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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

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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