Tag Archives: compliance

PTE 2020-02: The Remaining Steps: Retrospective Review and Correction of Compliance Failures (Part 1)

Key Takeaways

    • The next step in compliance with the DOL’s PTE 2020-02 is to conduct the annual retrospective review for 2022 and to reduce the review to a written report to be signed by a “senior executive officer.”
    • The review and report must be completed within 6 months after the end of the year.
    • In the process of conducting the review, it is likely that compliance failures will be discovered. To avoid prohibited transaction consequences, the failures must be corrected within 90 days of discovery and reported to the DOL within 30 days of correction.
    • The failures and corrections must also be included in the report.
    • There are a number of types of potential failures, some of which may be easy to correct and others of which will be more difficult.
    • Unfortunately, the DOL did not provide any guidance on how to correct failures. As a result, careful thought—with competent legal advice—should be given to the correction methodology.

Now that 2022 is behind us, the final steps in compliance with PTE 2020-02 must be satisfied. Those steps are (i) conducting the annual retrospective review and the resulting report (within six months) and (ii) correcting any compliance failures that are discovered in the course of the review.

The Review and Report are conditions to obtaining the relief afforded by the exemption. In other words, if they are not properly completed the protection is lost and all conflicted recommendations under the PTE are considered to be prohibited transactions. The consequence of having hundreds or even thousands of prohibited transactions is unimaginable. Here’s what the PTE says about the Retrospective Review and Report:

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Best Interest Standard of Care for Advisors #23

Regulation Best Interest: SEC 2020 Examination Priorities—Examinations for Compliance With Reg BI and the Investment Adviser Interpretation

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”

My last post on Best Interest for Advisors #22 discussed the FINRA 2020 Examination Priorities (https://www.finra.org/sites/default/files/2020-01/2020-risk-monitoring-and-examination-priorities-letter.pdf) provisions on examinations for compliance with Reg BI and Form CRS. This article discusses the SEC’s 2020 Examination Priorities (https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf) provisions on compliance with Interpretation Regarding Standard of Conduct for Investment Advisers (“RIA Interpretation”) and Form CRS (as well as compliance by broker-dealers with Reg BI).

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Best Interest Standard of Care for Advisors #22

Regulation Best Interest: FINRA Examination Priorities—2020 Examinations for Compliance

The SEC has issued its final Regulation Best Interest (Reg BI), Form CRS Rule, RIA Interpretation and Solely Incidental Interpretation. I am discussing the SEC’s guidance in a series of articles entitled “Best Interest Standard of Care for Advisors.”


Among the priorities in FINRA’s 2020 Risk Monitoring and Examination Priorities Letter (https://www.finra.org/rules-guidance/communications-firms/2020-risk-monitoring-and-examination-priorities-letter) is examining the compliance readiness for Reg BI and Form CRS . . . and then, after June 30, examining compliance with those requirements. Here’s what the examination priorities letter says about that, including the questions that their examiners will ask:

Continue reading Best Interest Standard of Care for Advisors #22

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