Jacko Law Group

Jacko Law Group Corporate and Securities Litigation Tip of the Week by Dharmi C. Mehta, Esq. Protecting Privacy Privileges if Litigation is Imminent When everything points to litigation, a business can take the right steps to strengthen its position in trial. This includes managing the human factor and any internal and external communications related to the case. Here are some key steps to take in managing the human factor: • Immediately work with executives and anyone involved to understand their feelings about the case. • Provide extensive coaching on maintaining control over their emotions regarding the case. • Emphasize the importance of limiting non-privileged communications about the case. • Remind them to avoid any written communication about the case unless necessary. • Hire an experienced litigation attorney at the outset. During litigation, the business will be placed under the microscope. It is in its best interest to position itself positively and contain any factors that may reflect negatively on it during trial. If you believe your business may be sued and need legal assistance in preparing for litigation, please call us at 619.298.2880 or email info@jackolg.com. #jackolg #litigationtip

Jacko Law Group Regulatory Tip of the Week by Michelle L. Jacko A common question that we receive is what regulatory compliance obligations differ between State verses SEC Registered Investment Advisers (“RIAs”)? Generally, there are several areas that differ based on regulatory requirements. Firstly, state registered investment advisers generally serve retail clients. Thus, state regulations tend to be geared towards disclosures to retail investors. This includes: - Generally, no testimonials are allowed - Certain contract provisions must be included (which generally speak to products or services being offered by others that are less expensive alternatives) - Senior investor protections are heightened - Cybersecurity reporting obligations may exist - Some states, such as California, have heightened privacy safeguarding protections - Form ADV Part 2A Item 19 must be completed For SEC registrants, they are required to: - Conduct an Annual Review - Adopt a Code of Ethics (which many states also require) - Have written policies and procedures that are reasonably designed to prevent violation of federal securities laws wherein the Advisers Act generally has more requirements than at the state level (consider the recent AML Rule which applies only to federal, and not state RIAs) For assistance with developing your State or SEC Compliance Program, please call us at 619.298.2880 or email info@jackolg.com. #Jackolg #compliance

Jacko Law Group Regulatory Tip of the Week by Michelle L. Jacko The New AML Rule: Emerging Threats The amended AML rule, which will go into effect in January 2026, contains several new and expanded requirements, one of which is a focus on emerging threats. The new rule stipulates that businesses must implement the necessary safeguards required to protect investors in relation to new technologies, digital currencies, new payment methods, and cyber threats. The new rule applies to both Registered Investment Advisers and Exempt Registered Advisers. The rule, however, excludes mid-sized advisers, multi-state advisers, pension consultants, state RIAs, foreign advisers and family offices. Here are several key requirements: - Implementing internal policies, procedures and controls that are risk-based, and reasonably designed to prevent the adviser from being used for money laundering and terrorism activities - Filing certain Suspicious Activity Reports (SARs) and Currency Transaction Reports (“CTRs”) with FinCEN - Fulfilling recordkeeping requirements relating to transmittal of funds Should you require assistance with developing these new AML protocols, our attorneys stand ready to assist. Please call us at 619.298.2880 or email info@jackolg.com to speak to one of our regulatory attorneys. #AML #Jackolg #compliance

Jacko Law Group Corporate and Securities Litigation Tip of the Week by Dharmi C. Mehta, Esq. Business litigation is a constant threat to an Investment Adviser. Litigation encompasses a wide range of legal disputes that can arise in the course of operating a company and can drain resources, damage reputations, and derail business objectives.  Understanding the different types of business disputes that may arise on a day-to-day basis is key to navigating challenges. Business disputes can consist of: - Breach of Contract: Failure to fulfill contractual obligations - Breach of Fiduciary Duty: Failure to act in the client’s best interest - Partnership and Shareholder Disputes: Conflict between owners or key members - Fraud and Misrepresentation: Allegations of deceptive business practices - Regulatory Violations: Failure to meet regulatory compliance requirements Being cognizant of potential disputes enables advisers to take proactive steps to mitigate, mediate, and safeguard the business. If you are at risk of or facing litigation, call us at 619.298.2880 or email info@jackolg.com. #jackolg #litigationtip

