RIA Compliance Consultants & Services
RIA Compliance Team Lead
Former DOJ Trial Attorney
Contact John directlyRegistered investment advisors (RIAs) face a daunting task in complying with all of the laws that regulate their industry. Failing to do so can lead to intrusive investigations by federal and state law enforcement agencies, awkward allegations of misconduct that can create bad publicity and harm your professional reputation, and the potential for civil or even criminal liability for securities fraud.
The securities compliance professionals at the national law firm Oberheiden P.C. have guided numerous regulated securities professionals, including RIAs, through the complex and ever-shifting minefields of legal compliance.
A Wide Variety of Laws Govern RIA Practice
As a type of regulated securities professional, RIAs have numerous state and federal laws to comply with. Just a few of the federal laws that RIAs need to keep in mind are the:
- Securities Act of 1933
- Securities Exchange Act of 1934
- Trust Indenture Act of 1939
- Investment Advisers Act of 1940
- Investment Company Act of 1940
- Sarbanes-Oxley Act of 2002
- Dodd-Frank Act of 2010
Many of these federal securities laws empower the U.S. Securities and Exchange Commission (SEC) to promulgate additional rules and regulations to better enforce the statute. Many of these rules, like the infamous Rule 10b-5, which vaguely forbids a “course of business which operates… as a fraud or deceit upon any person” when dealing in securities, are extremely broad and arguably give the SEC jurisdiction over conduct that was unimagined by the lawmakers who crafted these federal securities laws.
This makes compliance tricky. When the SEC, or even the private regulatory organization for the securities field, the Financial Industry Regulatory Authority (FINRA), can craft rules that carry the force of law over regulated securities professionals, keeping up to date on what rules you have to follow can be difficult. New rules can be made, and existing ones deleted or drastically altered, in a matter of months.
Moreover, complying with these laws and regulations is made even more complicated because RIAs are different from the traditional professions that these laws were made to cover, such as broker-dealers, who are licensed to sell individual securities on behalf of a client. RIAs, on the other hand, act as consultants for investors and are not licensed to sell the securities, themselves. Instead, RIAs offer experienced advice to their clients on how to make the best investments, given their client’s financial goals. This means that some of the provisions in state and federal securities laws that apply to broker-dealers and the firms that they work in will not apply to RIAs.
Parsing the irrelevant rules from the ones that you have to follow as an RIA can be extremely dicey. In the best of cases, a mistake can mean that you act inefficiently as you spend time and resources satisfying a legal obligation that does not apply to you. In the worst of cases, a mistake can mean that you are conducting business in violation of state or federal law, exposing you and your investment firm to legal liability.
Put our highly experienced team on your side
RIA Compliance Services at Oberheiden P.C.
Given the complexities that are inherent in RIA professionals complying with state and federal securities laws, it is not uncommon for investment firms to seek the assistance of securities lawyers or compliance professionals.
At Oberheiden P.C., we have both on our staff.
Many of our compliance professionals have worked as investigators within the federal agencies that are tasked with enforcing U.S. securities laws, including the SEC, the Department of Justice (DOJ), and the Federal Bureau of Investigation (FBI), or have spent time working at FINRA. They have an intimate, insider’s understanding of how federal securities laws are enforced and investigated. This makes them ideal compliance professionals, as they have first-hand knowledge of what sorts of business practices raise the suspicion of regulators and can attract an invasive investigation into your investment consulting firm.
Meanwhile, all of the attorneys at Oberheiden P.C. are senior-level securities litigation lawyers, with extensive experience defending against allegations of securities fraud. They have seen how noncompliant business practices have led to serious accusations of fraud and other illegal activity.
