May 2018 - IRI Law Journal

Posted on May 24, 2018

Issue 1 - May 2018
Did you know that several of the leading law firms in the insurance and investment space are members of IRI?
You may have occasionally had the chance to benefit from their expertise during an IRI conference or webinar, or on a committee or working group call, but until now, those were your only opportunities to hear directly from them.
But you’re in luck – IRI is excited to launch the IRI Law Journal, a new bi-monthly e-newsletter that will be delivered straight to your inbox, featuring recent whitepapers, client alerts, articles, and more from IRI’s law firm members. We hope you find this new publication valuable, and we look forward to connecting you with the best legal news and analysis from these top law firms. 
Featured Publications
Eversheds Sutherland: FINRA’s Disciplinary Actions in 2017 (and beyond): Increased restitution ordered with minimal changes in number of cases; variable annuities cases significantly down
In 2017, the Financial Industry Regulatory Authority (FINRA) ordered more than two times the restitution from the prior year, resulting in the fourth highest total of sanctions (fines combined with restitution and disgorgement) assessed over the past 10 years, despite a decline in the amount of fines and the number of cases. This review of FINRA’s 2017 cases analyzes the issues that resulted in the most significant fines, and identifies emerging enforcement issues and trends. Cases involving variable annuities are also separately analyzed.
Carlton Fields: COI Litigation Review – Early Dismissals Remain Elusive in Rate Increase Actions
Suits challenging insurers’ cost of insurance (COI) rate increases continue to generate much activity. In recent months, this activity has included transfers, consolidations, several actions that are inching closer to trial-readiness, and even a plaintiff’s jury verdict in an individual action. Although defendants continue to seek disposal or a narrowing of the scope of claims via motions to dismiss, the most recent rulings may foreshadow protracted litigation for the industry in this area.
Groom Law Group: Fiduciary Proposal: Episode III – Revenge of the SEC
After the Fifth Circuit’s March 15, 2018 decision striking down the Department of Labor’s (the “DOL”) Fiduciary Rule, many in the retirement space expected to finally be able to take a well-deserved break from years of regulatory drama and related compliance anxieties.  Instead, barely a month later, on April 18, 2018, the Securities and Exchange Commission (the “SEC”) signaled the opening of a new round in the effort to regulate the delivery of advice by voting to release a package of three rules.
Dechert: SEC Announces Share Class Selection Disclosure Initiative
The Division of Enforcement (Division) of the U.S. Securities and Exchange Commission (SEC) on February 12, 2018, announced a Share Class Selection Disclosure Initiative (SCSD Initiative). Led by the Division’s Asset Management Unit, the SCSD Initiative is a new self-reporting program under which the Division is offering to recommend to the SEC standardized settlement terms for investment advisers that self-report failures to disclose conflicts of interest in connection with certain mutual fund share class selection practices. The SCSD Initiative targets advisers’ alleged failures to make necessary disclosures relating to the advisers’ receipt of 12b-1 fees for investing client funds in, or recommending that clients invest in, a 12b-1 fee-paying share class when a lower-cost share class of the same fund was available for the clients. The Division has offered similar self-reporting incentives in the past.
DrinkerBiddle: SEC Proposes Regulations to Reform Retail Investment Standards
In this article, we summarize the SEC’s recent proposals on the best interest standard for broker-dealers, clarification of the fiduciary standard applicable to investment advisers, the disclosures required under the new Form CRS and the new naming requirements for broker-dealer representatives.  
Locke Lord: A Closer Look at the NAIC Insurance Data Security Model Law
Following New York’s lead after the Department of Financial Services (the NYDFS) promulgated its Cybersecurity Regulation, in October 2017 the NAIC adopted its Insurance Data Security Model Law (the NAIC Model) to establish standards for data security, and for the investigation and notification of certain cybersecurity events. The NAIC Model applies to any individual or nongovernmental entity licensed, authorized, or registered under the insurance laws, with certain exceptions. An NAIC taskforce had been working on cybersecurity standards for two years, but substantially revised its prior working drafts to follow the concepts and terminology used in the NYDFS Cybersecurity Regulation. The NAIC Model will prompt state legislatures to enact cybersecurity requirements that will affect the entire insurance industry, including InsurTech firms and other service providers with access to the data and systems of insureds and producers. Legislation based on the NAIC Model has already been introduced in Rhode Island and South Carolina, and other states are expected to follow in the coming months.
Do you have any feedback, questions or suggestions about the IRI Law Journal? We’d love to hear from you. We can be reached by email at Thanks for reading!
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