25 episodes

Meet Patrick Hayes, investment management counsel at Calfee, Halter & Griswold and your host for The Securities Compliance Podcast presented by the National Society of Compliance Professionals. A personal master class for the securities legal and compliance professional, Patrick’s passion is to help you put Compliance In Context™ by combining the technical expertise of industry thought leaders and innovators with the practical experience of doers and key decision-makers. Listen today to help elevate your firm’s compliance program and take your career to new heights.

The Securities Compliance Podcast: Compliance In Context Patrick Hayes

    • Business
    • 4.9 • 25 Ratings

Meet Patrick Hayes, investment management counsel at Calfee, Halter & Griswold and your host for The Securities Compliance Podcast presented by the National Society of Compliance Professionals. A personal master class for the securities legal and compliance professional, Patrick’s passion is to help you put Compliance In Context™ by combining the technical expertise of industry thought leaders and innovators with the practical experience of doers and key decision-makers. Listen today to help elevate your firm’s compliance program and take your career to new heights.

    S3:E11 | Marketing Rule Master Class Episode 6 - Implementation | Compliance in Context

    S3:E11 | Marketing Rule Master Class Episode 6 - Implementation | Compliance in Context

    Welcome to Episode 6 of the Marketing Rule Master Class mini-series.  In our final episode we are building upon the lessons learned in the prior five episodes with a focus on key compliance considerations for implementing the Marketing Rule.  Moderator Carlo di Florio, ACA, along with panelists Craig Watanabe, DFPG Investments, Chas Spiros, ACA, and Julia Reyes, ACA, discuss implementation timelines and challenge, incorporating the right policies and procedures for your firm, training and educating key stakeholders inside your firm, and how technology can help with implementation, execution, and ongoing monitoring.  Thank you for joining us for the Marketing Rule Master Class mini-series!
     
    Show

    02:12: Implementation timelines and main challenges
    17:51: Key consideration in drafting policies and procedures
    31:57: Key considerations in marketing approval workflows
    48:30: Setting a date for implementation and training
    54:40: Suggestion for testing and monitoring
    1:00:20: How can technology help with implantation, execution, and monitoring

     
    Quotes
    02:27 - “It can be very helpful to break it down into distinct phases that are, maybe a little bit more manageable. So with regard to the task at hand–the marketing rule–I would break it down to four phases. 1, drafting your policies and procedures. 2, creating or modifying your marketing review workflows. 3, setting a date for implementation and training. And then 4th, performing testing and monitoring.” - Craig 
    6:44 – “I can summarize my thoughts in one word, that is, assessment.  I think that each firm needs to do an assessment based upon how this rule will impact them and how based upon their assessment, then try to coordinate, and it might be helpful to go back to the four steps I outlined previously and design a timeline that makes sense to the firm.” - Craig
    08:18 - “From a practical standpoint, one of the things that I’ve seen via our marketing reviews is really substantiation. You’ll be surprised how many firms will say, ‘We are the best at doing x, y, and z.’ And if Julia and I are in a review, we’ll say, ‘If the FCC were here on an exam, could you produce that in a relatively quick manner?’ and in most of the cases it’s no. It could be a rating, an award that they’re citing. That could be just where they’re getting some sort of impetus for why they are the best at what they do.” - Chas 
    20:29 – “You can make decisions to go above and beyond the rule for operational continuity, ease and what you think works best to achieve the objectives of the rule. – Carlo
    21:40 – “This is a real opportunity for compliance teams to gain parity with internal business groups that had not existed in the past.” – Chas
    28:31 – “For us as compliance officers, we have to expand our horizons beyond the written word." – Craig
    57:16 – “There are times we have seen inception returns back to 1988.  I think it might be worth taking a look at those really long histories to see if you still do have the substantiation.” – Julia
     
    Resources
    ACA Group Marketing Rule Res

    • 2 hr 47 min
    S3:E10 | Marketing Rule Master Class Episode 5 - Adventures in Marketing | Compliance in Context

    S3:E10 | Marketing Rule Master Class Episode 5 - Adventures in Marketing | Compliance in Context

    Welcome to Episode 5 of the Marketing Rule Master Class mini-series.  Episode 5 focuses on testimonials, endorsements, and third-party ratings. Moderator, Patrick Hayes, Calfee and panelists Jaqueline Hummel, ACA, Anthony Dillingham, ACA, and Matt Shepherd, ACA, delve into the nuances and traps for the weary when utilizing testimonials, endorsements and third-party ratings.  While the new rule is a potential game-changer for firms, actual implementation comes with caveats and compliance burdens.  We hope you enjoy this installment of the Master Class mini-series!
     