Together, our legal and compliance teams can help RIAs undertake a wide variety of compliance measures that can drastically reduce the legal liability that they are exposed to. Whether you are just starting up your investment firm, tweaking or reviewing your compliance protocols, or have learned that you are under scrutiny by regulators, our proactive approach to compliance can help with:
- CRS Forms
- ADV Forms, including ADV amendments like the annual Schedule I amendment
- U4 and U5 filings
- Marketing and sales compliance measures
- Data retention and cybersecurity policies
- Maintaining books and records
- Creating business practices brochures that showcase your firm’s credentials without violating the law
- Reviewing contracts related to investment advice
- Business continuity plans
- Reviewing potential conflicts of interest
- Creating or updating privacy policies and codes of ethics
- Updating the firm’s Policy and Procedures Manual
Frequently Asked Questions About Oberheiden P.C. and RIA Compliance
What are the Consequences of Noncompliance?
It really depends on the nature of the noncompliance. For example, an RIA that was not complying with recordkeeping requirements will not face the same consequences as an RIA that was using and following a Policy and Procedures Manual that allowed them to breach their fiduciary duty to their clients without violating the contract. The first may be let off with a warning and instructions on how to come into compliance, and may face closer scrutiny in the future. The second may find themselves facing a criminal charge of embezzling client funds.
In either case, the steps that you took to achieve compliance will make a difference in the outcome of your case. Even if your compliance efforts were proven to have come up short, your intent in taking those efforts matter. If it is clear that you strove to comply with the law and there are strong indications that you put that intention into practice, regulators are far more likely to give you the benefit of the doubt. On the other hand, if there is a culture of immunity from the law at your firm, even minor instances of noncompliance can lead to significant repercussions.
What are the 3 Types of SEC Enforcement Actions?
When the SEC investigates potential instances of noncompliance by an RIA, the evidence that the investigation uncovers will influence how the agency will move forward. It has three options to choose from:
- Criminal referral
- Civil claim
- Administrative claim
These are in decreasing order of severity.
If the SEC investigates a potential instance of noncompliance and uncovers securities fraud, coupled with the intent to defraud the victims, it will refer the case to the DOJ or the FBI for criminal prosecution.
Securities fraud without the culpable mental state or intent to defraud is generally pursued with a civil lawsuit by the SEC. While prison time is not on the table, the financial repercussions can be severe and the publicity generated by a court case can hobble your professional future.
Less severe allegations are resolved within the SEC in an administrative process. These may impose fines but can also suspend or revoke the professional licenses that you need to practice.
What Sets Oberheiden P.C. Apart from Other Compliance Firms?
When it comes to RIA compliance, there are several reasons to choose Oberheiden P.C. over other compliance firms. Here are two of them.
First, we house both attorneys and compliance professionals under our roof. This diversity of background and focus means that you can count on our compliance strategies to be grounded in prior cases that have gone well, as well as others that have gone poorly. Our attorneys know what compliance protocols fail and why, having been called in to defend regulated securities professionals countless times in the past. Our compliance professionals use that experience to craft better ones for you and your firm.
Second, we are a national firm that can guide you through the compliance process wherever you are. Our firm is headquartered in Houston and Dallas, Texas, but has offices across the country.
Why Don’t You Call Yourselves the Best RIA Compliance Provider?
We would rather let our work stand for itself. Read the testimonials of our prior clients to decide if it does.
Oberheiden P.C.: Helping RIAs Come Into Compliance Without Sacrificing Business Efficiency
One of the most important aspects of compliance to appreciate is that it requires a balance: You want to minimize your legal exposure, but also to achieve this goal without saddling your firm with onerous requirements that sap its resources and undermine its financial success. Coming into complete compliance cannot be so costly that it would sink the company.
The compliance professionals at Oberheiden P.C. know this and strive to achieve a level of compliance that they, in their numerous years of experience, have found to be reasonable for RIAs, all while minimizing the sacrifice of your firm’s time and resources. We know that you want to focus on helping your clients make sound investments. Our goal is to ensure that you can do this in confidence that all of your business practices fall on the right side of the law.
Reach out to Oberheiden P.C. by calling our national law offices at (888) 680-1745, by contacting us online, or by initiating an online chat through our website.