You Don’t Have A Crystal Ball But That Doesn’t Mean You Can’t Be Prepared

Over the past six months, we’ve helped several clients successfully navigate the complex process of selling their firms or merging with larger entities, many of them backed by private equity. These transitions offer opportunity, but they also come with serious operational, compliance, and cultural implications. If you’re feeling the weight of running a business, managing risk, and leading solo at the top, you’re not alone, and there are ways to ease that burden while staying true to your values.

But here’s the reality: not every big offer delivers on its promises. We’re seeing an increasing gap between what’s pitched during acquisition talks and what’s delivered post-close. Private equity firms are ultimately working in their interest, which may not align with your pricing model, client experience, or legacy. That’s why succession planning is more than just a checkbox, it’s something that needs ot beto be included when you are planning around compliance and operations. So that it can help you and your clients prepare for the future.

Key Updates:

• Increases in the number of Ponzi-like schemes targeting investors. Now is a great time to educate your clients to make sure they aren’t vulnerable to these types of scans.
• New directors are being named, and acting directors are being instated as the SEC finds its feet under the new Chairman.
• FINRA has changed the rate for Fees Paid Under Section 31 of the Exchange Act. If you are a FINRA member, make sure that you are on top of this increase.

My Take:

Even though regulatory investigations may be getting dropped, and the rollout of new regulations has slowed down, this isn’t an excuse to stop focusing on these parts of your business. With many businesses now looking to sell or firms being acquired by larger entities, getting your compliance sorted can be a big bonus when going into negotiations. This is also an opportunity to start succession planning if you don’t already have a plan in place. Think about what you really want for yourself and your clients at the end of the day. Also, know what you’re willing to compromise on and what is a complete non-negotiable. Something else to keep in mind is that one individual may not be able to buy the business from you. You may need to prepare to sell to a group of advisors rather than just a single person. All of these decisions are things we can help you with if you are heading down the path of succession planning or preparing for a merger or acquisition.

Ask Leila

Q: What is the impact of the expungement rule updates for people who had held off going through the expungement process?

A: Customer dispute-related expungements must now be filed within 3 years of the customer complaint or 2 years of the close of any related arbitration or litigation—whichever is later. This restricts the previously broader timeframe and makes it harder for individuals to file expungement requests for older complaints. Expungement requests are now heard by special three-member panels selected from experienced public arbitrators with additional training. The new rules eliminate the option of using single arbitrators or relying on friendly arbitrator selection via party agreements, which had been a strategic advantage in the past. For an expungement request to be granted, all three arbitrators must unanimously agree that the information should be expunged.This significantly raises the bar for success, especially when the panel is unfamiliar or skeptical. State securities regulators are now invited to attend and participate in expungement hearings. They may object and provide evidence, adding pressure on arbitrators to deny requests. This means the process is no longer a one-sided affair; regulators may actively oppose expungement. Expungement requests filed as stand-alone actions (i.e., not part of a customer dispute) are now heavily restricted and only allowed under limited circumstances.Those who previously waited with the hope of a “clean” straight-in expungement now face a narrower path.

Impact on Those Who Waited

If someone held off on initiating the expungement process: They may now be time-barred if their matter occurred more than three years ago or the arbitration/litigation concluded more than two years ago. Strategic advantages have diminished, particularly the ability to choose a single arbitrator or file in a low-resistance jurisdiction. The likelihood of success has decreased due to procedural complexity, regulatory opposition, and the requirement for a unanimous panel.

Recommendations

Act Immediately if Still Eligible: Anyone who still qualifies under the new deadlines should file without delay. The longer they wait, the less favorable the process becomes. Consult with Counsel: The procedural and strategic considerations are now more nuanced. An attorney experienced with post-rule-change expungements is essential. Consider Alternative Avenues: In limited cases, expungement may still be available through court proceedings if arbitration is not viable.

Responsible Entrepreneurs

Do you know what makes a good compliance provider? The SEC does, and they actually broke it down into several categories of things that successful compliance providers do vs the things that are warning signs that your compliance provider isn’t doing enough.

The SEC’s Risk Alert on Outsourced Compliance Providers makes one thing clear: outsourcing your CCO responsibilities doesn’t lower the bar for quality, accountability, or accuracy. If anything, it raises expectations.

At My RIA Lawyer, we take this seriously. We cap the number of clients each CCO serves, maintain direct access to your systems, and tailor compliance programs to your firm’s unique risks—not just boilerplate templates. Our team shows up onsite, conducts regular training, and keeps your policies aligned with how your business actually operates.

Want a full done-for-you compliance solution that understands the SEC’s requirements so that your firm isn’t taking on unnecessary risk? This is exactly why we created our Outsourced Compliance Department solutions. We also understand all the legal-ese so that rules are properly implemented in a way that compliments your business operations. Want to find out more? With 2 spots available for July you’ll need to act fast. Call us today to talk to our team about how we can help.

Snapshot

Last month, I was lucky enough to be featured on the KITCES podcast as a guest. In this episode, I discuss what you really need to know to scale compliance with your independent RIA firm. If compliance is something that has been causing you problems, this episode could have a lot of your answers.

Listen to the full episode here: https://www.kitces.com/blog/leila-shaver-ria-lawyer-scale-compliance-solutions-independent-ria-growth/