New SEC variable contract summary prospectus rules: an implementation project plan

2020 ◽  
Vol 21 (2/3) ◽  
pp. 151-166
Author(s):  
W. Thomas Conner ◽  
Nathaniel Segal ◽  
John M. Sanders
Keyword(s):  
Cost Savings ◽  
Insurance Companies ◽  
Project Implementation ◽  
Regulatory Requirements ◽  
Implementation Plan ◽  
Content Type ◽  
Disclosure Requirements ◽  
Policies And Procedures ◽  
Project Plan ◽  
Practical Implications

Purpose To analyze the SEC’s newly adopted Rule 498 A, the variable contract summary prospectus rule, and concurrently adopted prospectus disclosure requirements in order to propose to insurance companies issuing variable contracts a project implementation plan for companies seeking SEC approval for summary prospectuses compliant with the new rules. Design/methodology/approach Discusses the history, requirements, effects, and expected implementation timeline of the new rules, then offers a detailed project plan and timeline for compliance. Findings The Rule does not require insurers to use summary prospectuses, but there are several compelling reasons for doing so. The Rule allows insurers to use a new concise and brief selling document, and by so doing to begin generating very significant cost savings as soon as May 1, 2021. The article provides a detailed implementation plan for insurance companies that want to comply with the new prospectus disclosure requirements and implement policies and procedures to begin using summary prospectuses. Practical implications A coordinated project implementation plan like that outlined in the article might assist insurance companies to make the requisite statutory prospectus revisions and prepare and obtain SEC approval of summary prospectuses by May 1, 2021. Originality/value Analysis from experienced attorneys who frequently advise insurance companies issuing fixed and variable annuities, and assist clients in navigating the complex regulatory requirements governing insurance and securities products.

SEC and FINRA broker-dealer exam priorities for 2019: how to prepare

2019 ◽  
Vol 20 (4) ◽  
pp. 1-8
Author(s):  
Laura S. Pruitt ◽  
David P. Bergers ◽  
Eric A. Love
Keyword(s):  
Financial Risks ◽  
Financial Industry ◽  
Regulatory Requirements ◽  
Content Type ◽  
Policies And Procedures ◽  
The Us ◽  
Retail Investors ◽  
Market Infrastructure ◽  
Practical Implications ◽  
Digital Assets

Purpose The purpose of this paper is to summarize and analyze the 2019 broker-dealer examination priorities of the Financial Industry Regulatory Authority (“FINRA”) and the US Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”). Design/methodology/approach This paper provides an overview of the FINRA and OCIE examination priorities for the year, details particular aspects of both regulators’ priorities that may be of interest to broker-dealers and provides practical tips to prepare for a regulatory exam. Findings In 2019, OCIE intends to prioritize retail investors, compliance and risk in registrants responsible for critical market infrastructure, digital assets, cybersecurity and anti-money laundering programs. FINRA will focus on a number of materially new areas of attention, as well as on sales practice, operational, market and financial risks. Practical implications Broker-dealer firms should review their policies and procedures in the areas highlighted by FINRA and OCIE, both to ensure that the procedures are consistent with existing regulatory requirements and to assure that firm personnel are actually complying with those policies and procedures. In situations where the firm’s practices have changed over time, firms should amend their policies and procedures to comport with current practices. Originality/value This paper provides an overview of the notable aspects of both regulators’ examination priorities that are particularly relevant to broker-dealers and recommends ways that firms can prepare for examinations on those issues.

OCIE issues risk alert on the most frequently identified advisory fee and expense compliance issues

2018 ◽  
Vol 19 (4) ◽  
pp. 1-3
Author(s):  
Robert Van Grover
Keyword(s):  
Design Methodology ◽  
Best Practice ◽  
Investment Management ◽  
Content Type ◽  
Informed Decisions ◽  
Policies And Procedures ◽  
The Us ◽  
Investment Advisers ◽  
Practical Implications

Purpose To summarize and interpret a Risk Alert issued on April 12, 2018 by the US SEC’s Office of Compliance Inspections and Examinations (OCIE) on the most frequent advisory fee and expense compliance issues identified in recent examinations of investment advisers. Design/methodology/approach Summarizes deficiencies identified by the OCIE staff pertaining to advisory fees and expenses in the following categories: fee billing based on incorrect account valuations, billing fees in advance or with improper frequency, applying incorrect fee rates, omitting rebates and applying discounts incorrectly, disclosure issues involving advisory fees, and adviser expense misallocations. Findings In the Risk Alert, OCIE staff emphasized the importance of disclosures regarding advisory fees and expenses to the ability of clients to make informed decisions, including whether or not to engage or retain an adviser. Practical implications In light of the issues identified in the Risk Alert, advisers should assess the accuracy of disclosures and adequacy of policies and procedures regarding advisory fee billing and expenses. As a matter of best practice, advisers should implement periodic forensic reviews of billing practices to identify and correct issues relating to fee billing and expenses. Originality/value Expert guidance from experienced investment management lawyer.

