DOL Proposes Delay of Fiduciary Rule

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After six years of planning and intense effort, which included solicitations of input from the industry and investor advocates, the Department of Labor’s (“DOL”) Conflicts of Interest rule was released in April 2016 (the “Final Rule”).  Among other things, the Final Rule required all “advisers” (i.e., individuals or entities who are representatives of a registered investment adviser, bank or similar financial institution, insurance company, or broker-dealer) providing advice regarding retirement accounts act in the best interest of their clients.  Advisers were given until April 10, 2017 to implement the changes required by the Final Rule.

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Investment Adviser and Unregistered Firm Caught Stealing Investor Funds

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On February 2, 2017, the SEC charged Sentinel Growth Fund Management, a Connecticut-based investment advisory business, and its owner with stealing investor money to settle a private lawsuit among other expenditures.

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Are You Considering Breaking Away?

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The number of advisers considering breaking away from a traditional broker-dealer business model is on the rise. According to the latest research from Echelon partners, last year alone, more than 400 teams broke away from their broker-dealers to go independent, with over 15% becoming their own RIAs.1

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Investment Adviser in Trouble with SEC After Failing to Disclose Solicitation Agreement

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Earlier this month, John Rafal, former president and CEO of Essex Financial Services, Inc., admitted wrongdoing and agreed to pay more than $575,000 in settlement charges.  According to the SEC, the Connecticut-based investment adviser defrauded a client, attempted to mislead the SEC’s enforcement investigators and lied to his other clients about the status of the SEC’s investigation.

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WORM Deficiencies: Are Your Electronic Records Safe?

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As part of FINRA’s ongoing efforts to crackdown on cybersecurity failures, the brokerage industry’s self-regulatory organization issued $14.4 million in fines to a dozen firms – including companies in the Wells Fargo & Co. and RBC Capital networks, RBS Securities Inc., SunTrust Robinson Humphrey Inc., LPL Financial, Georgeson Securities Corp. and PNC Capital Markets – for deficiencies related to their cybersecurity programs.

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Expedia IT Specialist Charged with Insider Trading

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In an ideal world, companies would be able to trust their employees one-hundred percent. However, there are those who take advantage of their position within an organization to perform illegal activities. Unfortunately, that was the case with Expedia’s Jonathan Ly. Earlier this month, the SEC charged Mr. Ly, an information technology specialist in Expedia’s corporate IT services department, with insider trading.

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Purported “Angel” Investor Defrauded Investors Out of Millions

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Last week, Alberto Chang-Rajii and his asset management company, Onix Capital LLC, were charged with fraud by the SEC. Using false claims of Chang’s wealth and investment success as an award-winning multi-millionaire “angel” investor, Chang and Onix apparently defrauded investors out of millions of dollars. In addition to the claims of fraud, the SEC announced an asset freeze against the Miami Beach-based company and its owner.

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