    Show
    Interview with Jacqueline Hummel, Anthony Dillingham, Matt Shepherd

    7:11: Review of the industry (social media, adoption and entanglement, live presentation/speeches, inadvertent endorsements).
    45:36: Building the right disclosures (disclosure of compensation and conflicts of interest)
    1:01:40: Third Party Ratings
    1:08:20: How will this area be reviewed by the Division of Examinations?

     
    Quotes
    07:33 - “The prior advertising rule contained an outright prohibition against the inclusion of testimonials and over time that was supplemented by a series of no-action letters where essentially the industry was writing to the SCC and saying, ‘If we do this, is this a testimonial?’ And they would say, ‘Well, maybe but not if you do it this way.’” - Matt 
    10:04 - “The definition of endorsement and testimonial… They’re not the same but they are very, very similar. So, just for the sake of keeping the conversation simple, I’m going to say that they’re basically the same and what’s different between the two is the identity of the person who makes that statement.” - Matt  
    18:48 - “You still have to remember that no matter what you put out there you are still subject to the fraud provision of the Advisers Act.” - Jacqui
    31.52 – “The degree of adoption and entanglement, whether a third-party communication is even going to be deemed an advertisement of the adviser at all, is going to be dependent on the extent the adviser has adopted or entangled itself.” – Patrick
    49:57 – “There is still going to be a dichotomy between state registered investment advisers and federally registered investment advisers.  So, while many states will follow the SEC’s lead, there are still exceptions.” – Jacqui
    1:03:32  - “It is always best practice to disclose whatever the reader, or listener, or the watcher of that marketing material would want to know.  What does this rating mean in context and how did you get it?”– Jacqui
     
    Resources
    ACA Group Marketing Rule Resource Library
    LinkedIn: ACA Group, Compliance in Context, NSCP
    Twitter: @acacompliance, @compliancepod
    Websites: ACA Group,

    • 1 hr 11 min
    S3:E9 | Marketing Rule Master Class Episode 4 - Performance | Compliance in Context

    S3:E9 | Marketing Rule Master Class Episode 4 - Performance | Compliance in Context

    Welcome to Episode 4 of the Marketing Rule Master Class mini-series focused on performance.  In our fourth episode of the master class, moderated by Carlo di Florio, ACA Group, you will hear from Karyn Vincent, CFA Institute, Janice Kitzman, Cascade Compliance, Julia Reyes, ACA Group, and Shivani Choudhary, ACA Group, as they discuss the various Marketing Rule performance requirements including how they compare and contrast with GIPS 2020. Our panelists will provide practical advice and insights as to how best to set your compliance program up for success.  We hope you enjoy this installment of the master class series!
     
    Show
    Interview with Karyn Vincent, Janice Kitzman, Julia Reyes and Shivani Choudhary

    3:09: Net vs Gross Performance
    16:22: 1, 5, ads 10-year requirements
    25:00: Related performance
    40:03: Extracted performance - attribution
    51:43: Hypothetical performance
    1:07:15: Portability of performance
    1:10:58: Recordkeeping

     
    Quotes
    4:43 – “Given that the definition of performance refers to a portfolio, I think it’s reasonable to assume that performance does not include items that are meant to be analyzed or be composed for portfolio performance.  For example, standard deviation and other risk measures are not the returns of a portfolio.”  - Karyn
    12:48 – “Whatever you are providing to a prospect investor, at the end of the day would that be construed as misleading or not is the mindset you should be thinking about.” – Julia
    20:31: “I am a big believer in updating GIPS report annually and just leaving them alone. [In times of market volatility] the safest approach is to include any other performance information including year-to-date returns either in other materials or maybe as an attachment to the GIPS report.  If the GIPS report is used as a standalone advertisement it has to meet all of the requirements of the Marketing Rule.  This is what many firms do now and should continue with this approach.”  - Karyn
    31:57: “GIPS compliant firms will definitely have a leg up with the Marketing Rule because they will have already calculated composite returns that they too will consider meet the requirements of the Marketing Rule” – Karyn
    57:49: “Every time someone turns around with [a] model, and it’s often a chain, that is being used within these platforms, you have to stop and say is it ok that I am giving this performance to people.  There is going to come a time when you say, “no.” - Julia

