Letter from 2020 Council Chair
As the 2020 Chair of the Securities Industry/Regulatory Council on Continuing Education (“Council”), I would like to continue the tradition established by my predecessors and provide you with a review of the 2020 activities and accomplishments of the Council. As described in the following sections, the Council’s primary mission continues to be implementing improvements and modernization to the Securities Industry Continuing Education Program (“CE Program”) to better serve the industry’s continuing education (“CE”) needs. This year was particularly exciting in that regard as Council, working with industry regulators and the industry, making meaningful progress toward proposing CE Program modernization.
In 2020, the Council was composed of 17 industry members and five self-regulatory organization (SRO) members, as well as SEC, NASAA and SRO liaisons to the Council. Industry members generally serve four-year terms and the Council meets quarterly.
The Council has specific advisory and consultative responsibilities to the CE Program. These are:
II. recommending updates to the Firm Element;
III. promoting effective implementation of meaningful CE to the securities industry;
V. maintaining the program on a revenue neutral basis subject to adequate financial reserves.
There are five standing Council committees: the Executive Committee, the Regulatory Element Committee, the Firm Element/Strategic Planning Committee, the Finance Committee and the Nominating Committee.
This year an additional ad hoc committee, the Change Management and Communications Committee, convened. This newly established committee has a focus on change management and communications strategy efforts related to the CE Council transformation initiative. In the following sections, I will share some of the Council’s 2020 accomplishments.
I. The Regulatory Element Program
Gina Hyde, chief compliance officer of institutional equities at Stifel Financial, served as chairperson of the Regulatory Element Committee in 2020. The Regulatory Element is comprised of two distinct programs:
• The S101 General Program for Registered Persons is the original Regulatory Element program introduced in 1995 for Series 7 registered persons. Today the program includes all other representative-level registrations. The S101 Program was updated in 2016 to include personalization in the form of self-selection by candidates for one module that reflected their business functions. Candidates can self-select from one of the following functions: retail sales, institutional sales, trading, operations, investment banking and research.
• The S201 Supervisors Program for Registered Principals and Supervisors was introduced in October 1998.
The Council’s goal is to refresh the content for each Regulatory Element program annually with updated content that addresses rules, regulations and ethical business practices, especially those topics that are of fundamental importance to the industry or of regulatory concern. CE program content is developed by CE Content Committees composed of industry subject matter experts, along with SEC, SRO and NASAA representatives, who meet periodically for this specific purpose
II. The Firm Element
This year’s Firm Element/Strategic Planning Committee chairperson was Sandra Mao, executive director and chief compliance officer at Huatai Securities (USA), Inc. This committee reviews industry issues and trends and provides guidance for firm element tools that may be useful to the industry.
The Firm Element Advisory (FEA) is a document that is published by the Council quarterly and posted to the Council website for the industry to highlight current regulatory and sales practice topics for possible inclusion in a firm’s Firm Element training plan. Topics for the FEA are identified from a review of industry, regulatory and SRO announcements and publications of significant events. Such topics may center around new or amended rules and regulations (e.g., Regulation BI), regulatory notices and SRO guidance.
The committee recently published on the CE Council website updated guidance and resources about the Firm Element resulting in real time assistance to firms for 2021 firm element planning. The Council updated the guidance document based on industry feedback from a survey conducted this year, industry outreach sessions and input from Council members. A Needs Analysis template was also added to provide firms with a tool to assist with conducting an annual evaluation and prioritization of training needs.
III. Promotion of Effective Continuing Education in the Securities Industry
The Council website, www.cecouncil.com, serves as a reliable source of information and assistance to the securities industry with respect to industry CE programs and compliance. A variety of tools and materials are available to individuals to assist them in preparing for their Regulatory Element sessions. Additional tools and resources are available on the Council website to assist firms in developing their Firm Element training programs.
IV. Liaising with Appropriate Industry Groups and Regulators
On occasion, Council members or SRO staff who support Council functions speak at industry conferences to keep the industry apprised of the latest issues and matters with regard to the CE Program and to receive feedback on Council initiatives.
As part of our outreach, members and liaisons to the Council have spoken about the CE Program to industry representatives at the following meetings in 2020:
• Association of Registration Management’s Annual Conference (ARM);
• Licensing and Registration Council/Registration and Qualifications Subcommittee meetings (LRC);
• National Society of Compliance Professionals (NSCP) National Conference; and
• Securities and Insurance Licensing (SILA) Annual Conference.
The Council is grateful for the SEC’s continued support over the years. Special thanks to the Commission’s staff who have worked so closely with us from the Office of Chief Counsel in the Division of Trading and Markets: Daniel Fisher and Edward Schellhorn.
V. Maintaining the Continuing Education Program on a Revenue Neutral Basis
One of the responsibilities of the Council is to provide advice and consultation on maintaining the CE Program on a revenue neutral basis while ensuring adequate financial reserves to maintain and improve the programs.
The Finance Committee regularly reviews the financial health of the CE Program to ensure that it remains positioned to continue our mission. James Papagiannis, chief compliance officer at Incapital LLC, served as the 2020 Finance Committee chairperson.
VI. 2020 Enhancements and Modernization Proposal
The Council continues to focus its attention on the CE Program to explore a number of opportunities to improve the efficiency and effectiveness of education in the securities industry.
In early 2020, FINRA published Regulatory Notice 20-05 in support of recommendations made by the CE Council. The enhancements are designed to: (1) ensure that registered persons receive relevant and sufficient Regulatory Element training on an annual basis; (2) provide firms with the guidance and resources necessary to design effective and efficient Firm Element training programs; and (3) provide a path for previously registered individuals to maintain their qualification through CE.
FINRA received 26 comment letters that are generally supportive of the potential enhancements identified by the CE Council. The comment letter feedback has resulted in continued discussions between the regulatory agencies and industry representatives on a path forward to a rule filing in 2021 that will further enhance, modernize and transform the CE Program in an efficient and effective manner. The Council’s recommendations have been strongly shaped by suggestions from the industry, and Council believes they will greatly enhance the effectiveness of CE in our industry.
The Council continually seeks to raise the industry’s awareness of both the Council and its mission to promote and improve the CE Program within the securities industry. The Council continues to be grateful for the SEC’s commitment to this goal and would appreciate continuing support from you and your fellow commissioners to raise awareness of the Council’s work and of the importance of the CE Program in general. As we move toward formally proposing changes to the CE Program in the coming year, Council asks that the SEC strongly consider the benefits these changes can bring to the industry. On behalf of Council, thank you for your support. I will be happy to answer any questions you might have.
Gwen K. Weithaus
2020 Chair of The Securities Industry/Regulatory Council on Continuing Education
Vice President, Investment Products Risk and Controls