Disclosures are one of those compliance topics that everyone talks about, yet few truly unpack.

Disclosures are one of those compliance topics that everyone talks about, yet few truly unpack.

Where do you need them?

What exactly should they say?

Do they need to be signed off on, delivered in person, or posted online?

For RIAs and broker-dealers, it’s not just about having disclosures, it’s about having them in the right places, with the right level of clarity, and ensuring they actually mitigate risk. This means covering everything from conflicts of interest and outside business activities to testimonials and personal trading.

Being a fiduciary means putting your clients’ interests ahead of your own, and regulators expect more than a sentence buried in your ADV. Disclosures need to be prominent, consistent, and backed by compliance testing to ensure your policies are truly protecting clients.

Why is this important? Let’s take a look

Key Updates:

• The SEC is serious about investor harm. This can be seen through enforcement actions against spoofing, ponzi schemes, and insider trading this past month.

My Take:

The new Chair of the SEC has made it abundantly clear that minimising investor harm is high on the commission’s priority list. You may also think that this doesn’t apply to you or your firm since you aren’t engaging in spoofing, insider trading, or Ponzi schemes, as I mentioned above. However, coming back to disclosures, improper disclosures (especially those around your fee structure) can be seen as a form of investor harm. So, if you weren’t convinced about getting your disclosures updated and aligned with your ADV and compliance manual, then this should be your sign to get a hustle on.

Ask Leila

Question: What counts as a disclosure?

Answer: A disclosure generally refers to any information provided to clients or prospective clients that describes material facts about the firm, its personnel, its services, and potential conflicts of interest. Disclosures are required by the Investment Advisers Act of 1940 and related SEC/state regulations, and they are intended to ensure transparency so clients can make informed decisions.

Responsible Entrepreneurs

Disclosures are part of every area of compliance. Which means that your approach to disclosures needs to match your compliance program, which unfortunately means there isn’t a one-size-fits-all approach.

However, simply not knowing isn’t going to save you when it comes to incomplete or inadequate disclosures. So what can you do? Well, you can start by learning what you don’t know.

In our Compliance U training modules we cover several areas that require disclosures from your ADVs to Marketing and more. Start with one of our free courses and then build on your skills as you see fit with our on-demand platform. Don’t let disclosures catch you out. You can find more training here.

Snapshot

Regulate THIS! Is back for season 2! If you haven’t had a chance to watch our recent episodes that might catch your eye is our deep dive into client complaints. When the markets are volatile, we see a spike in client complaints as investors begin to worry about the performance of their investments. Find out how you can safeguard against complaints and keep your clients happy in times of increased volatility.

Watch the episode here: https://youtube.com/shorts/JjrT7le8dD0?feature=share