Jacko Law Group Regulatory Tip of the Week by Michelle L. Jacko How to Incorporate New Tests Into Your Annual Review Each year, the Division of Exams provides investment advisers with exam priorities, offering a useful guide to assess internal controls for fiduciary compliance and industry regulations. As you begin your review, consider whether your Annual Review covers the SEC's 2024 exam priorities. • Investment advice on complex, high-cost, and illiquid products • Processes for determining whether advice is in a client’s best interest • Succession Plans (particularly for smaller advisers) • Compliance with the Marketing Rule, particularly with adequacy of disclosures and substantiation • Advisory fee calculations and practices • Compensation Arrangements • Regulatory filings (such as Forms 13F, 13H, and N-PX) • Cybersecurity incident response • Safeguarding of customer data and information Use this list to identify areas of compliance to advance, keeping a checklist of areas that need to be addressed. Log your progress when implantation occurs and highlight to senior management the corrective measures taken or suggested. If you need assistance with how to best document your compliance annual review process, please call us at 619.298.2880 or email info@jackolg.com. #annual review #compliance #jackolg

Jacko Law Group Corporate and Securities Litigation Tip of the Week by Dharmi C. Mehta, Esq. Partnership Disputes Strong partnerships are highly beneficial to the growth of a business. However, when there is conflict between partners, it could negatively affect the business in many ways. Differences will come up, but partners should strive to resolve disputes amicably. Here are five ways to do so: - Honest and Open Communication: address the issue promptly, and honestly - Mediation: Consider involving an objective third-party - Legal counsel: If the dispute is yet to be resolved, retain legal counsel - Create or Modify Partnership Agreement: If a partnership agreement is in place, explore reestablishing roles and obligations to accommodate all parties - Dissolution: If resolution is impossible, consider parting ways as business partners If you are going through a partnership dispute and would like to discuss your case with our team, please call 619.298.2880 or email info@jackolg.com. #jackolg #litigationtip

Jacko Law Group Regulatory Tip of the Week by Michelle L. Jacko FINRA Reminds Member Firms that Regulatory Rules Apply to Use of Generative AI In June 2024, FINRA reminded firms that laws regulating the use of technology and tools used in the trade must be applied to Generative AI. No new regulations have been introduced, and member firms that utilize Generative AI must adapt and apply existing laws to meet compliance requirements. Those regulations include: - Oversight: Continuous human supervision and monitoring if using AI systems. - Employee Training: Ongoing training for employees and key company personnel to ensure they are well-versed in the ethical and compliant use of AI. - Data Protection: Privacy and security protocols in place to protect customer data. - Compliance with Communication Laws: AI-generated communications must comply with FINRA’s standards to ensure that all information presented is fair and accurate. For assistance in determining if your business meets FINRA’s regulations for Generative AI use, please call 619.298.2880 or email info@jackolg.com. #FINRA #AI #jackolg

Jacko Law Group Managing Partner Michelle Jacko is thrilled to be back at the Schwab Fall Compliance Update where Schwab Advisors can learn the latest in regulatory compliance, EXAMS and much more. Date: September 19, 2024 Venue: Virtual Learn more at: https://hubs.ly/Q02QlgYC0 #Schwabcomplianceupdate #compliance #jackolg

Enforcement actions are once again on the rise. The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are cracking down on violations of “Duty of Care.” Jacko Law Group discusses two recent enforcement actions highlighting the importance of making sure your clients’ best interests are always top of mind. Read the full blog post here: https://hubs.li/Q02Q1mF_0 #SEC #RegBI #jackolg

Jacko Law Group Regulatory Tip of the Week by Michelle L. Jacko How to Prepare for the New Regulation S-P Amendments One of the biggest challenges for financial firms is to assess the impact that a new regulation may have on the business – and its customers. The Amendments to Reg S-P may not have a compliance date until the end of next year, but it is important to plan ahead, particularly given the operational challenges firms may face with implementation. Amendments to Reg S-P are designed to address new technologies and corresponding risks. One of the largest threats to financial firms are security compromises where sensitive customer information was or is likely to be used or accessed without authorization. In this case, under the amendments, a “covered financial institution” will have 30-days to notify affected individuals. Thus, a communication template should be developed for ease of use in the event this occurs. Other requirements include: • Development of policies and procedures to dispose of customer information • Oversight procedures for security compromises with service providers • Incident response, including assessment of the nature and scope of the risk, containment, control and notification to affected individuals JLG assists firms with developing internal controls to comply with the new requirements under Regulation S-P. For more information, please contact us at 619.298.2880 or email info@jackolg.com. #compliance #jackolg #RegS-P