Monday, December 5, 2016

COMPLIANCE: What's Coming in 2017

While the Securities and Exchange Commission’s (SEC) annual list of priorities is probably a few weeks away, the list of priorities has already started to take shape for many compliance professionals.  As we look to the new year, what appear to the hot button issues that either the SEC or the industry will bring to the front-burner?

Cyber-security.  This is not only first on our list, but is also the most obvious and will rightfully get its own post.  From the election to the SEC’s recent and frequent commentary on cybersecurity, to the State of New York Department of Financial Services ruling requiring a Chief Information Security 0fficer by the beginning of 2018, the year promises to be a busy one.  2016 ended with many people thinking that cybersecurity and “hacking” was mostly the realm of the gigantic retail firms like Target and salacious hacks like Sony and Ashley Madison.  But in 2016 we learned that hacking, phishing and ransomware can effect regular people and small firms.  2017 promises more of the same as nefarious parties continue to develop new ways to steal large and small amounts from the investment management industry.

Fiduciary Status.  For a while this issue seemed to be settled after many years of simply being ignored.  But the issue continues has new life as multiple regulatory bodies weigh in and extend the realm of fiduciary duties.  With Department of Labor regulations regarding fiduciary status going into effect in April, concerns about the effects of conflicts of interest on plan participants will remain important considerations.  In an industry that sometimes seems to be dominated by the egos of a few high profile managers, regulators are trying to keep the focus on the interests of plan participants and small investors.

Regulation.  Perhaps the greatest uncertainty in the upcoming year involves the events and appointments in Washington and how this trickles down into the industry.  Will the nominee to head the SEC  Jay Clayton, most recently a lawyer with New York firm Sullivan & Cromwell, continue the trends toward consumer and investor protection or undo some of the regulatory thicket that has encumbered the economy?

Whatever the specifics, 2017 promises to be an exciting year for compliance officer and institutional investment managers.

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