The factors behind working in virtual community

2019 ◽  
Vol 12 (2) ◽  
pp. 246-267 ◽  
Author(s):  
Anitha Acharya
Keyword(s):  
Virtual Teams ◽  
Virtual Community ◽  
Cost Savings ◽  
Working Hours ◽  
Substantial Cost ◽  
Content Type ◽  
Part Time ◽  
Research Findings ◽  
Hourly Basis ◽  
Practical Implications

Purpose In this paper, the prior research on virtual teams was reviewed to assess the state of the literature. The purpose of this paper is to determine why individuals prefer working in virtual teams (also termed liquid workers and part-time workers). Previous researchers have focussed on the benefits that organizations receive if they hire liquid workers, but to date, no research has been conducted to determine the perspective of these liquid workers. The various definitions of virtual teams are discussed and an integrative definition is proposed that suggests all teams may be defined in terms of their extent of virtualness. Design/methodology approach A systematic review of the literature on virtual teams was conducted. The data were collected from 12 informants. A thematic analysis was used to analyse the data. Findings Six main themes were identified, namely, pliability, opportunities, increased earnings, vigour, family and transportation. Research limitations/implications This study was conducted in a three-metropolitan city in India and warrants being extended to rural and international settings to gain additional insights and confirmation of the research findings. Practical implications It is suggested that organizations who recruit liquid workers will be in a position for substantial cost savings; this is because organizations usually make payment of liquid workers’ wages on an hourly basis. This will help the organizations to schedule the number of working hours depending on their needs. Originality/value The current study is novel as there is a paucity of research in identifying the factors behind working in the virtual community in India. This study presents the first research of its kind to the best knowledge of the author, and the findings will be valuable for companies who are looking for cost savings.

CFTC overhauls customer protection requirements

2014 ◽  
Vol 15 (1) ◽  
pp. 25-32 ◽  
Author(s):  
Robert M. Brown
Keyword(s):  
Design Methodology ◽  
Commodity Futures ◽  
Regulatory Regime ◽  
Futures Trading ◽  
Content Type ◽  
Regulatory Response ◽  
Market Participants ◽  
Policies And Procedures ◽  
Practical Implications

Purpose – The purpose of the paper is to summarize the Commodity Futures Trading Commission's (CFTC) recent overhaul of its customer protection rules, which regulate how futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) handle customer funds. Design/methodology/approach – The paper summarizes the most significant aspects of the CFTC's October 30, 2013 customer protection rulemaking, explains FCM and DCO obligations under the new regulatory regime, and sets forth a compliance timeline. Findings – The CFTC's recent overhaul of its customer protection rules impose significant new requirements on FCMs and DCOs in their handling of customer funds. Practical implications – All FCMs and DCOs that handle customer funds should review these new rules and begin putting into place policies and procedures to ensure their compliance as each new requirement comes into effect. Originality/value – The CFTC's overhaul of its customer protection regime is new and significant. FCMs and DCOs need to understand their new obligations under the rules. As these new rules are the CFTC's regulatory response to the events that led to the insolvencies of MF Global and Peregrine Financial Group, these developments also should be of interest to futures and swaps market participants generally.

