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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 long-standing 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

FINRA's Examination Priorities and Findings for 2020

FINRA's Examination Priorities and Findings for 2020

May 5, 2020

Apart from COVID-19 and Reg BI, another piece of the regulatory landscape warrants attention: SEC oversight of FINRA.

Suitability Model Crosses the Finish Line

Suitability Model Crosses the Finish Line

February 13, 2020

On February 13, the NAIC Executive Committee adopted revisions to the Suitability in Annuity Transactions Model Regulation.

NY DFS Delivers an Icy Blast to Insurers Using External Data Sources and Algorithmic Underwriting

NY DFS Delivers an Icy Blast to Insurers Using External Data Sources and Algorithmic Underwriting

January 29, 2019

On January 18, 2019, a wintry wind blew when the New York Department of Financial Services (NY DFS) released Circular Letter No. 1 (2019) ("Letter No. 1") "to advise insurers authorized to write life insurance in New York of their statutory obligations regarding the use of external consumer data and information sources in underwriting for life insurance."

Challenging New York’s “Best Interest” Standard: A Comparison to COCUS

Challenging New York’s “Best Interest” Standard: A Comparison to COCUS

December 18, 2018

Recent challenges filed by trade associations representing insurance agents in the state of New York seek to overturn the amendment of Regulation 187, which will impose a “best interest” standard on life insurance agents in the offering and sale of annuities and life insurance in New York.

Court Upholds California Department of Insurance’s Expansive Interpretation of Claims Practices Statute

Court Upholds California Department of Insurance’s Expansive Interpretation of Claims Practices Statute

December 18, 2018

A California appellate court recently reversed the trial court’s decision to enjoin the California Insurance Commissioner from enforcing certain regulations regarding unfair claim settlement practices.

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

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

December 18, 2018

On October 30, the SEC voted to propose modernized disclosures for variable annuities and variable life insurance policies.

New Jersey Fiduciary Rule Pre-Proposal

New Jersey Fiduciary Rule Pre-Proposal

December 18, 2018

On October 15, the New Jersey Bureau of Securities (Bureau) requested public comments on the concept of amending the New Jersey Blue Sky regulations “to require that broker-dealers, agents, investment advisers, and adviser representatives be subject to a fiduciary duty.”

Use of Non-Binding SEC Staff Guidance Called Into Question

Use of Non-Binding SEC Staff Guidance Called Into Question

December 18, 2018

Recent moves by the SEC could signal a shift away from the use of non-binding guidance in the form of no-action letters or other types of compliance and interpretive information that the SEC staff frequently publishes.

Is It Time to Revisit SEC’s Ban on “Forced” Arbitration Provisions?

Is It Time to Revisit SEC’s Ban on “Forced” Arbitration Provisions?

December 18, 2018

The SEC has long refused to allow companies to go public with bylaws or other governing documents that would require shareholders to arbitrate federal securities law claims against the company.

Various NAIC Groups Discuss a Cornucopia of Life and Annuity Topics

Various NAIC Groups Discuss a Cornucopia of Life and Annuity Topics

December 18, 2018

At the NAIC Fall 2018 National Meeting, various groups within the NAIC discussed a cornucopia of topics that impact the life and annuity industry.

SEC Lightens Legal Load of Mutual Fund Directors

SEC Lightens Legal Load of Mutual Fund Directors

December 18, 2018

The SEC staff now says that mutual fund directors can rely on chief compliance officer certifications in determining compliance with board procedures required by SEC exemptive Rules 10f-3, 17a-7, and 17e-1 under the Investment Company Act.

Parent Company Guarantees of Annuities

Parent Company Guarantees of Annuities

December 18, 2018

Rule amendments proposed in October by the SEC could impact insurers whose obligations under certain types of annuity contracts have been guaranteed by the insurers’ affiliates.

Buffer ETFs vs. Index-Linked Annuities

Buffer ETFs vs. Index-Linked Annuities

December 18, 2018

A new form of “buffer” ETF is competing with somewhat similar products – often referred as index-linked or “buffer annuities” – issued by insurance companies. Innovator Capital Management, LLC serves as the investment adviser for a suite of buffer ETFs.

Executive Compensation Disclosure – Partial Relief for Insurance Products

Executive Compensation Disclosure – Partial Relief for Insurance Products

December 18, 2018

For many years, insurance company issuers of non-variable products that are registered with the SEC on Forms S-1 or S-3 have been required to disclose compensation information about highly compensated executive officers of the issuer.

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.

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.

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 Enforcement & 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

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.