Financial Regulatory Forum

Federal marijuana ban deters insurers as U.S. states legalize

October 19, 2016

By Antonita Madonna, Regulatory Intelligence The legal use of marijuana could increase substantially by the end of the year as several U.S. states, including California, vote on its use for recreational or medical purposes. This could open new markets for insurance coverage in areas including property and casualty and health. However, insurers, principally regulated by the states, are unlikely to step in while federal regulations still criminalize use of the drug. 

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IA Brief: If your program is a “wrap”, be prepared

October 11, 2016
An investment adviser’s participation in a wrap fee program will not only increase its compliance and disclosure responsibilities but raise its regulatory profile with heightened focus on the programs. The focus was recently demonstrated with a Securities and Exchange Commission case in which two large firms settled complaints over wrap fee program compliance failures. Investment advisers are often creating or implementing new programs to meet their clients’ specific needs and ultimately improving their client experience. In recent years, the use of single fee programs or a more holistic approach to the advisory relationship has been embraced; however, programs that bundle particular services can often fall into the definition of a wrap fee program.

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IMPACT ANALYSIS: FINRA’s charges against ex-Morgan Stanley traders hired by UBS raise background questions

September 27, 2016

By Julie DiMauro, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – The Financial Industry Regulatory Authority’s (FINRA) charges against John Batista Bocchino and his sales assistant, Rafael Barela Jacinto, over unauthorized trading of $190 million worth of Venezuelan bonds and falsifying records have cast light on the significance of disciplinary histories in employing brokers.

Wells Fargo case highlights need to monitor employees with stressful performance goals

September 22, 2016
One of the more difficult tasks for compliance officers is to question employee success, even if those achievements come against almost insurmountable odds. The disclosure that Wells Fargo employees, in order to meet sales targets, signed up more than 2 million of its customers for new accounts and credit cards without their knowledge, is an example of employee performance that should be questioned even though the impulse is often to look the other way.

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INSIGHT: SEC delivering on promise to scrutinize private equity firms

September 15, 2016

By Todd Ehret, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – Private equity firms in the 1980’s and 1990’s gained a notorious image as corporate raiders thriving on leveraged buyouts and hostile takeovers funded by junk bonds. The industry spawned famous tales and movies about the deals and larger-than-life personalities. Nevertheless, the number of participants and total assets of approximately $30 billion of that era were miniscule compared to today’s private equity (PE) industry, which has finally come under greater regulatory oversight. (more…)

COMMENTARY: How to fix a broken system that fails flood victims

September 13, 2016

By Lawrence Hsieh, Practical Law for Thomson Reuters

(Thomson Reuters Regulatory Intelligence) – A homeowner’s insurance policy covers most disasters, but it won’t cover flood damage. Private insurers long ago deemed flood loss, which accounts for most disaster losses in the United States, as “too big to insure.” So people who live in a flood zone and have a federally-backed mortgage must purchase flood insurance through the National Flood Insurance Program (NFIP), which was established in 1968 to make flood insurance more affordable.

INSIGHT: U.S. insurance regulators pressured over universal life premium increases

September 8, 2016
By Lawrence Hsieh, Practical Law for Thomson Reuters  The post-crisis regulatory environment and ultra-low interest rates that ravaged bank proprietary trading desks have also hugely affected the insurance industry. This includes universal life insurance, which offers policyholders a cash value savings component earning tax-deferred interest on top of the death benefit. State insurance regulators face increasing pressure to stop insurers from raising premiums to offset their obligation to make guaranteed interest payments on the savings component at rates that were fixed during the high-interest rate “bubble” of the 1980s and 1990s.

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INSIGHT: In a regulatory era, small U.S. banks are getting some relief

September 8, 2016

(Thomson Reuters Regulatory Intelligence) – While the regulatory pendulum has swung toward the “more” side since since the advent of Dodd-Frank Act in 2010, a relatively new – and less noticeable — counter-trend has emerged toward addressing complaints by smaller banks of disproportionately heavy regulation. (more…)

SEC scrutinizing more sellers of F-Squared portfolios based on bad performance

August 31, 2016

By Richard Satran, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – After charging 13 firms for using discredited marketing claims from the now-defunct investment adviser F-Squared, the Securities and Exchange Commission said it is looking more broadly at other companies that used a portfolio strategy for exchange-traded funds (ETFs) whose claims of market-beating results were based on false data.

Whistleblowing practices and severance agreements — what works

August 30, 2016

By Julie DiMauro, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – Through their enforcement actions, policy initiatives and press releases, United States regulators are showing what effective whistleblowing practices look like, and why their importance is growing.