Regulation r what now
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Regulation R What Now?. Kathryn Vest 2012 FIRMA Conference. Back to the basics. Trust & Fiduciary Exemption Compensation calculations are being done. Permissible gyrations Accounts open < 3 months De minimis accounts Bank versus account-by-account Still over 90%?? 95%?

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Regulation R What Now?

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Regulation r what now

Regulation RWhat Now?

Kathryn Vest

2012 FIRMA Conference


Back to the basics

Back to the basics

  • Trust & Fiduciary Exemption

    • Compensation calculations are being done.

    • Permissible gyrations

      • Accounts open < 3 months

      • De minimis accounts

      • Bank versus account-by-account

    • Still over 90%?? 95%?

    • Have you checked your inputs? Are you picking up any new compensation schemes?


Back to the basics1

Back to the basics

  • Safekeeping & custody exemption

    • Employee & entity compensation

    • Investment advice restriction

  • Money market mutual fund sweep exemption

    • Load vs. No load funds

  • Networking Exemption

    • Nominal & higher-than-nominal options

    • Details, details


What s old is new again

What’s old is new again!

  • No regulatory guidance or interpretation, as promised!

  • No change to the regulations…no commentary…no major findings.


What s missing

What’s missing?

  • Further clarification & definitions

    • Non-relationship compensation

    • Accommodation trades

    • Advertising restrictions

  • Bank referrals routed through dual employees


Building a referral program where are the compliance risks

Building a Referral ProgramWhere are the compliance risks?

  • After a round of golf, a new to small town broker/dealer approaches a trust company president about acting as a referral source.

  • Trust company president thinks his employees would react well to the potential added income so he says yes.

  • The broker/dealer is willing to pay $35 for each referral that results in a sale.

  • Each trust advisor receives a beach ball and $25 gas card after their first referral.


Building a referral program continued

Building a referral program,continued

  • Plus, for each of the 3 trust company branches, the broker/dealer will award $100 to the branch manager whose branch makes 10 or more referrals.

  • Would it help if the trust advisors and/or client support staff were licensed with the broker/dealer?

  • Could trust company branch managers still get the $100 promised?


Building a referral program continued1

Building a referral program,continued

  • Could the broker/dealer invite trust company employees (not licensed) to an educational seminar?

  • What if they have to pass along a certain number of referrals to qualify for the seminar to be held in Cancun?


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