State & Other Regulatory Issues

The weekend is coming.

On January 20, FSI meet with the NASAA BD and NASAA’s BD Section Project Chairs to discuss issues of mutual concern to each group.

The Financial Services Institute (FSI) today met with officials at the Department of Labor. This meeting was a result of a joint coalition letter in response to the Department’s December letter requesting industry information.

FSI staff and members recently had the opportunity to meet with state regulators in Missouri and Massachusetts to introduce FSI and to share the concerns of independent broker-dealers and our industry.

The Massachusetts Legislature recently passed legislation that would authorize the State Treasurer to sponsor a defined contribution plan that may be adopted by non-profit employers and their employees.

On Monday, December 5, 2011, 55 Republican members of the House of Representatives signed onto a letter that was sent to Hilda Solis, Secretary of the Department of Labor (DOL).

Over the past several years, FSI has constructively engaged the Florida Office of Financial Regulation (OFR) related to the length of time it takes to register a branch office in the state. On September 27, 2011, we recieved an update from the OFR indicating that they have made significant improvements to their branch office registation approval process.

In an effort to get the Department of Labor to withdraw and re-propose its proposed fiduciary rule, FSI issued a Call to Action to its members urging them to send personalized letters to President Obama.

On July 21, 2011 Dale Brown, President & CEO of FSI, led a coalition comprised of members of FSI and the Financial Services Roundtable in a meeting with the DOL.

FSI is pleased to report we successfully advocated for the adoption of amendments to California Senate Bill 459 (Corbett).

On August 4, the Financial Services Institute (FSI) announced the results of its advocacy grassroots effort to convince the Department of Labor (DOL) to withdraw and re-propose its flawed fiduciary rule proposal.

One of FSI's top priorities is to continually build strong relationships with state securities regulators on behalf of our members. FSI first commented on NASAA’s Model Rule for Private Fund Advisors in February, then again in early July. Our constructive engagement with NASAA has paid off as NASAA's Board has accepted our recommendation to hold off on finalizing its Model Rule until the SEC adopted final amendments to the Investment Advisor Act of 1940 (Advisers Act) – which happened on June 22.

On June 23, Matthew Schwartz, Government Affairs Counsel at FSI, along with Jennifer Relien of FSI member firm Woodbury Financial Services, and Andrea Golis of FSI member firm Thrivent Financial, met with Michael Rothman, Commissioner of the Minnesota Department of Commerce, and his staff.

In an ongoing battle to preserve your independence, FSI continues to urge California members to contact their Assemblyman and urge him/her to support amendment to SB 459 (Corbett).

On Thursday, June 30, FSI Chairman Bill Dwyer, FSI Vice Chairman Joe Russo, FSI President and CEO Dale Brown and the FSI Advocacy team along with The Financial Services Roundtable, met with Gene Sperling, Assistant to the President for Economic Policy and Director of the National Economic Council (NEC) to address FSI’s concerns with the Department of Labor’s (DOL) proposed rule on definition of fiduciary.

As a financial advisor, you know that your ability to offer advice on IRAs is critical to your client’s retirement planning. And, just as critical to your small business, is the ability to collect commissions for that advice. If you do not act now, while there is still a chance to make a difference, your ability to advise clients on IRAs and to collect commissions for your work may soon come to an end. We strongly urge you to take action no later than July 31 in order to make a true impact on this process. 

One of FSI’s top priorities is to continually build strong relationships with state securities regulators on behalf of our members. We are pleased to report that we recently put this aspiration in to practice by working with, and commenting on, the North American Securities Administrators Association (NASAA)’s plan to put forward a Model Rule on Private Fund Adviser Registration and Exemption.

Senate Bill 459 (Corbett) holds employers responsible for “willful misclassification” of an employee as an independent contractor, without clarifying or outlining a clear and objective test that employers may use to determine if an individual is an employee or independent contractor.

When it comes to the future of affordable, quality financial advice, few other issues have commanded the attention of the industry as that of the Department of Labor Fiduciary Rule. In a nutshell, if this rule were to become reality, financial advisors would lose their ability to be compensated through commissions on advice given to investors with IRAs.

On June 9, Dale Brown, & CEO of FSI, Matthew Schwartz, Government Affairs Counsel at FSI, and FSI Board members Valerie Brown, Jim Herrington, met with Preston DuFauchard, California’s Corporations Commissioner and a NASAA Board member.

In an ongoing battle in California, FSI submitted a letter to all members of the California Senate urging them to oppose SB 459 (Corbett).

On May 24, 2011, FSI submitted a comment letter to the Massachusetts Securities Division on its Proposed Amendments to the Massachusetts Code of Regulations (Proposed Amendments).

On April 28, 2011, FSI sent a letter to Senator Tom Harkin , Chairman of the Senate Health, Education, Labor and Pensions Committee opposing S.770 , the Payroll Fraud Prevention Act (PFPA). 