    • 1 hr 17 min
    S3:E8 | Marketing Rule Master Class Episode 3 - Impact on Private Funds | Compliance in Context

    S3:E8 | Marketing Rule Master Class Episode 3 - Impact on Private Funds | Compliance in Context

    In the third episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Patrick Hayes, Calfee along with our industry panelists Genna Garver, Partner, Troutman Pepper, Bree Ward Associate, Akerman LLP, Matt Shepherd, Director, ACA Group. Together, we’ll discuss the general impact of the new Marketing rule to Private Funds. We’ll dive into the requirement to present net performance, the application of related performance to private funds, and considerations around hypothetical performance. We’ll also take a look at other relevant marketing rules and prohibitions that still apply.
    With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! 
     
    Show
    Interview with Genna Garver, Bree Ward, Matt Shepherd

    1:50: Introductions
    4:12: Impact of the new rule to Private Funds
    15:08: Performance
    19:15: Extracted Performance
    32:18: Related Performance
    43:35: Hypothetical Performance
    55:10: Endorsements: Replacement of Cash Solicitation Rule, Disclosures, Cap Intro Programs, and Testimonials
    1:13:10: New private fund rule proposals

     
    Quotes
    07:26 –“The big take-away here is that the marketing rule is a merger of the prior cash solicitation rule and the advertising rule... Out of the gate, the combined rule, on its face because of the two-pronged definition to the term advertisement bring in pooled investment vehicle private fund, in particular investors, for compliance generally for both rules and that’s a fundamental shift for how the prior rules both operated.” – Genna
    14:11 – “As a practitioner, either on the legal side or the compliance side, you have to presume that written materials or recordings are going to be deemed advertisements. – Genna
    18:00 – “Historically, some information has only been presented gross because it’s either mathematically difficult or impossible to come up with a net version of that number. Or is it meaningful to present a net version of that number... The problem is that the rule creates this new definition called extracted performance… The rule explicitly says, if you show extracted performance it must be shown net and that’s a problem. “ - Matt
    1:14:37 – “Get your policies and procedures drafted in a way that really tries to catch the ethos of this rule. Which is: Is it fair and balanced? Are you making disclosures? And try to capture your processes in a way that makes sense, that you can justify them, and then follow them.” – Bree
     
    Resources
    ACA Group Marketing Rule Resource Library
    LinkedIn: ACA Group, Compliance in Context, NSCP
    Twitter: @acacompliance, @compliancepod
    Websites: ACA Group,

    • 1 hr 20 min
    S3:E7 | Marketing Rule Master Class - Episode 2 Overview of the Rule and Tricky Legal Aspects | Compliance in Context

    S3:E7 | Marketing Rule Master Class - Episode 2 Overview of the Rule and Tricky Legal Aspects | Compliance in Context

    Welcome back! In the second episode of our new master class series on the SEC Marketing Rule! You’ll hear from host, Carlo di Florio of ACA Group along with our industry panelists Issa Hanna, Partner, Eversheds Sutherland, Amber Allen, VP and General Counsel, Fairview Investment Services, and Chas Spiros, Principal Consultant, ACA Group. Together, we’ll provide additional insights on the new rule, including misconceptions, key definitions, timelines, ADV changes, and key features. We’ll also cover tricky legal aspects like promoter vs. solicitor and the withdrawal of no-action letters.
    With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! 
     
    Show
    Interview with Issa Hanna, Amber Allen, and Chas Spiros

    2:30: Overview of the rule and additional insights
    8:30: Practical application of the rule: What is and isn’t an advertisement?
    14:17: Prohibitions: What will be prohibited under the new rule?
    20:30: Solicitors and Promoters: How does solicitation fit within the framework?
    35:25: Performance: What the requirements that apply to performance?
    53:45: Form ADV and Books and Records: Are there changes to other rules?

