Suitability policies and procedures
    • Compliance and risk evaluation reviews
    • Net capital obligations
    • Reporting obligations
    • Customer complaint handling
    • Product due diligence
    • Advertising and marketing materials
    • AML and OFAC compliance
    • Books and records requirements
    • Cash and non-cash compensation arrangements and fee referral issues
    • Sales to vulnerable adults
    • Privacy rules
    • Email retention and production
    • Principal underwriters (including statutory underwriter questions)
    • Selling group arrangements
    • Independent marketing organizations (IMOs)
    • Interactions between investment advisor regulation and broker-dealer regulation and between insurance regulation and broker-dealer regulation
  • Broker-Dealer Arbitration and Dispute Resolution

    Carlton Fields guides and represents broker-dealers and other market professionals through internal investigations, inquiries and proceedings initiated by the SEC and FINRA. Our firm handles all phases of SEC and FINRA inquiries and investigations, including responding to Wells notices and defending against enforcement actions.

    Our securities law litigators handle FINRA arbitrations and other disputes regarding securities issues throughout the country, with responsibilities that range from responding to employee/registered representative dispute counseling, regulatory inquiries and pre-complaint investigations to arbitrating and litigating claims of securities fraud. We routinely defend underwriters and other broker-dealers, including their officers and directors, against class action litigation, shareholder derivative actions, suites arising out of failed securities offerings and other complex matters involving the Securities Act, the Exchange Act, and the Investment Company Act of 1940.

    Other links: Securities and Derivative Litigation, White Collar Crime & Government Investigations, Alternative Dispute Resolution Services, and Class Actions
     

  • Insurance Products and Distribution
    Our attorneys have earned a national reputation in the area of annuity and life insurance products regulation. We have extensive experience with the design, marketing, sale, and regulation of variable annuities and variable life insurance products, individual and group annuities, contingent deferred annuities, fixed indexed annuities, market value adjustment (MVA) products, COLI/BOLI, funding agreements, stable value wrap contracts, and other innovative products. Our work on behalf of clients includes all aspects of federal and state regulation involved in bringing an insurance product to market, including advice and counseling on matters such as:
    • Product design
    • Policy drafting and state and IIPRC approval
    • Insurance licensing and expansion of authority
    • Public offerings and private offerings
    • Marketing, sales, and communication practices
    • Distribution relationships with producers, managing general agents, and underwriters
    • Suitability and replacement requirements
    • Tax issues related to insurance products
    • ERISA compliance
    • Anti-money laundering and OFAC compliance
  • Insurance Regulation
    Carlton Fields has extensive experience advising clients on a wide range of insurance regulatory matters, including:
    • Approval of form and rate filings, and regulatory litigation to contest denials of form and rate submissions 
    • Investments, solvency, risk-based capital, reserve credit, SVO valuation, and holding company issues
    • Claims practices, use of retained assets accounts, and unclaimed property
    • Market conduct, financial, and other investigations and examinations, financial examinations, and regulatory litigation arising from them
    • Investigations under state and federal unfair trade practice laws and similar consumer protection laws 
    • Investigations and audits regarding Florida premium tax, retaliatory tax, corporate income tax, and sales or use tax 
    • License disciplinary proceedings 
    • Disputes concerning the validity or amount of residual market assessments against insurers, and premium and retaliatory tax assessments 
    • Disputes regarding the validity and constitutionality of legislation and agency rules adversely affecting entities regulated under insurance codes 
    • Data protection and privacy regulation
    • Trade secret and proprietary information protection in connection with insurance regulatory reporting requirements and in the course of rehabilitation or liquidation proceedings against impaired or insolvent direct insurers
    • Outsourcing and offshoring information technology systems and business processes
    • Insurance regulatory financial issues concerning surplus notes, administration of deposits, and the status of insurer assets, liabilities, and investments under state insurance statutory accounting statutes.
  • Insurance Transactions
    We routinely assist insurance clients with a variety of insurance transactions and related regulatory issues, including:
    • Formation or acquisition of insurance companies
    • Insurance company mergers and acquisitions
    • Corporate restructuring
    • Portfolio transfers, sales or transfers due to insolvency proceedings
    • Sales of insurance agencies and brokerage firms
    • Reinsurance arrangements
    • Separate account transfers, reorganizations, and deregistrations
    • Applications for issuance of certificates of authority and other insurance licenses, and litigation to contest denials of licensure 
    • Applications for regulatory approval for acquisitions and changes of control 
    • Approvals for exemptions from Form A requirements or disclaimers of control in Alabama, Arkansas, Florida, Georgia, Illinois, Kentucky, Louisiana, North Carolina, New York, Ohio, South Carolina, Tennessee, Texas, Utah, Vermont, Wisconsin, and Puerto Rico 
    • Approval of bulk reinsurance transactions and accredited reinsurer status 
  • ERISA/Tax
    We offer comprehensive regulatory and compliance counseling to insurance companies, investment companies and other clients in the financial services industry with regard to a broad range of tax and ERISA matters relating to:
    • Life insurance contracts,
    • Qualified and non-qualified annuities,
    • Qualified and non-qualified retirement plans,
    • Individual Retirement Accounts (IRAs),
    • Health insurance and other welfare benefit plans.
    We have extensive experience advising clients concerning the fiduciary and prohibited transaction provisions of ERISA.  In this capacity, we consulted extensively with numerous insurers or their affiliates concerning a wide variety of issues arising out of the DOL’s and SEC’s fiduciary and best interest proposals.  We also advise on the taxation of annuities, life insurance contracts and regulated investment companies. We have represented clients on numerous matters before both the Internal Revenue Service and the Department of Labor.
  • Legislative Matters
    We routinely help clients understand the political landscape before pursuing a strategy or policy position. We identify, track, monitor, analyze, and summarize legislative proposals and political and policy considerations, and can assess their impact on operations. We also monitor the activities of the NAIC, NCOIL, and major consumer representative trade organizations for potential regulatory developments.  We testify, draft legislation and amendments to legislation, pass or defeat legislative proposals, and use our extensive political relationships to advocate client positions.

All Insights

Is It Time to Harvest the NAIC Suitability in Annuity Transactions Model Regulation?

Is It Time to Harvest the NAIC Suitability in Annuity Transactions Model Regulation?

November 26, 2018

At the NAIC Fall 2018 National Meeting, state regulators continued plowing through the Suitability in Annuity Transactions Model Regulation (Model 275) (Suitability Model).