On October 22, 2010, the Department of Labor’s (DOL) Employee Benefits Security Administration proposed a rule that would eliminate the ability to earn commissions on IRA accounts and other retirement accounts.

On October 22, 2010, the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) proposed a rule that would eliminate your ability to earn commissions on IRA accounts and other retirement accounts.

On April 4, 2011, FSI submitted a comment letter to the California Department of Corporations on Proposed Amendments to Section 260.204.9 of Title 10 of the California Code of Regulations (Proposed Amendments).

Over the past several months, FSI has been working with the Florida Office of Financial Regulation, Division of Securities, to improve the turnaround of branch office applications in the state.

 On March 2, 2011, Mark Smith of Sutherland Asbill and Brennan LLP, FSI’s ERISA policy counsel, represented FSI at a hearing before the Department of Labor (DOL).

 In February 2011, FSI conducted a survey of its members and found that more than half of the respondents would like more information about the “switch” from SEC to state jurisdiction of registered investment advisers (RIA) with assets under management between $25mm and $100mm.

The Financial Services Institute (FSI) submitted a comment letter February 15, 2011, in response to the North American Securities Administrators Association (NASAA) proposed Model Rule on Private Adviser Registration and Exemption called for in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 The Financial Services Institute (FSI) responded to the Public Company Accounting Oversight Board’s (PCAOB) proposal that would create a temporary rule to establish an interim inspection program related public accounting firms that conduct audits of broker-dealers.

On February 3, the Financial Services Institute (FSI) submitted a comment letter to the Department of Labor regarding proposed regulation that would redefine the circumstances under which a person is considered an investment advice fiduciary under both ERISA and IRS codes.

The Texas State Securities Board recently proposed changes to Title 7 of the Texas Administrative Code.

The Financial Services Institute (FSI) is pleased with the Government Accountability Office (GAO) Report, “Consumer Finance: Regulatory Structure for Financial Planners Is Generally Comprehensive, but Consumer Protection Issues Remain," issued January 18, 2011, that called for more disclosure and transparency to help consumers better understand financial markets.

FSI strives to create a healthier regulatory environment for independent broker-dealers and their affiliated independent financial advisors through aggressive and effective advocacy, education and public awareness.

The State of Florida’s Disciplinary Guidelines became effective November 22, 2010. FSI commented on Proposed Rule 69W-1000.001 and the related Disciplinary Guidelines February 12, 2010.

Senior members of FSI staff met with the SEC’s Study Group on December 6 to discuss enhancing investment adviser examinations mandated by Section 914 of the Dodd-Frank Act.

On November 16, FSI, along with participants from the SEC, FINRA, state regulators, public-interest groups and securities firms, participated in a roundtable discussion concerning issues that arise in serving investors who are suffering from diminished mental capacity.

FSI submitted a comment letter to the Utah Department of Commerce November 15, 2010, expressing our support of the Proposed Amendments that would, among other things, update recordkeeping requirements for broker-dealers and investment advisers, make minor modifications to the license application and renewal process for investment advisers, and will formally adopt and incorporate by reference the 2010 amended federal rule governing custody.

With Republicans picking up 61 seats and now the majority in the House, committee chairs will change hands, thus giving Republicans the advantage in controlling the agenda.

On October 27, 2010, FSI submitted a detailed comment letter to the South Dakota Securities Division related to Proposed Amendments to the Administrative Rules of South Dakota.

Over the past several months, FSI has been working with the state of Florida’s Office of Financial Regulation (OFR) in an attempt to improve approval times of broker-dealer and investment adviser branch office applications in the state.

Over the past several months, FSI has been working with the state of Florida to improve approval times of broker-dealer and investment adviser branch office applications. Florida regulators recently provided a list of “ common issues that may delay a branch office application.”

During the course of this summer, FSI's Advocacy staff has met, or will meet, with key state securities regulators in the following states...

Political insiders in Michigan speculated that Governor Jennifer Granholm (D) may expand the state sales tax to apply to services, including financial services, in an effort to raise revenues. On February 11, 2010, FSI sent a letter to key legislators in Michigan explaining the unintended consequences of imposing a state tax on services.

In an effort to improve registration times for branch offices in the state of Florida, the Florida Office of Financial Regulation has shared with FSI several common branch office registration issues.

On July 13, 2010, FSI issued a Call to Action in Michigan. FSI urged its Financial Advisor members in Michigan to call Majority Floor Leader Kathy Angerer and Speaker Andy Dillon and ask them to support H.B. 6141.

The Michigan House of Representatives is considering legislation (H.B. 6141) that would exempt certain investment adviser representatives (IARs) from the requirement to sit for the Investment Adviser examination (Series 65 or Series 66), if they meet one of the criteria set out in the bill.

In an effort to address California’s severe budget crisis, the state legislature has considered raising funds via an onerous 3% withholding tax on payments to independent contractors by businesses and public agencies.