     
    Quotes
    5:30 – “They made the rule more evergreen so it could withstand the test of time; and to the extent that mediums of communication change overtime … the rule is equipped to handle that.” - Issa
    10:00 – “What I think firms will have to get used to and what is new are the compensated testimonials, and endorsements, and third-party ratings. Firms are going to have to have a mechanism for reviewing this material and memorializing it from a books and records perspective which will be really critical.” – Chas
    15:28 – “Instead, firms should use a layered disclosure approach. If you’re going to highlight a benefit of your advisory services, for example, you should also be talking about the material risks that are associated with that benefit. And the risks should be discussed within the “four corners” of the ad.”- Amber
    17:09 – “If you’re trying to rely on something being an opinion, you want to make sure that your advertising piece is couching that statement like “in our BU” or “we believe.”” – Amber 
    25: 33 – “When it comes to testimonials and endorsements, just because something falls within the definition of a testimonial or endorsement doesn’t necessarily make it a prong 1 or prong 2 endorsement under the rule. It has to be compensated, adopted, or entangled by the advisor. There has to be one of those things going on before the endorsement or testimonial becomes an advertisement under the rule and the requirements of the rule kick in.” – Issa 
    48:53 – “One important component of the application of the new rule is going to be the training component. So with all of these changes with how firms are presenting performance it’s really important to make sure your marketing team is trained well in advance of that November 4 deadline.” - Amber
     
    Resources

    • 1 hr 6 min
    S3:E6 | Marketing Rule Master Class Episode 1 - Background and Observations on the New Rule | Compliance in Context

    S3:E6 | Marketing Rule Master Class Episode 1 - Background and Observations on the New Rule | Compliance in Context

    Welcome back to Compliance In Context podcast! We are incredibly pleased to announce the release of our new master class series on the new SEC Marketing Rule! In our first episode of the master class, you’ll hear from our co-hosts, Patrick Hayes, Calfee and Carlo di Florio, ACA Group along with our industry panelists from the SEC, Steven Levine and Chris Mulligan, as we provide background on the new SEC Marketing Rule and why it was developed. We’ll cover key nuances to the rule, the founding principles behind the rule, and feedback that the SEC has received from the industry. We’ll also explore how the Division of Examinations has prepared to examine for the new rule and lessons learned from early adopters. With just three months until the compliance date for the new rule, this series is the perfect master class to set you and your firm up for success. Listen and enjoy! 
     
    Show
    Interview with Steven Levine and Chris Mulligan

    2:30: Motivation for the new SEC Marketing Rule
    8:00: Fundamental principles
    10:49: Key Nuances and FAQs
    20:00: Feedback from the industry
    23:11: Impact of comment letters
    28:13: Impact of the new rule on SEC Examinations
    32:47: Review of policies and procedures during examinations
    48:00: Application to compliance programs

     
    Quotes
    03:13 – “The existing regulatory regime that we were working with was potentially a bit dated. The advertising rule that was in existence before this most recent rule adoption, was adopted in 1961. So we were dealing with an advertising rule from 1961 and there was a cash solicitation rule that was adopted in 1979. Decades have gone by since those rule adoptions.” – Steven
    04:33 – “One of the motivators for this most recent marketing rule was to put everything in one place. Eliminate the system that we currently had where there were a bunch of pieces of relief all over the place and just codify everything at the commission-level into a single rule. The hope there is that everyone would be on the same page in the industry as to what the guideposts are for operating at this space.” – Steven
    13:00 – “And that FAQ basically says that an advisor may–but is not required–to comply with the new marketing rule in advance to the new compliance date. However, if an advisor chooses to comply with any part of the new marketing rule, it must shift it’s compliance program over too. Basically, it must comply with all of the rule, not only part of it.” – Steven 
    18:30 – “In order to demonstrate to the SEC staff that a particular advertisement complies with the rule, pointing to a no-action letter is no longer an acceptable way to do that. There has to be something within the rule itself or be adopting release that justifies the underlying content that is being questioned.” – Steven
    32:47 – “I think any tips I could give is, start with your policies and procedures. Start with your policies and procedures. That’s where we’re going to look at first, right? You have to, at least, acknowledge, like, we’re going to want to know that you’ve acknowledged that the world has changed and there’s a new rule, right? And that is kind of expressed through your policies and procedures.” – Chris
    49:37 – &ldq

    • 1 hr 2 min

Customer Reviews

4.9 out of 5
25 Ratings

25 Ratings

Mahendra S. Rathore ,

Excellent Podcast! Congratulations to Mr. Hayes! I look forward to many more like

Thanks again!!

GW2021 ,

Excellent content!

Great podcast covering wide range of securities topics. Guests are interesting and relevant

Usbqbcos ,

Impressive!

Patrick does a great job of explaining some tough materiel concisely and with ease. I imagine his podcast will have a very big audience very soon!

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