SEC Proposes Summary Prospectus Option and Modernized Disclosure for Variable Insurance Products

SEC Proposes Summary Prospectus Option and Modernized Disclosure for Variable Insurance Products

October 31, 2018

On October 31, the SEC took the first step toward allowing variable annuities providers to streamline disclosure by issuing summary prospectuses similar to those used by mutual funds. This article discusses the SEC’s proposed summary prospectus option and modernized disclosure for variable insurance products.

Suitability Working Group Stirs Ingredients for Suitability Model Potion

Suitability Working Group Stirs Ingredients for Suitability Model Potion

October 25, 2018

On October 22 and 23, the NAIC Annuity Suitability (A) Working Group (Suitability WG) held an interim meeting to review comments received on the Suitability in Annuity Transactions Model Regulation (Model 275) (Suitability Model).

As Students Return to School, Regulators Continue Their Study of the NAIC’s Suitability in Annuity Transaction Model Regulation

As Students Return to School, Regulators Continue Their Study of the NAIC’s Suitability in Annuity Transaction Model Regulation

October 1, 2018

At the 2018 NAIC Summer National Meeting, regulators continued their efforts to define the standard of care that applies to recommendations.

Dodd-Frank Rollback Benefits Insurers

Dodd-Frank Rollback Benefits Insurers

October 1, 2018

The Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174 or the Act) was signed into law on May 24. The Act can benefit life insurance companies or their affiliates in a number of ways.

FINRA Targets Variable Annuity Practices

FINRA Targets Variable Annuity Practices

October 1, 2018

FINRA’s reported enforcement actions as to certain variable annuity practices increased in 2018.

In California, a New Era in U.S. Privacy

In California, a New Era in U.S. Privacy

October 1, 2018

In June, California passed a sweeping new privacy law that will impact an estimated 500,000 businesses in the United States.

NAIC Summer National Meeting Spotlights Innovation and Insurtech

NAIC Summer National Meeting Spotlights Innovation and Insurtech

October 1, 2018

In response to the accelerating pace of change, the NAIC’s Summer National Meeting in Boston focused on innovation and insurtech.

NIST Provides Guide and Example Solution for IT Asset Management

NIST Provides Guide and Example Solution for IT Asset Management

October 1, 2018

On September 7, the National Cybersecurity Center of Excellence (NCCoE) and the National Institute of Standards and Technology (NIST) published Special Publication 1800-5 – IT Asset Management Practice Guide (the Guide) to help financial services companies tackle challenges in managing both the hardware and software components of their information technology assets.

Protecting At-Risk Seniors from Financial Exploitation

Protecting At-Risk Seniors from Financial Exploitation

October 1, 2018

Financial exploitation of senior citizens and other vulnerable adults results in substantial losses each year. This article discusses two of the many recent legislative and regulatory actions targeting this abuse.

SEC ‘Investor Experience Initiative’ Expressly Includes Variable Insurance Products

SEC ‘Investor Experience Initiative’ Expressly Includes Variable Insurance Products

October 1, 2018

The SEC, on June 5, announced that it would be exploring “modernization of the design, delivery and content of fund disclosures” in order “to improve the investor experience and help investors make more informed investment decisions.”

SEC Proceedings Face Uncertainty After Supreme Court Holds ALJs Unconstitutional

SEC Proceedings Face Uncertainty After Supreme Court Holds ALJs Unconstitutional

October 1, 2018

After much anticipation, the U.S. Supreme Court ruled on the constitutionality of the Securities and Exchange Commission’s (SEC or Commission) Administrative Law Judges (ALJs). In Lucia v. SEC, Dkt. No. 17–130, the Supreme Court held that ALJs are “Officers of the United States” subject to the Appointments Clause of the U.S. Constitution, rather than mere federal employees.

SEC Proposes New Rule Impacting ETFs

SEC Proposes New Rule Impacting ETFs

October 1, 2018

On June 28, the SEC proposed new rule 6c-11 to allow open-end exchange-traded funds that satisfy certain conditions to operate without obtaining an SEC exemptive order.

SEC: Ether and Bitcoin Are Not Securities

SEC: Ether and Bitcoin Are Not Securities

October 1, 2018

Cryptocurrency investors were concerned following the SEC’s July 2017 investigative report on digital token sales by a virtual organization known as “The DAO.”

XBRL Amendments Have Limited Impact on Insurance Products

XBRL Amendments Have Limited Impact on Insurance Products

October 1, 2018

On June 28, the SEC amended existing requirements for public operating companies and mutual funds regarding the use of eXtensible Business Reporting Language (XBRL) for financial statement information and risk/return summaries.

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales

September 5, 2018

In June, we circulated our fifth article on the continuing saga regarding the standard of conduct for sales of securities and annuities — and the efforts of federal and state regulators to impose new conditions on the existing standards. Our earlier articles focused on the potential for regulatory and litigation issues arising under the Department of Labor’s fiduciary rule adopted in 2016, which was struck down by the Fifth Circuit Court of Appeals.

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

July 27, 2018

On July 24, in preparation for its August 4 meeting at the NAIC 2018 Summer National Meeting, the Annuity Suitability (A) Working Group released a working draft of proposed revisions to the Suitability in Annuity Transactions Model Regulation (#275). This alert discusses the significant proposed changes, comments, and suggestions for discussion at the Summer National Meeting.

COI Litigation Update

COI Litigation Update

June 25, 2018

Life insurers that defend challenges to their exercises of discretion to adjust cost of insurance (COI) rates on universal life insurance policies continue to seek opportunities to narrow the scope of the claims through early dispositive motions.

FINRA Moves Toward SEC Anti-Churning Proposal

FINRA Moves Toward SEC Anti-Churning Proposal

June 25, 2018

On April 18, the SEC voted to propose major rule changes to reconcile and clarify the standards of conduct that apply to broker-dealers and investment advisers.

FINRA Proposes to Ease Regulation of Outside Business Activities

FINRA Proposes to Ease Regulation of Outside Business Activities

June 25, 2018

FINRA has proposed a major paradigm shift for regulating outside business activities (OBAs) and private securities transactions (PSTs) of broker-dealer personnel.

New York Pushes Mutual Fund Active Share Disclosure

New York Pushes Mutual Fund Active Share Disclosure

June 25, 2018

New York’s Attorney General issued a report on its recent investigation of fees charged by actively managed equity mutual funds and a metric known as "Active Share."

