FiSolve Weekly News Digest: October 2, 2026

Here is what we are reading in the news this week...

SEC Action Reinforces the Importance of

Accurate Conflict Disclosures 

The U.S. Securities and Exchange Commission sanctioned a registered investment adviser for failing to fully disclose conflicts of interest associated with its referral practices and for providing a misleading description of how clients were matched with third-party advisers. According to the SEC, the firm had financial incentives tied to certain referral arrangements that were not adequately disclosed and represented that referrals were based solely on client onboarding responses when other factors also played a role.  The action serves as a reminder that fiduciary obligations require more than simply identifying conflicts of interest.  Firms must ensure that disclosures are complete, accurate, and consistent with actual business practices, particularly as referral, solicitation, and technology-driven matching models become increasingly common across the wealth management industry.  Read more here.

SEC Staff Urges Greater Transparency in

Valuing Private Assets 

In a statement released this week, staff of the U.S. Securities and Exchange Commission (Staff) emphasized the growing importance of rigorous valuation practices and transparent disclosures as private assets, particularly private credit investments, become a larger part of investment portfolios.  The Staff reminded registrants, fund boards, valuation designees, and auditors that fair value measurements for private assets often require significant judgment and should be supported by robust policies, reliable information, calibration to market conditions, and a market participant perspective.  The statement also stresses that boilerplate disclosures are insufficient, encouraging firms to provide clear, tailored information about valuation methodologies, key assumptions, portfolio risks, non-performing assets, payment-in-kind income, and other factors that may affect investment performance and valuation.  Overall, the Staff's message is that investors need meaningful, transparent disclosure to understand both the valuation process and the risks associated with increasingly popular private asset strategies.  Read more here.

Wealth Management Talent Pressures Intensify as

Industry Consolidation Accelerates 

In its September 2026 Executive Talent Intelligence Brief™, Lyneer Search Group highlights mounting talent challenges across the wealth management industry as record RIA merger and acquisition activity, advisor attrition, and growing demand for specialized expertise reshape the executive hiring landscape.  The report notes that industry consolidation is increasing the need for experienced leaders capable of managing integration, operations, compliance, data, and client growth initiatives, while a shrinking advisor population and heightened competition for fiduciary, tax, trust, and estate professionals are further tightening the talent market.  The findings suggest that firms pursuing growth, particularly through acquisitions, may face increasing difficulty sourcing and retaining the executive talent needed to support expansion and navigate an increasingly complex regulatory and operational environment.  Read more here.

New York Expands Access to Personnel

Records by Employees 

Effective November 8, 2026, New York employers will be required to provide current and former employees with a copy of their personnel records, at no cost, within five business days of a written request, significantly expanding employee access to workplace records.  The new law, which adds Section 210-b to the New York Labor Law, broadly defines personnel records to include items such as job applications, performance evaluations, compensation information, disciplinary records, written warnings, and termination notices.  In addition to granting access rights, the law requires employers to notify employees within ten days when negative information is added to a personnel file, allows employees to submit written rebuttals to disputed information, imposes record-retention obligations, and prohibits retaliation against employees who exercise their rights under the statute.  Employers should review their personnel file practices, response procedures, and recordkeeping policies before the law becomes effective. Read more here.

SEC Division of Examinations Releases

New Examination Handbook 

The SEC’s Division of Examinations has released a new handbook designed to provide registrants with a more detailed roadmap of the examination process from initial risk assessment through final disposition.  Replacing the agency’s prior examination brochure, the handbook is intended to promote greater transparency, consistency, and predictability across SEC examinations while reinforcing the Division’s commitment to a collaborative and accessible approach.  The guidance also includes practical tips and resources to help firms prepare for exams and maintain strong compliance programs, reflecting the SEC’s continued focus on improving industry practices, monitoring risk, and protecting investors.  Read more here.

