SEC further extends filing deadline; Finra pushes arb hearings back again


As the COVID-19 pandemic intensifies, securities regulators on Wednesday offered more relief to financial advisers.

The Securities and Exchange Commission further extended the deadline for registered investment advisers to file registration documents, known as Form ADV. Finra has postponed in-person arbitration hearings until May 31, after previously halting them through May 1.

The SEC is giving advisory firms affected by the coronavirus an extra 45 days to submit registration forms that were due between March 13 and June 30. The original SEC order, released March 13, was only for ADVs due through April 30. The agency also delayed requirements for delivery of ADV changes to clients.

Advisers who want to take advantage of the extension must notify the SEC and their clients. They must say they’re relying on the order to delay their ADVs but they do not have to explain why, as they did under the original order.

“Advisers had some concerns around framing why they were seeking relief,” said Gail Bernstein, general counsel at the Investment Adviser Association. “It seemed to be self-evident. It is the commission’s intent to make meeting regulatory obligations easier during this time and not more difficult.”

In a recent statement, the SEC Office of Compliance Inspections and Examinations said that an advisory firm’s request for an ADV deadline extension would not be a “risk factor” in determining whether the agency launches an examination.

Lawyers and compliance experts have expressed concerns that taking the SEC up on its offer to ease regulatory requirements would backfire on advisory firms.

“The SEC is trying to be responsive to feedback here, and they deserve credit for that,” said G.J. King, president of RIA in a Box.

Nonetheless, King said advisers should avoid delaying their ADVs.

“As an RIA firm, I would still do all I can to meet the regular filing and delivery deadlines,” he said.

Otherwise, a firm may not look as if its business continuity plan is working. “Why create that issue for yourself unless you absolutely must take this relief?” King said.

Finra extends suspension of arbitration hearings

Also on Wednesday, the Financial Industry Regulatory Authority Inc. extended its suspension of in-person arbitration hearings to May 31. Arbitration parties can contact Finra to reschedule or discuss remote hearing options, according to a statement on Finra’s website.

The Finra arbitration system is still operating in terms of prehearing case activity, said Rick Berry, director of dispute resolution services at Finra.

“Everything is 100% business as usual except for in-person hearings through May 31,” Berry said. “Our interest is in being efficient, fair and as much as possible in these times, keeping the cases moving.”

Although the coronavirus is roiling much of daily life, one arbitration lawyer hopes that the disruption to the Finra arbitration system doesn’t gotoo far.

“It does seem to be a slippery slope,” said Andrew Stoltmann, a Chicago securities attorney, “For elderly and sick people, it’s imperative that those cases be adjudicated.”

Written by Investors Wallets

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