Ninth Circuit: Face Amount Controls Amount-in-Controversy Questions Where Policy’s Validity is Disputed

Ninth Circuit: Face Amount Controls Amount-in-Controversy Questions Where Policy’s Validity is Disputed

June 25, 2018

In March, the Ninth Circuit provided clarity on a key and recurring issue relevant to a district court’s ability to exercise subject matter jurisdiction in actions involving the validity of life insurance policies.

Recalls of Loaned Securities by Insurance Dedicated Funds

Recalls of Loaned Securities by Insurance Dedicated Funds

June 25, 2018

In March, the SEC sanctioned the investment advisers of two funds supporting variable insurance contracts for inadequate disclosure about the funds’ recalls of loaned portfolio securities in advance of the securities’ dividend record dates.

SEC Warns About Third-Party Destruction of Broker-Dealer Records

SEC Warns About Third-Party Destruction of Broker-Dealer Records

June 25, 2018

The SEC staff issued an April 12 letter addressing broker-dealer contracts with third-party recordkeeping service providers under which the service provider can delete or discard records of a broker-dealer who fails to pay fees due under the recordkeeping agreement, among other scenarios.

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

June 25, 2018

In April, the U.S. Supreme Court heard oral argument in Lucia v. SEC to resolve the federal circuit court split on whether the SEC’s administrative law judges (ALJs) are "inferior officers" of the United States who must be appointed in accordance with the Appointments Clause of the U.S. Constitution, and not mere employees whose hiring is not required to meet constitutional standards.

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

June 25, 2018

During two weeks in April, two different courts — the Second Circuit and the New Jersey Superior Court — considered nearly identical allegations regarding variable products and reached diametrically opposed conclusions about the extent to which the claims were barred by the Securities Litigation Uniform Standard Act (SLUSA).

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

June 25, 2018

The pace of developments in the unclaimed life insurance benefits space remained active in the first six months of 2018, with new judicial decisions and state legislative enactments making an impact.

Which Thoroughbred Will Win the Standards of Care Derby?

Which Thoroughbred Will Win the Standards of Care Derby?

June 25, 2018

The NAIC and the State of New York continue racing as each is revising its suitability regulation to incorporate enhanced standards of care. Only time will tell which version will gallop to victory.

Win for MassMutual in Rare Class Action Trial

Win for MassMutual in Rare Class Action Trial

June 25, 2018

A California jury recently returned a verdict in favor of MassMutual following a 12-day trial in a state-court class action that claimed the insurer failed to pay dividends owed to policy owners.

Expect Slower SEC Processing of Investment Company Filings

Expect Slower SEC Processing of Investment Company Filings

June 24, 2018

The SEC has reported to Congress that it expects the Division of Investment Management (IM) to provide comments at a slower pace during the 2018 and 2019 fiscal years.

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

June 24, 2018

On May 3, Governor Henry McMaster signed the South Carolina Insurance Data Security Act, making South Carolina the first state to adopt the NAIC Insurance Data Security Model Law.

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales, Avoiding Collision and Potential Regulatory and Litigation Issues

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales, Avoiding Collision and Potential Regulatory and Litigation Issues

June 12, 2018

During the past two years, we have written about potential litigation arising under the Department of Labor’s, first proposed, then adopted fiduciary rule. This article is the first of several we will write on the potential impact of these events on the recommendation and sale of securities generally, with particular emphasis on insurance company annuities.

Several Teams Compete to Reach NAIC Suitability Model Finals

Several Teams Compete to Reach NAIC Suitability Model Finals

June 5, 2018

Several teams competed over proposed revisions to the Suitability in Annuity Transactions Model Regulation (#275) at the in-person meeting of the NAIC Annuity Suitability Working Group.

Almost There!  South Carolina on Course to Become First State to Adopt NAIC Insurance Data Security Model Law

Almost There! South Carolina on Course to Become First State to Adopt NAIC Insurance Data Security Model Law

May 2, 2018

South Carolina’s law is substantially similar to the NAIC Model, and would take effect January 1, 2019.

Changes to New York Insurance Regulation 187: Are They April Showers Bringing May Flowers, or Are June Bugs on the Way?

Changes to New York Insurance Regulation 187: Are They April Showers Bringing May Flowers, or Are June Bugs on the Way?

April 30, 2018

If issued, the updated proposed first amendment will take effect on March 1, 2019.

SEC Proposes New Standards of Conduct for Broker-Dealers and Investment Advisers

SEC Proposes New Standards of Conduct for Broker-Dealers and Investment Advisers

April 19, 2018

On April 18, the SEC voted four to one to propose new standards of conduct for broker-dealers (BDs) and investment advisers (IAs).

An Illustration Saga Continues in California

An Illustration Saga Continues in California

March 31, 2018

As we previously reported, the Ninth Circuit in March 2017 held that violation of California’s illustration statutes could serve as a predicate for an Unfair Competition Law (UCL) action, partially reversing the trial court’s decision in Walker v. Life Ins. Co. of the Southwest on the plaintiff’s UCL claims following a jury verdict for the insurer.

Another Bout in the NAIC Best Interest Standard Title Fight

Another Bout in the NAIC Best Interest Standard Title Fight

March 31, 2018

In response to the National Association of Insurance Commissioners’ (NAIC) Annuity Suitability Working Group’s (Suitability WG) proposed revisions to the "Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation" (Model), 23 comment letters were submitted by regulators, consumer groups, industry groups, and companies (the Contenders).

CAFA’s Local Controversy Exception Requires Class Claims Against Local Defendant

CAFA’s Local Controversy Exception Requires Class Claims Against Local Defendant

March 31, 2018

As we previously reported, in September 2017, a federal district court in Louisiana dismissed with prejudice as time-barred putative class action RICO and state racketeering claims related to alleged wrongful conduct by an agent in connection with annuities issued by Sun Life.

Court Rejects Insurer’s Spokeo-Based  Standing Challenge to TCPA Action

Court Rejects Insurer’s Spokeo-Based Standing Challenge to TCPA Action

March 31, 2018

In a February 20 ruling, the Northern District of Illinois cleared the way for a plumbing company’s putative class action against Allstate Insurance Company and an insurance agency co-defendant by denying the defendants’ motions to dismiss, which were inspired by recent U.S. Supreme Court decisions, including Spokeo v. Robins in 2016.