Bonding capability of Nigerian contracting firms

2018 ◽  
Vol 25 (6) ◽  
pp. 707-720 ◽  
Author(s):  
Ayodeji Emmanuel Oke
Keyword(s):  
Construction Projects ◽  
Design Methodology ◽  
Insurance Companies ◽  
State Governments ◽  
Legal Capacity ◽  
Years Of Experience ◽  
Past Performance ◽  
Content Type ◽  
Financial Strength ◽  
Practical Implications

Purpose The ability of construction contractors to engage in construction bond agreement with guarantors depends on capital, experience, capacity and continuity. Using these criteria, the purpose of this paper is to provide insights into the bonding capacity of Nigerian contractors. Design/methodology/approach Factors required for bonding were examined based on a set of questions addressed to managers of contracting firms and personnel involved in issuing bonds and guarantees in commercial banks and insurance companies. The scorecard approach was employed to determine the bonding capability of the contractors. Findings Contractors’ financial strength and past performance on previous projects are the two important factors considered by guarantors in granting bond to contractors. However, the condition surrounding the bond, the legal capacity of the guarantor to issue bond and the identity of the guarantor are mostly considered by contractors in approaching a potential guarantor. Using the scorecard approach, about one-third of contractors have the necessary requirements to engage in construction bond agreement with guarantors. This ability of contractors is affected by years of experience of the firm but not by their location nor years of experience of their manager. Practical implications It is necessary for contracting firms to increase their capital base through merging, borrowing, etc., and also engage experienced professionals and workers in the execution of construction projects, as this will eventually improve their bonding ability. Social implications The study is limited to construction contractors registered with Ondo and Lagos State Governments and guarantors that are banks and insurance companies in Nigeria. Originality/value The paper specified various areas of concerns for Nigerian contracting firms in their bid to enhance their bonding ability. This will help them in overcoming various challenges and bottlenecks that may arise in securing bonds and guarantees from guarantors.

TIP TIG: new technology for welding

2007 ◽  
Vol 34 (6) ◽  
pp. 462-466 ◽  
Author(s):  
Mike Wilson
Keyword(s):  
Design Methodology ◽  
New Technology ◽  
Cost Savings ◽  
Mig Welding ◽  
Typical Application ◽  
Good Opportunity ◽  
Content Type ◽  
Welding Technology ◽  
Practical Implications

PurposeThe paper aims to report on a new welding technology, TIP TIG.Design/methodology/approachThe principle of operation and benefits of the technology are described together with a typical application.FindingsThe study finds that the technology provides the quality of TIG welding at the speeds of MIG welding, providing significant cost savings to the user.Practical implicationsTIP TIG provides a good opportunity for all users of robotic MIG welding to improve the quality of their product and reduce their costs.Originality/valueThe paper introduces a new and useful technology to the robot industry.

Why brand drugs priced higher than generic equivalents

2015 ◽  
Vol 9 (1) ◽  
pp. 3-19 ◽  
Author(s):  
Kathleen Iacocca ◽  
James Sawhill ◽  
Yao Zhao
Keyword(s):  
Prescription Drugs ◽  
Wholesale Price ◽  
Cost Savings ◽  
Brand Names ◽  
Insurance Companies ◽  
Demand Model ◽  
Generic Competition ◽  
Content Type ◽  
Pharmaceutical Manufacturers ◽  
Structural Demand

Purpose – This paper aims to investigate why brand-name drugs are priced higher than their generic equivalents in the US market. The authors hypothesize that some consumers have a preference for brand names, which outweighs the cost savings realized by switching to generics. Consumers may prefer a brand drug because the brand may have a higher perceived quality due to advertising and other promotional activities. Additionally, individuals are habitual in their consumption of prescription drugs, which leads to continued use of the brand in the face of generic competition. Design/methodology/approach – The authors develop a structural demand model and proceed to estimate it using wholesale price and demand data from the years 2000 through 2004. Findings – The results of our analysis reveal that customers have a strong preference for brand drugs. In addition, consumers exhibit high switching costs for prescription drugs. Originality/value – Considering the price and quantity of prescriptions filled each day, determining why brand drugs do not lower their prices to compete with their generic equivalents is an important question. Unfortunately, the existing literature only acknowledges this counter-intuitive business practice, but does not mathematically explain it. The authors address this knowledge gap in literature and provide important insight for all players in this industry including consumers, pharmaceutical manufacturers and health insurance companies.