FINRA Unifies Regulatory Operations to Enhance Risk Detection and Reduce Firm Burden 

FINRA announced the completion of a significant restructuring that combines its member supervision, market oversight, and enforcement functions into a single Regulatory Operations department.  The new structure consolidates Risk & Intelligence, Examinations, Surveillance, Investigations, and Enforcement into a coordinated framework intended to improve information sharing, accelerate the identification of emerging risks, strengthen investor protection, and reduce duplicative requests to member firms.  FINRA stated that the integrated model will enable regulatory teams to develop a more complete view of firms and market activity, leverage advanced analytics and GenAI capabilities, and promote earlier intervention when risks are identified.  The organization also highlighted efforts to provide firms with more actionable intelligence and compliance resources while reducing regulatory burdens, citing significant declines in trade blotter requests, Rule 8210 requests, and Blue Sheet requests as evidence of improved operational efficiency.  Read more here.

SEC Proposes Amendments to Expand

Retailization of Private Markets 

The SEC proposal would expand retail investor access to private-market investment strategies by permitting registered investment advisers to receive performance-based compensation from a broader range of clients, including certain registered funds and business development companies, while enhancing related disclosure requirements.  The proposal also would modernize the interval fund framework by providing greater flexibility in fund repurchase programs to better align with underlying portfolio liquidity and would allow regulated closed-end funds to offer multiple share classes through a rules-based framework rather than individual exemptive orders.  Separately, the SEC is seeking public comment on expanding the definition of accredited investor to include individuals who demonstrate investment sophistication through a potential FINRA-administered examination or by holding certain professional credentials, such as the CFA, CFP, CPA, Series 79, and Series 86/87 designations.  Collectively, the joint release of these proposals reflect the SEC’s effort to broaden retail access to alternative and private-market investments while maintaining investor protections through enhanced transparency, qualification standards, and regulatory oversight.  Read more here.

SEC Proposes New Crypto Custody

Framework for Advisers and Funds 

The proposal would establish a tailored custody regime designed to accommodate crypto assets within the federal securities law framework while modernizing longstanding custody requirements for both registered investment advisers and regulated funds.  Under proposed Release No. IA-7023, advisers would be permitted, subject to specific safeguards, to maintain certain crypto assets in self-custody or through qualifying state-chartered trust companies, provided they meet enhanced requirements relating to safeguarding expertise, cybersecurity controls, annual reviews, internal control reporting, asset segregation, client reporting, and independent audits.  The proposal also would create new custody provisions for registered funds holding crypto securities, update existing custody rules that were largely designed for traditional assets, and introduce additional reporting and disclosure requirements on Form ADV and Form N-CEN, including disclosures regarding tokenized products.  SEC Chairman Paul S. Atkins stated that the proposal is intended to provide a clear, compliant pathway for advisers and funds to custody crypto assets while expanding investor access and reducing regulatory uncertainty that has developed as digital assets have evolved beyond the scope of custody frameworks written decades before the emergence of blockchain-based investments.  Read more here.

CFTC Clarifies Use of Crypto Assets, Stablecoins, and Tokenized Collateral in Derivatives Markets 

In a recently issued set of frequently asked questions (FAQ), the Commodity Futures Trading Commission (CFTC)'s Market Participants Division, Division of Market Oversight, and Division of Clearing and Risk provided additional guidance on the treatment of crypto assets and blockchain technologies within the derivatives markets, building on earlier staff guidance and no-action relief issued in CFTC Staff Letters 25-39 and 26-05.  The FAQs clarify that futures commission merchants (FCMs) may, under specified conditions, recognize certain non-security crypto assets and payment stablecoins posted as margin when determining whether customer accounts are adequately margined, and may deposit proprietary payment stablecoins as residual interest in segregated customer accounts subject to capital haircuts.  The guidance also confirms that crypto assets generally remain ineligible collateral for uncleared swaps, although tokenized versions of otherwise permissible collateral may be used if they provide legal and economic rights equivalent to the traditional asset.  Notably, the CFTC added new guidance addressing investments in tokenized forms of otherwise permitted assets and the use of blockchain technology to satisfy certain recordkeeping and reporting obligations, reflecting the agency's continued effort to integrate digital asset innovation into existing regulatory frameworks while maintaining existing customer protection and risk management standards.  Read more here.