Enforcement of DOL’s New Best Interest Contract Exemption’s Anti-Arbitration Condition is Enjoined

Enforcement of DOL’s New Best Interest Contract Exemption’s Anti-Arbitration Condition is Enjoined

March 31, 2018

A number of lawsuits have been brought challenging aspects of the United States Department of Labor’s "fiduciary rule," which expanded the definition of "fiduciary" of an employee benefit plan or individual retirement account as a result of giving investment advice for compensation to retirement investors.

Fifth Circuit Vacates DOL Fiduciary Rule

Fifth Circuit Vacates DOL Fiduciary Rule

March 31, 2018

On March 15, the Fifth Circuit, in Chamber of Commerce, et. al. v. United States Department of Labor, a 46-page opinion, reversed the district court’s ruling upholding the Department of Labor (DOL) fiduciary rule and vacated the rule.

FINRA Requires Order Taker Registration

FINRA Requires Order Taker Registration

March 31, 2018

In late 2017, FINRA pronounced in Regulatory Notice 17-30 that, "Beginning on October 1, 2018, unregistered persons cannot accept an order from a customer under any circumstances.

Illinois Federal Court Rejects Twin Suits Challenging Dividend Payment Practices

Illinois Federal Court Rejects Twin Suits Challenging Dividend Payment Practices

March 31, 2018

Challenges to mutual life insurers’ discretion in setting dividend scales date back over 100 years. Earlier this year, in Anderson v. Country Life Insurance Company and Ochoa v. State Farm Life Insurance Company, a federal court in Illinois dismissed twin putative class action lawsuits filed against a pair of insurers.

Implementation Delay and Q&As for Fund Liquidity Rule

Implementation Delay and Q&As for Fund Liquidity Rule

March 31, 2018

On February 21, the SEC approved a six-month extension for mutual funds to comply with the classification (bucketing) requirements and related elements of its new liquidity rule.

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

March 31, 2018

Following the financial crisis, the NAIC undertook a solvency modernization initiative (SMI) to update insurance regulators on insurance companies’ regulatory frameworks.

Investment Adviser Fee Table on the Table

Investment Adviser Fee Table on the Table

March 31, 2018

On February 7, the Massachusetts Securities Division asked for public comment on a fee table requirement for Massachusetts-registered investment advisers.

NAIC Disclosure Developments

NAIC Disclosure Developments

March 31, 2018

Annuity Illustration Standard Changes: On March 2, the Annuity Disclosure (A) Working Group of the National Association of Insurance Commissioners agreed to recommend the adoption of a revision to the NAIC’s Annuity Disclosure Model Regulation illustration standards.

Plaintiffs’ Notice That the ‘Taxman Cometh’ Was Sufficient to Trigger Statute of Limitations

Plaintiffs’ Notice That the ‘Taxman Cometh’ Was Sufficient to Trigger Statute of Limitations

March 31, 2018

In a November 16, 2017 ruling, a California appellate court affirmed a summary judgment ruling in favor of several financial advisors, and insurer American General Life Insurance Company, holding that plaintiffs’ fraud and negligence based claims relating to alleged faulty financial planning advice were time-barred.

SDNY Ruling Narrows Claims in COI Suit

SDNY Ruling Narrows Claims in COI Suit

March 31, 2018

In EFG Bank AG, Cayman Branch v. AXA and The Duffy 2004 LLC v. AXA, in a February 14 ruling, AXA Equitable Life Insurance Company earned a sweet victory on its motion for partial dismissal of the complaints in two consolidated proceedings actions challenging its COI rate increases.

SEC Issues Cybersecurity Disclosure Guidance

SEC Issues Cybersecurity Disclosure Guidance

March 31, 2018

On February 21, the SEC published interpretive "Guidance" to help public operating companies prepare disclosures about cybersecurity risks and incidents.

SEC Sidelines Funds Focused on Cryptocurrencies

SEC Sidelines Funds Focused on Cryptocurrencies

March 31, 2018

In a January 18 letter to two of the fund industry’s leading advocacy groups, the staff of the SEC’s Division of Investment Management advised fund sponsors not to initiate registration of funds that intend to invest substantially in cryptocurrency and related products until the staff’s questions, which the letter identified, are satisfactorily addressed.

State Suitability, Fiduciary Duty and Disclosure Initiatives Roundup

State Suitability, Fiduciary Duty and Disclosure Initiatives Roundup

March 31, 2018

States are stampeding to impose additional duties on those who provide financial advice or make recommendations to consumers.

Supreme Court Denies Insurer’s Petition to Review Standing in Data Breach Class Actions

Supreme Court Denies Insurer’s Petition to Review Standing in Data Breach Class Actions

March 31, 2018

In recent years, the insurance and financial services industries have been targets of high profile data breaches.

When Innovation Meets Regulation: InsurTech and State Licensing Laws

When Innovation Meets Regulation: InsurTech and State Licensing Laws

March 31, 2018

The rise of InsurTech — which brings technological innovations to the business of insurance — is having a significant impact on the insurance industry, including through advancements in cybersecurity tools, the introduction of blockchain, and the use of big data for underwriting and claims.

SEC Targets Variable Insurance Products

SEC Targets Variable Insurance Products

March 30, 2018

Once again, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has made variable insurance products an exam priority.

In California, Proposed Legislation to Increase Insureds’ Recoveries from Their Insurance Policies

In California, Proposed Legislation to Increase Insureds’ Recoveries from Their Insurance Policies

January 18, 2018

After devastating wildfires, California legislators proposed greater wildfire insurance protection, drafting a set of bills.

New York Department of Financial Services Rings in the New Year with New Suitability Requirements for Insurance Companies

New York Department of Financial Services Rings in the New Year with New Suitability Requirements for Insurance Companies

January 1, 2018

New York’s Department of Financial Services (NY DFS) decided to bid farewell to 2017 and ring-in the new year by proposing to amend Suitability in Annuity Transactions, 11 NYCR 224 (the Annuity Suitability Rule).

Delicate FINRA Balancing Act: To Self-Report or Not?

Delicate FINRA Balancing Act: To Self-Report or Not?

December 29, 2017

FINRA Rule 4530(a) requires member firms to promptly report certain enumerated events. Rule 4530(b) is less specific, with supplemental guidance advising that a firm should report when it concludes or reasonably should have concluded that conduct or events will result in "widespread or potential widespread impact to the member,

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

December 29, 2017

The Proposed Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation

Preparing for New York Regulation 210’s Effective Date

Preparing for New York Regulation 210’s Effective Date

December 29, 2017

The Preamble to New York’s Regulation 210 (the "Regulation") contains a March 19, 2018 effective date.

