February, 2020

Dear SDDco Clients and Colleagues: Our SDDco Perspective includes industry news, guidance, regulatory rule updates, deadlines, and other timely matters impacting brokers, advisors, fintech firms, taxpayers, investors, and their service professionals. The SDDco Perspective is made available on our website monthly at http://sddco.com/resources-newsletter.

IN THIS ISSUE:

• U.S. Department of Homeland Security Issues a Nationwide Bulletin
• 10 FinTech Forecasts for the ‘20s
• Déjà vu All Over Again?
• IRS Updates Its Online W-4 Estimator

U.S. Department of Homeland Security Issues a Nationwide Bulletin

While urging Americans to continue to travel, attend public events, and freely associate with others, DHS under the National Terrorism Advisory System issued a Bulletin January 18, 2020 that warns of a heightened risk of potential cyber and physical attacks by Iran against the United States. In a response to the Advisory Bulletin, FINRA issued an Information Notice January 23 to its members that states while there is no information indicating a specific, credible threat at this time, terrorist organizations aligned with Iran, such as Hizballah, “have demonstrated the intent and capability to conduct operations within the United States, and that an attack may come with little or no warning.”
FINRA reminds member firms in its Information Notice to:

• Adopt a state of heightened awareness, review relevant threat intelligence and alerts
• Review the firm’s cybersecurity program and procedures
• Review the firm’s business continuity and contingency plan (BCP); and
• Increase organizational vigilance

National Terrorism Advisory System - Bulletin

National Counterterrorism Center – Guide to Hizballah

FINRA – Information Notice 1/23/2020

CISA - Increased Geopolitical Tensions and Threats

10 FinTech Forecasts for the ‘20s

Every decade there is some sort of vast new technology that emerges. In the last decade, it was FinTech that redesigned the financial system. Now, these companies are entering the second phase of maturity, competition, and increased demand. Evolving challenges are at the forefront now more than ever as companies are going to make new splashes into the FinTech industry. Here are 10 indications on where fintech is headed next:

1. Rebundling will follow the great unbundling
2. E-commerce battles are brewing
3. Big tech is moving into fintech…

Read More >

Déjà vu All Over Again?

On January 7, 2020, the Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) released the 2020 Examination Priorities, designed to provide insight into those specific areas where the Staff will focus their efforts. As with previous years, the announcement includes the usual provisos that the list does not preclude the Staff from focusing on additional areas as needed.

The 2020 report continues and extends the focus of the 2019 version and includes updates from the results of the 2019 examinations and regulatory releases. The themes of Retail Investors, Cybersecurity, Digital Assets, AML, and Market Infrastructure are all revisited, along with many other items. Naturally, with Regulation Best Interest’s deadline of June 30, 2020 in sight, the focus on Retail Investors should not come as a surprise to anyone. Here’s the snapshot of the report, full link is below for your review.

• Retail Investors, Including Seniors and Individuals Saving for Retirement
  • Fraud, Sales Practices, and Conflicts
  • Retail-Targeted Investments
  • Standards of Care
  • Information Security
• Financial Technology (FINTECH) and Innovation, Including Digital Assets and Electronic Investment Advice
  • Digital Assets
  • Electronic Investment Advice
• Additional Focus Areas Involving RIAs and Investment Companies
  • RIA Compliance Programs
  • Never-Before and Not Recently-Examined RIAs
  • Mutual Funds and ETFs
  • RIAs to Private Funds
• Additional Focus Areas Involving Broker-Dealers and Municipal Advisors
  • Broker-Dealer Financial Responsibility
  • Trading and Broker-Dealer Risk Management
  • Municipal Advisors
• AML Programs
• Market Infrastructure
  • Clearing Agencies
  • National Securities Exchanges
  • Regulation Systems Compliance and Integrity (SCI)
  • Transfer Agents
• Focus on FINRA and MSRB

Read More >

IRS Updates Its Online W-4 Estimator

The changes to the online withholding estimator is a welcomed change to the earlier versions. The Tax Cuts and Jobs Act of 2017 dramatically changed how individual income tax is calculated. Form W-4 and the online estimator were slow to reflect these changes. As a result, many taxpayers were surprised by their tax owed to the IRS. Even though most taxpayer’s overall tax liabilities were decreased by the new law, the withholding against the new liability was not enough. Therefore, taxpayers were surprised by the amount their usual refunds were reduced or the amount their usual tax bill grew. The new online estimator attempts to more accurately calculate the appropriate withholding amounts for taxpayers to achieve their desired goals (e.g.: receive a refund).

Read More >

SDDco SERVICE OF THE MONTH:

Looking for a Principal Financial Officer (PFO) and Principal Operations Officer (POO)?

Pursuant to FINRA Regulatory Notice 17-30, all Broker-Dealers are required to designate a PFO and POO.

SDDco-PC will assign a qualified series 27 licensed individual to be designated as your firm’s POO with primary responsibility of overseeing that the day-to-day operations of your business are properly supervised by assigned personnel. This includes overseeing the receipt and delivery of securities and funds, safeguarding customer and firm assets, calculation and collection of margin from customers and processing dividend receivables and payables and reorganization redemptions and those books and records related to such activities.

IN THE SPOTLIGHT

Keep a lookout for us at upcoming conferences!

• Empire Startups
• New York, NY | April 1, 2020
• Register Now: https://empirestartups.com
• FINRA ANNUAL
• Washington DC | May 12-14, 2020
• Register Now: https://www.finra.org/events-training/conferences-events/2020-finra-annual-conference
• NSCP National
• Baltimore, MD | Oct 19-21, 2020
• Register Now: https://national.nscpconferences.org
• FINRA Small Firm
• Santa Monica, CA | TBD

Let’s try to connect!

SDDco Group makes this general information available for educational purposes only, the contents of which were not originated from SDDco. SDDco is not affiliated with any of the publishing persons or entities of the articles herein. The information provided should not be construed as legal advice. This email may constitute an advertisement under U.S. law.

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