FCA Opens the Gateway to Regulated Crypto 

The Financial Conduct Authority (FCA) announced that, effective September 30, 2026, cryptoasset firms can begin applying for authorization under the UK's new crypto regulatory framework, marking a major step toward bringing the sector under full regulatory oversight.  For the first time, crypto firms operating in the UK will be subject to comprehensive FCA requirements covering consumer protection, safeguarding of customer assets, market integrity, and financial resilience.  Firms wishing to continue operating in the UK are expected to submit applications by February 28, 2027, before the new regime takes effect on October 25, 2027.  The FCA emphasized that authorization will not be automatic and that firms must demonstrate compliance with regulatory standards or risk losing access to the UK market.  The regulator views the new regime as a means of enhancing investor protection while providing greater regulatory certainty and legitimacy for the crypto industry, supporting the UK's broader objective of becoming a trusted global center for digital asset innovation.  Read more here.

FINRA Bars Broker for Misappropriating

$1.7 Million from Customers’ Accounts 

FINRA has barred former registered representative of LPL Financial LLC, from associating with any FINRA member firm in all capacities for conversion—the intentional and unauthorized taking of another person’s property—of $1,731,000 from two customers’ accounts into an outside business bank account. The former representative’s firm has since reimbursed both customers in full.  Read more here.

2027 Priorities Announced by ESMA 

The European Securities and Markets Authority (ESMA) published its annual Work Programme for 2027. Guided by ESMA’s multi-annual strategy for 2023–2028, the programme is marking a shift from preparation to the delivery of several major initiatives.  The priorities are aimed at building stronger, simpler, and more integrated EU capital markets while advancing the objectives of the EU’s Savings and Investments Union (SIU).  ESMA plans to expand its supervisory role over consolidated tape providers, ESG rating firms, European Green Bond reviewers, benchmark administrators, and crypto-asset service providers under MiCA, while continuing oversight of operational resilience under DORA.  The regulator will also focus on enhancing supervisory convergence across EU member states, supporting implementation of key initiatives such as the European Single Access Point and the transition to T+1 settlement, and advancing four simplification initiatives designed to reduce reporting burdens, improve regulatory data quality, streamline the retail investor experience, and promote risk-based supervision.  In parallel, ESMA intends to accelerate its use of data analytics, artificial intelligence, and technology-driven supervisory tools, while continuing work on cybersecurity, crypto-assets, and tokenization, reflecting its broader goal of making EU capital markets more efficient, resilient, and attractive to investors.  Read more here.

FiSolve Issues Client Alert on the Modernization

of FINRA Rule 3290 (OBAs) 

FINRA's new Rule 3290, approved by the SEC on September 15, 2026, significantly reshapes how broker-dealers oversee their registered representatives' outside business activities.  The new rule replaces and consolidates existing Rules 3270 and 3280 into a more risk-based framework.  Rather than requiring review of nearly all compensated outside activities, the new rule concentrates regulatory attention on investment-related activities and private securities transactions that present meaningful risks involving conflicts of interest, customer confusion, investor protection, or selling away.  The rule preserves heightened supervision and approval requirements for private securities transactions, while providing relief for lower-risk activities, certain personal transactions, and advisory activities conducted through unaffiliated registered investment advisers.  Although firms may benefit from reduced compliance burdens in some areas, Rule 3290 places greater emphasis on thoughtful risk assessments, documenting supervisory decisions, monitoring imposed conditions, and updating policies, systems, and training programs to align with the new requirements.  Until the rule becomes effective, firms must continue complying with current Rules 3270 and 3280 while preparing for implementation.  Read the alert authored by Kimberly Johnson here.

💡FiSolve's Negotiation Tip of the Week💡

Negotiating with a More Powerful Party

When negotiating with a more powerful party, focus less on matching their influence and more on increasing your leverage through preparation and the generation of options.  In financial services, larger counterparties often assume they have the advantage, but the strongest negotiators shift the discussion from power to value by clearly articulating what they bring to the relationship, whether that is specialized expertise, access, market intelligence, operational efficiency, or risk reduction.  Avoid negotiating from a position of need; instead, cultivate credible alternatives and demonstrate a willingness to walk away if terms are not aligned with your objectives.  The party with the most options, not necessarily the most size, often has the greatest negotiating strength. 

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