Regulators Continue to Scrutinize Initial Coin Offerings

Regulators Continue to Scrutinize Initial Coin Offerings

December 29, 2017

As reported in the most recent issue of Expect Focus, the SEC issued an investigative report in July cautioning market participants that distributed ledger (blockchain) technology-based offers and sales of digital "tokens" or "coins" in a so-called initial coin offering (ICO) may be subject to federal securities laws, depending on the circumstances.

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

December 29, 2017

On December 7, the Investor Advisory Committee of the Securities and Exchange Commission (SEC) adopted a recommendation that the SEC seriously explore the development of a summary disclosure document for mutual fund companies to use to satisfy their shareholder report delivery requirements.

SEC Exam Staff: “Surprise, We’re Back”

SEC Exam Staff: “Surprise, We’re Back”

December 29, 2017

In August, Kevin Kelcourse, the associate director for examinations at the SEC’s Boston Regional Office, confirmed that his office has been making "surprise" examination visits to registered advisers in the region.

SEC Whistleblower Awards to Insurance Department Employees?

SEC Whistleblower Awards to Insurance Department Employees?

December 29, 2017

Many federal, state, and local governmental employees may be eligible for awards pursuant to the SEC’s whistleblower program under the Dodd-Frank Act.

The Ghosts of Christmas Past, Present, and Future Haunt Insurers’ Use of Big Data and Algorithmic Tools

The Ghosts of Christmas Past, Present, and Future Haunt Insurers’ Use of Big Data and Algorithmic Tools

December 29, 2017

Watching as legislators, regulators, and policymakers’ consider what changes, if any, are necessary for insurers’ use of big data and algorithmic tools, is like being visited by the Ghosts of Christmas Past, Present, and Future.

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

December 29, 2017

A recent European Union (EU) directive prohibits certain investment managers from receiving securities research whose cost is "bundled" together with broker-dealers’ costs of effecting securities transactions directed by the investment managers.

The NAIC Says Aloha

The NAIC Says Aloha

December 29, 2017

The National Association of Insurance Commissioners held its Fall National Meeting December 2-4 in Hawaii, saying aloha to 2017 and aloha to 2018.

Third Time Is the Charm: Class Certified in DMF-Related Shareholder Suit

Third Time Is the Charm: Class Certified in DMF-Related Shareholder Suit

December 29, 2017

In City of Westland Police & Fire Retirement System v. MetLife, the plaintiffs allege that the insurer overstated its earnings because it did not hold sufficient reserves for death benefit claims on group life insurance policies that were incurred but not reported.

When Innovation Meets Regulation

When Innovation Meets Regulation

December 29, 2017

The rise of InsurTech — which brings technological innovations to the business of insurance — has recently had a significant impact on the insurance industry, including through advancements in cybersecurity tools, the introduction of blockchain, and the use of big data for underwriting and claims.

Treasury Department Urges SEC to Act on Life Company Products

Treasury Department Urges SEC to Act on Life Company Products

December 28, 2017

The U.S. Department of the Treasury published an October 2017 report, "A Financial System That Creates Economic Opportunities — Asset Management and Insurance" in response to President Trump’s Executive Order 13772 on "Core Principles for Regulating the United States Financial System."

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #4

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #4

December 4, 2017

This article continues the discussion of potential litigation issues under the “revised temporary” DOL Rule involving the offer and sale of annuities in the IRA market.

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #3

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #3

October 1, 2017

Potential litigation issues under the "revised temporary" DOL Rule involving the offer and sale of annuities in the IRA market, including class action exposure and ERISA distributions.

A Ticking Clock: New York’s Pending Non-Guaranteed Elements Rule for Life Insurance and Annuity Products

A Ticking Clock: New York’s Pending Non-Guaranteed Elements Rule for Life Insurance and Annuity Products

September 26, 2017

The clock is ticking on the New York Department of Financial Services’ issuance of new Regulation 210 "Life Insurance and Annuity Non-Guaranteed Elements" (the Rule).

Certified Financial Planner Board Proposes Fiduciary Obligations for All CFP Financial Advice

Certified Financial Planner Board Proposes Fiduciary Obligations for All CFP Financial Advice

September 26, 2017

In June, the Certified Financial Planner (CFP) Board released proposed revisions to its standards of professional conduct that would require CFPs to adhere to a fiduciary standard at all times when providing any "financial advice" to a client.

Communications With Auditors and Audit Committees May Change

Communications With Auditors and Audit Committees May Change

September 26, 2017

The SEC has proposed for comment major revisions in the disclosures auditors are required to make in their reports on financial statements audited pursuant to Public Company Accounting Oversight Board (PCAOB) standards.

Dismissal of Individual Claims Cap Insurer’s Winning Streak in Action Challenging FIA Product Features

Dismissal of Individual Claims Cap Insurer’s Winning Streak in Action Challenging FIA Product Features

September 26, 2017

In May, the Southern District of California handed ING a win in a case involving allegations that the company targeted seniors with annuities that hid an embedded derivative structure that made them worth less than promised.

Eleventh Circuit Affirms Summary Judgment or Insurer in STOLI Case

Eleventh Circuit Affirms Summary Judgment or Insurer in STOLI Case

September 26, 2017

In Sun Life Assur. Co. of Canada v. U.S. Bank Nat. Ass’n, the Eleventh Circuit recently clarified that where a life insurance policy lacks an insurable interest at its inception and is thus void ab initio, prejudgment interest accrues from the date of payment.

New Jersey Enacts Unclaimed Life Insurance Benefits Law

New Jersey Enacts Unclaimed Life Insurance Benefits Law

September 26, 2017

New Jersey became the latest state to enact legislation governing unclaimed life insurance benefits.

NAIC Big Data Working Group Update

NAIC Big Data Working Group Update

September 26, 2017

Regulators are hard at work considering insurers’ use of big data and analytics. The Big Data (Ex) Working Group, chaired by Oregon Commissioner Laura Cali Robison, adopted three charges for 2017.

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

September 26, 2017

The National Association of Insurance Commissioners (NAIC) Cybersecurity (EX) Working Group (Cybersecurity WG) approved Version 6 (Finalized) of its Insurance Data Security Model Law (Model) on August 7 at the NAIC Summer 2017 National Meeting in Philadelphia.