SEC releases enforcement division FY 2017 annual report: shift in tone and likely approach

2018 ◽  
Vol 19 (1) ◽  
pp. 15-19
Author(s):  
Matthew C. Solomon ◽  
Robin M. Bergen ◽  
Alexis Collins
Keyword(s):  
Asset Management ◽  
Design Methodology ◽  
Annual Report ◽  
Risk Profile ◽  
Content Type ◽  
Policies And Procedures ◽  
The Us ◽  
Retail Investors ◽  
Practical Implications ◽  
Insight Into

Purpose To discuss and analyze the US Securities and Exchange Commission’s (SEC’s) FY 2017 Annual Report, which details its priorities for the coming year and evaluates enforcement actions that occurred during FY2017. Design/methodology/approach Summarizes key shifts from FY 2016, outlines the Enforcement Division’s current priorities, and, in view of its stated focus on the conduct of investment professionals and protection of retail investors, provides guidance to the investment management industry as it gears up for the coming year. Findings The Report provides insight into changes in the SEC’s approach to enforcement actions, including a general shift in tone suggesting a more measured approach to enforcement and remedies and a move away from a statistics-oriented approach, and a glimpse into its priorities for the coming year, including five core principles guiding the Division’s enforcement decisions. Practical implications As those in the asset management industry consider revisions to their policies and procedures for FY 2018, as well as their risk profile more generally, they should keep in mind key insights into the Commission’s enforcement strategy offered by the Report. Originality/value Practical guidance from experienced securities enforcement, litigation, compliance and anti-corruption lawyers.

FINRA publishes guidance on research conflict of interest rules

2016 ◽  
Vol 17 (1) ◽  
pp. 45-50
Author(s):  
Timothy Burke ◽  
Jason Pinney
Keyword(s):  
Conflicts Of Interest ◽  
Selection Process ◽  
Valuable Insight ◽  
Financial Industry ◽  
Content Type ◽  
Risk Levels ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Research Analysts ◽  
Practical Implications

Purpose To explain recent guidance released by the Financial Industry Regulatory Authority (FINRA) regarding research analyst conflicts of interest that arise during the underwriter selection process. Design/methodology/approach The article discusses the risks associated with different communications between research analysts and issuers during the three phases of the underwriter selection process: the pre-IPO period; the solicitation period; and the post-mandate period. Findings While many questions remain, the FINRA guidance provides valuable insight to firms regarding the types of communications between research analysts and issuers that are permitted during different periods in the solicitation process. The risk levels associated with different types of communications during those time periods range from low to high to “unmanageable”. The article provides practical guidance on what research analysts can say and do during the different periods. Practical implications Broker-dealers should evaluate their policies and procedures to ensure compliance with the new FINRA guidelines. Originality value Practical guidance from experienced securities lawyers who are on the front lines in dealing with these issues.

The profile of unethical insurance customers: a European perspective

2015 ◽  
Vol 33 (3) ◽  
pp. 298-315 ◽  
Author(s):  
Ali Dehghanpour ◽  
Zeinab Rezvani
Keyword(s):  
Demographic Variables ◽  
Data Driven ◽  
Insurance Companies ◽  
Insurance Fraud ◽  
Insurance Claim ◽  
Psychological Variables ◽  
Policy Makers ◽  
Content Type ◽  
Practical Implications ◽  
Perceived Probability

Purpose – Although perceived as a wrong act, insurance fraud is a prevalent phenomenon. The purpose of this paper is to understand the psychological factors that lead to reporting an exaggerated/false insurance claim would enable insurance companies and policy makers to devise better preventive policies. Design/methodology/approach – Utilizing data-driven clustering techniques on psychological and demographic measures from 985 insurance customers in Europe, this study outlines profiles of segments of customers as it relates to dishonesty in dealing with insurance companies. The segmentation criteria include attitude toward insurance fraud, perceived probability of punishment, basic human values and morals, religiosity, life satisfaction and demographic characteristics. Findings – Results reveal the existence of four market segments. The segments include non-conservatives (sensitive to both perception of wrong behavior and the monetary payoff for a fraudulent claim), self-protectionists (sensitive to the probability of being caught), hedonists (sensitive to the personal pleasure and monetary payoffs for insurance fraud) and socially focused individuals (sensitive to social norms regarding admitting to having committed insurance fraud). Among the demographic variables, only education and among psychological variables, universalism, hedonism, security, conformity, tradition, benevolence, moral philosophy, religiosity, perceived probability of punishment and attitude toward insurance fraud were significantly different among the four identified segments. Practical implications – Specific policies are proposed in order to prevent insurance fraud, tailored to the specific profile of each segment. Originality/value – Using a psychological perspective and a data-driven methodology, this study identifies four heterogeneous segments of unethical insurance customers with dissimilar values, attitudes toward fraud and perception of punishment probability.

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