Event Summary: 2023 Charlotte Regional SIFMA C&L Regional Seminar

In the ever-evolving landscape of financial regulation and compliance, staying ahead of the curve is paramount for financial professionals and organizations alike. I attended the SIFMA C&L Regional Seminar in Charlotte this month where speakers and panelists discussed various crucial aspects. Here are a few key themes that emerged.


One of the primary areas of concern for FINRA in the coming year is cybersecurity. With the increasing frequency and sophistication of cyberattacks, the financial industry must remain vigilant. Ransomware attacks in particular have been a growing menace. In addition, fraudsters are employing sophisticated tactics, such as connecting fraudulent new account openings with fraudulent ACAT transfer requests, effectively siphoning off assets and vanishing into the digital abyss. Crypto security has also become a critical issue, given the rise of digital assets and cryptocurrencies.

Regulation Best Interest

Regulation Best Interest (Reg BI) remains a central concern for FINRA, the SEC, and the financial industry at large. Individual speakers and panelists throughout the day focused attention on compliance and examination/enforcement expectations.

Greg Ruppert, Executive Vice President, Member Supervision, at FINRA, provided a few key insights from the perspective of the regulator:

  • Beyond merely confirming the presence of high-level policies and procedures, regulators are now scrutinizing firms for specific instances of investor harm.
  • Dual registrants are under the microscope.
  • The gap between the Fiduciary Standard and Best Interest is narrowing, meaning the traditional opinion around “that doesn’t apply to me” is no longer going to be acceptable.
  • SEC and FINRA are working in tandem to ensure coordinated examinations, reducing duplicative effort and showing a much higher level of collaboration.
  • The “check-the-box” approach to compliance is discouraged, as it often leads to inadequate training for financial professionals and generic, template-based compliance efforts.

In addition to Mr. Ruppert’s commentary, industry experts from Wells Fargo, LPL Financial, and Sidley Austin provided their insights on complying with the Care Obligation. The rhetoric was similar to that of Mr. Ruppert, indicating a higher degree of cooperation between the regulators and a deeper dive into more granular Reg BI topics, including the need to prove specific rationale for scores of selected transactions during your examinations.

Panelist Alex McCoy, Senior Vice President, Risk & Compliance, LPL Financial, discussed at length how firms need to be thinking about their Reg BI programs. Some key points from Mr. McCoy were:

  • Make sure you educate your financial professionals about what your program means to you, them, and your firm. Education and training will be just as important as compliance and supervision.
  • This is not a one-size-fits-all opportunity. Your program will be different if you are a single vs. dual registered firm; if you offer an open architecture for your investment products or if you have a more closed architecture that focuses on proprietary products.
  • The account type rationale will be important, as it sets the stage for the relationship with your client, what strategies they invest in, what products are available to them, their trading preferences, and the list goes on. Do not underestimate the importance of the account type selection.

Speaking of the account-type rationale, a panelist from the Securities Enforcement and Regulatory Developments panel highlighted recent arbitrage cases involving schemes to increase revenue for the financial professional, and how they also may be tied to the original rationale for the appropriate account type. In the example, an advisor recommended the purchase of a Variable Annuity in a commission-based account, and then transferred the annuity to a fee-based account, thereby collecting commissions and AUM fees. Where this connects to the account type rationale is that an advisory share class option was available all along, and the advisor should have recommended the direct purchase into the advisory account.

Off-Channel Communications

Off-channel communications presents a unique challenge for firms and was discussed in many sessions. Mr. Ruppert stated that FINRA is interested in exploring best practices for dealing with these communications, and they will be hosting a roundtable in the coming months.

Other panelists also discussed the issue with off-channel communications, more focused on available technologies, identification of red flags, and follow-up and remediation strategies for when flags are identified. Compliance teams need to ensure that any issues are followed up in a timely manner, and remediation steps are documented.

Artificial Intelligence

Artificial Intelligence (AI) is becoming increasingly prevalent in the financial industry and was another topic that spanned multiple sessions. Mr. Ruppert commented on the importance for firms to understand the nuances between Generative AI, Machine Learning, and intelligent business rules. He also was clear that it is crucial to understand the technology you are using.

Other panelists on the Impact of AI on our Industry panel commented on how AI’s influence on the financial industry is undeniable. It excels at pattern recognition and large data/text summarization, which will provide huge benefits for the Compliance and Supervision areas. While AI is unlikely to replace human jobs entirely, those who embrace and effectively use AI will have a competitive advantage. However, careful oversight of AI outputs is essential to ensure accuracy, especially as AI systems continually learn and evolve. Compliance and Supervision teams need to monitor and have oversight of the output. Recognizing and addressing issues arising from AI implementation will be essential to maintain compliance.



In conclusion, this year’s SIFMA C&L Regional Seminar in Charlotte shed light on the challenges and opportunities that lie ahead in the financial industry. To thrive in this dynamic landscape, organizations must prioritize cybersecurity, respond to the growing best interest compliance, and conduct responsible AI adoption. By staying informed and proactive, financial professionals can navigate the regulatory landscape successfully and provide the best possible service to their clients.


By: Randy Barnes, Director of Sales and Product Engineering, InvestorCOM