Nevada Securities Act Amendments – What’s Next?

Nevada Securities Act Amendments – What’s Next?

September 26, 2017

Over the summer, much was written about amendments to the Nevada Securities Act provisions governing financial planners, which became effective July 1, after being signed by the Governor on June 2.

New Partnership Audit Rules – Plan Ahead Before the Tax Bill Arrives

New Partnership Audit Rules – Plan Ahead Before the Tax Bill Arrives

September 26, 2017

A new set of rules for partnership audits (New Audit Rules), which generally take effect January 2018, fundamentally alter the manner in which the Internal Revenue Service (IRS) will conduct audits of partnerships, multi-member LLCs, and certain unincorporated organizations, including joint ventures, treated as partnerships for federal income tax purposes (collectively, Partnership).

OCIE Lessons From Cybersecurity 2 Initiative

OCIE Lessons From Cybersecurity 2 Initiative

September 26, 2017

On August 7, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a risk alert containing observations from its Cybersecurity 2 Exam Initiative. As a follow-up to the 2014 Cybersecurity 1 initiative, the Cybersecurity 2 Initiative examined the cybersecurity preparedness of 75 SEC-registered broker-dealers, investment advisers, and investment companies (funds) for the period of October 2014 through September 2015. In its report, OCIE identified issues of continuing concern, and articulated some best practices recommendations.

Pennsylvania Court Holds Fiduciary Duty Exists Only Where Consumer Cedes Decision-Making Control to the Fiduciary

Pennsylvania Court Holds Fiduciary Duty Exists Only Where Consumer Cedes Decision-Making Control to the Fiduciary

September 26, 2017

The Pennsylvania Supreme Court recently held in Yenchi v. Ameriprise Financial, Inc. that a financial adviser owed no fiduciary duty to a couple who purchased a life insurance policy based on the adviser’s advice where they did not cede all of their decision-making control to him.

Plaintiffs Survive Standing-Based Challenge to California Senior Notice and Financial Elder Abuse Claims

Plaintiffs Survive Standing-Based Challenge to California Senior Notice and Financial Elder Abuse Claims

September 26, 2017

In California, actions predicated on alleged senior notice requirement violations and financial elder abuse continue to challenge life insurers.

SEC Cautions on Use of Distributed Ledger/Blockchain Technology to Raise Capital

SEC Cautions on Use of Distributed Ledger/Blockchain Technology to Raise Capital

September 26, 2017

In July, the SEC issued a report addressing the applicability of U.S. federal securities laws to the offer and sale of securities by "virtual corporations or capital raising entities that use distributed ledger or blockchain technology to facilitate capital raising and/or investment."

SEC Investor Advocate’s 2018 Objectives Target Key Issues for Life Insurers

SEC Investor Advocate’s 2018 Objectives Target Key Issues for Life Insurers

September 26, 2017

On June 29, the SEC’s Office of the Investor Advocate released a report that prioritizes addressing the inconsistency in the standard of care applicable to broker-dealers (a suitability standard) versus investment advisers (a fiduciary standard) in fiscal year 2018.

SEC Scrutinizes Multi-Manager Arrangements

SEC Scrutinizes Multi-Manager Arrangements

September 26, 2017

Many mutual funds implement their investment strategies through "multi-manager" (also called "manager of manager") arrangements, particularly funds used to support variable life insurance and annuity products.

SEC Stays Approval of Quadruple-Leveraged ETF

SEC Stays Approval of Quadruple-Leveraged ETF

September 26, 2017

In July, MetLife obtained a win in the Northern District of Illinois when the court granted summary judgment in its favor on a claim that it had breached the duty of good faith and fair dealing in setting interest rates for a retirement plan.

Sticking Firmly to Contract Terms, Court Dismisses Premium and COI Overcharge Claims

Sticking Firmly to Contract Terms, Court Dismisses Premium and COI Overcharge Claims

September 26, 2017

In July, in Hancock v. Americo Financial Life & Annuity Co., Americo achieved a total victory on its motion to dismiss a putative class action in the Eastern District of North Carolina that challenged its premium and COI charges. Hancock v. Americo Financial Life & Annuity Co.

Summary Judgment Win for Insurer in “Stable Value” Interest Rate Setting Case

Summary Judgment Win for Insurer in “Stable Value” Interest Rate Setting Case

September 26, 2017

In July, MetLife obtained a win in the Northern District of Illinois when the court granted summary judgment in its favor on a claim that it had breached the duty of good faith and fair dealing in setting interest rates for a retirement plan.

The Fiduciary Rule Status Update

The Fiduciary Rule Status Update

September 26, 2017

On April 8, the Department of Labor published the so-called "Fiduciary Rule." It defines who is an employee benefit plan’s "fiduciary" for purposes of the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code as a result of giving compensated investment advice regarding assets of a plan or individual retirement account.

New York DFS Tightens Cybersecurity Gaps

New York DFS Tightens Cybersecurity Gaps

September 19, 2017

Equifax takes no deposits and makes no loans, but New York now says that it, as well as all other consumer reporting agencies, must protect consumer data to the same degree as banks and other financial institutions.

DOL Announces New Enforcement Policy on BIC Arbitration Limitation Class Actions

DOL Announces New Enforcement Policy on BIC Arbitration Limitation Class Actions

August 31, 2017

In order for fiduciaries to receive compensation that varies based on their investment advice or from third parties in connection with their advice, they must comply with a prohibited transaction exemption.

Labor Department Extends Applicability Date of BIC Exemption and PTE 84-24 an Additional 18 Months

Labor Department Extends Applicability Date of BIC Exemption and PTE 84-24 an Additional 18 Months

August 30, 2017

The Labor Department has proposed extending the applicability date of the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries, and certain amendments to Prohibited Transaction Exemption 84-24 from January 1, 2018 until July 1, 2019.

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #2

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #2

August 24, 2017

Last month, we wrote about potential litigation issues under the “revised temporary” DOL Rule involving the offer and sale of annuities in the IRA market. This paper continues that discussion.

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

NAIC Cybersecurity Working Group Votes to Approve Insurance Data Security Model Law

August 13, 2017

Version 6 of the Model incorporates significant changes from the first version released on March 2, 2016, including the narrowed purpose of establishing "standards for data security and standards for the investigation of and notification to the Commissioner of a Cybersecurity Event applicable to Licensees…"

Fintech Firm Shut Down and Fined by the FTC

Fintech Firm Shut Down and Fined by the FTC

July 10, 2017

A financial technology firm and its CEO have agreed to pay $104 million to resolve the FTC’s allegation that they misled consumers into providing sensitive personal and financial information, which was later sold without ensuring compliance with the FTC Act.

Florida Adopts New Life Insurance Notice Requirement for Changes in Policy

Florida Adopts New Life Insurance Notice Requirement for Changes in Policy "Status"

July 10, 2017

On June 26, 2017, a new Florida Statute (Section 626.99292) was signed into law, effective immediately, which imposes problematic policyholder notice requirements on life insurers.

New York DFS Requests Information on Use of External Consumer Data and Information Sources in Life Insurance Underwriting

New York DFS Requests Information on Use of External Consumer Data and Information Sources in Life Insurance Underwriting

July 5, 2017

The New York DFS initiated an investigation into the use of external consumer data or information sources in connection with underwriting by issuing a Section 308 information request to all New York authorized life issuers.

Colorado Set to Regulate Cybersecurity Practices of Broker-Dealers and  Investment Advisers

Colorado Set to Regulate Cybersecurity Practices of Broker-Dealers and Investment Advisers

June 23, 2017

On May 15, Colorado became the latest state to publish major regulations tackling cybersecurity in the financial services industry when the Colorado Division of Securities released amendments to existing division rules previously proposed in late March 2017.

Eighth Circuit Affirms Dismissal of RICO Claim in So-Called Shadow Insurance Suit

Eighth Circuit Affirms Dismissal of RICO Claim in So-Called Shadow Insurance Suit

June 23, 2017

In Ludwick v. Harbinger Group, the U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal under the McCarran-Ferguson Act of a federal RICO claim against Fidelity & Guaranty (and its owner and several affiliates) alleging that F&G had engaged in statutory accounting fraud to create a false impression of capital adequacy.

FINRA Issues New Guidance on Social Media and Digital Communications

FINRA Issues New Guidance on Social Media and Digital Communications

June 23, 2017

In April, FINRA issued Regulatory Notice 17-18, which reiterates previous rules and provides additional guidance regarding the application of several key rules governing communications with the public to digital communications

FINRA Moves to Protect Seniors and Other Vulnerable Persons

FINRA Moves to Protect Seniors and Other Vulnerable Persons

June 23, 2017

FINRA has taken another step to protect against what it calls "financial exploitation of vulnerable individuals or individuals with diminished capacity."

FINRA Proposes to Loosen Restrictions on Performance Projections

FINRA Proposes to Loosen Restrictions on Performance Projections

June 23, 2017

The proposed exception would permit broker-dealer firms to provide clients with customized hypothetical investment planning illustrations that include the projected performance of an "asset allocation or other investment strategy."

FINRA Public Offering Proposal Excludes All Insurance Contracts

FINRA Public Offering Proposal Excludes All Insurance Contracts

June 23, 2017

For the first time since 2004, FINRA has proposed major amendments to its requirements that govern the terms of the underwriting arrangements for most public offerings of securities and mandate that such arrangements be submitted to FINRA for review.

More Fund Companies Sanctioned for Misusing Fund Assets for Distribution

More Fund Companies Sanctioned for Misusing Fund Assets for Distribution

June 23, 2017

The SEC recently settled enforcement actions against William Blair and two Calvert companies for using mutual fund assets to pay distribution-related expenses in violation of Investment Company Act Rule 12b-1 and for certain other misconduct.

Mutual Fund Advisers Win Again on Section 36(b) Claims

Mutual Fund Advisers Win Again on Section 36(b) Claims

June 23, 2017

Following a four-day bench trial, New Jersey District Judge Renee Bumb granted judgment to defendant Hartford mutual fund advisers on "excessive fee" claims brought by fund shareholders under Section 36(b) of the Investment Company Act of 1940.

SEC Guidance Seeks Enhanced Disclosures by Robo-Advisers

SEC Guidance Seeks Enhanced Disclosures by Robo-Advisers

June 23, 2017

In February, the SEC staff issued a guidance update focusing on "robo-advisers," i.e., registered investment advisers (RIAs) who provide online, automated investment advice, through the use of an algorithmic program.

SEC Seeks Public Comments on Standards of Conduct for Investment Advisors and Broker-Dealers

SEC Seeks Public Comments on Standards of Conduct for Investment Advisors and Broker-Dealers

June 23, 2017

On June 1, SEC Chairman Jay Clayton issued a statement seeking comments from interested parties regarding the standards of conduct for investment advisers and broker-dealers providing investment advice to retail investors.

Special Purpose National Bank Charter for FINTECH Firms

Special Purpose National Bank Charter for FINTECH Firms

June 23, 2017

The draft makes clear that FINTECH special purpose banks will not be permitted to engage in any activity that is prohibited for other national banks and will be required to engage in at least one "core banking activity" such as lending money or paying checks.

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation

June 23, 2017

"From a litigation perspective, this change to a fiduciary status for the sales agent is substantial and in many cases will afford litigants unhappy with investment results, or the ultimate characteristics of a particular form of annuity, the opportunity to second-guess the original decision applying a significant range of issues."

Fraud-Free Sunsets: How Financial Professionals Can Deter Financial Elder Abuse in Florida and Reduce Their Own Liability Exposure

Fraud-Free Sunsets: How Financial Professionals Can Deter Financial Elder Abuse in Florida and Reduce Their Own Liability Exposure

May 3, 2017

Investment advisers, securities brokers, and other financial professionals who work directly with clients who are age 60 and older have two reasons to learn more about Florida’s financial elder abuse laws.

Circuits Split Over Constitutionality of SEC’s Administrative Law Judges

Circuits Split Over Constitutionality of SEC’s Administrative Law Judges

April 10, 2017

The Tenth Circuit Court of Appeals, in Bandimere v. SEC, recently held that the SEC’s administrative law judges (ALJs) are “inferior officers” whose appointments violate the Appointments Clause of the U.S. Constitution because they are not appointed by the President, the chairman of the SEC, or a court of law.

Court Applies “Fiduciary Exception” to Mutual Fund Trustees’ Attorney-Client Privilege

Court Applies “Fiduciary Exception” to Mutual Fund Trustees’ Attorney-Client Privilege

April 10, 2017

In Kenny v. Pacific Inv. Mgm’t Co. LLC (W.D. Wash.), a federal judge recently ruled that a mutual fund’s independent trustees must produce certain documents that the trustees had redacted or withheld based on attorney-client privilege.

FINRA Fines Firms for WORM Problems

FINRA Fines Firms for WORM Problems

April 10, 2017

Broker-dealers, including principal underwriters of insurance products, may retain required records in electronic format, subject to satisfaction of longstanding conditions.

SEC Adopts T+2 Securities Settlement Cycle

SEC Adopts T+2 Securities Settlement Cycle

April 10, 2017

On March 22, the Securities and Exchange Commission (“Commission”) adopted a rule amendment that shortens the time by which most securities transactions effected by a broker-dealer are required to settle.

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

SEC Approves FINRA Efforts to Protect Seniors and Other Vulnerable Persons

April 10, 2017

The SEC recently approved an amendment to FINRA Rule 4512 that requires FINRA members to make reasonable efforts to obtain, from each customer for whom they maintain an account, specified information about a “trusted contact person.”

SEC Facilitates Product Charge Variations

SEC Facilitates Product Charge Variations

April 10, 2017

SEC staff in December issued a Guidance Update that provides significant flexibility regarding how mutual funds and variable annuities (VAs) reflect multiple charge structures in their SEC registration statements.

SEC Staff Allows Brokers to Set Commissions for Mutual Fund “Clean Shares”

SEC Staff Allows Brokers to Set Commissions for Mutual Fund “Clean Shares”

April 10, 2017

The CG Letter clearly states clean shares may not be sold with sales loads or asset-based fees for sales or distribution. However, the CG Letter does not address whether a selling broker may receive service fees, such as sub-transfer agent or shareholder servicing fees, or revenue sharing payments from the fund’s adviser.

Signs of an Active 2017 for Laws Protecting Vulnerable Adults from Financial Exploitation

Signs of an Active 2017 for Laws Protecting Vulnerable Adults from Financial Exploitation

April 10, 2017

The North American Securities Administrators Association (NASAA)’s Model Legislation or Regulation to Protect Vulnerable Adults from Financial Exploitation (Model Act) gained traction in 2016 and appears poised for even more progress in 2017.

Sprouting Activity at the NAIC

Sprouting Activity at the NAIC

April 10, 2017

Various NAIC groups have planted seeds for a number of regulatory initiatives that impact life insurers.

Transparency Watch: Federal District Court Mandates Automatic Disclosure of Third-Party Funding Arrangements for Class Actions

Transparency Watch: Federal District Court Mandates Automatic Disclosure of Third-Party Funding Arrangements for Class Actions

April 10, 2017

In January, the U.S. District Court for the Northern District of California announced a change that makes litigants in putative class action suits subject to requirements mandating automatic disclosure of third-party funding arrangements.

Regulators Demand Third-Party Risk Management

Regulators Demand Third-Party Risk Management

April 9, 2017

While third-party risk management has been a required component of an effective enterprise risk management program for many years, the topic is receiving elevated attention at insurance companies and related businesses.

Will New Administration Speed VA Summary Prospectus?

Will New Administration Speed VA Summary Prospectus?

April 9, 2017

President Trump’s nominee for SEC Chairman, Jay Clayton, could speed authorization of the variable annuity (VA) summary prospectus and related layered disclosure and shortened underlying fund report to shareholders.

Prospects Fade for NAIC Unclaimed Life Insurance and Annuities Model Act

Prospects Fade for NAIC Unclaimed Life Insurance and Annuities Model Act

March 13, 2017

The prospects for an NAIC Unclaimed Life Insurance and Annuities Model Act (“Model Act”) appear to be fading based on developments at the Unclaimed Life Insurance Benefits (A) Working Group’s March 7 meeting

NY DFS Issues Circular Letter Addressing Life Insurance Unfair Claims Settlement Practices During the Contestability Period

NY DFS Issues Circular Letter Addressing Life Insurance Unfair Claims Settlement Practices During the Contestability Period

January 26, 2017

On January 26 – in its first-issued circular letter of the year – the New York Department of Financial Services (DFS) reminded life insurers doing business in the state that they can only contest claims following the death of insureds during the two-year contestability period if there is “actual evidence of misrepresentation” and warned insurers against “improperly … shifting the burden of proof to beneficiaries.”

NY DFS Proposed Cybersecurity Regulations Revised and Implementation Delayed

NY DFS Proposed Cybersecurity Regulations Revised and Implementation Delayed

January 16, 2017

Many small and medium-sized companies were particularly active in expressing their objection to the “one size fits all” approach of the original proposed regulations.

Cybersecurity Still Top FINRA Operational Risk

Cybersecurity Still Top FINRA Operational Risk

January 12, 2017

While FINRA acknowledges that there is no one-size-fits-all approach to cybersecurity, its 2017 letter reinforces its commitment to advising an approach grounded in risk management and effective control mechanisms for maintaining firms’ security and integrity.

Key Contacts

Other Team Members

Beth A. Vecchioli

Beth A. Vecchioli

Senior Director Government Consulting

Events

  • ACLI Compliance & Legal Sections Annual Meeting 2018 (July 11, 2018)
  • IRI ACTION18 Conference (May 9, 2018)
  • ALIC 2018 Annual Meeting (May 6, 2018)
  • NALC Spring 2018 Conference (April 25, 2018)
  • ACLI Annual Conference 2017 (October 9, 2017)
  • APIW September 2016 Luncheon (September 21, 2016)
  • California Fair Claims Settlement Regulations (May 10, 2016)
  • Proposed DOL Fiduciary Rule: Scope, Status & Potential Litigation Exposure (March 8, 2016)
  • National Advanced Forum on Life Insurance Litigation, Regulatory Enfordement & ERM (January 25, 2016)
  • DOL Fiduciary Rule: Advisor Update Webinar (December 15, 2015)
  • 3rd Advanced Forum on Captive Insurance (April 24, 2015)
  • Webinar: Intellectual Property in the Financial Industry (December 2014)
  • American Law Institute's 32nd Annual Advanced Conference on Life Insurance Company Products (November 12, 2014)
  • What Hath It Wrought: Did the Financial Crisis Alter the Litigation & Enforcement Landscape (October 28, 2014)
  • ACLI Annual Conference 2014 (October 20, 2014)
  • ACLI: Compliance & Legal Sections Annual Meeting 2014 (July 29, 2014)
  • Securities Products of Insurance Companies (January 22, 2014)

Featured Insights

Disclaimer

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