How To Sign Iowa Banking POA

How to industry sign banking iowa poa

want to get started thank you marissa hello everyone and welcome back to day three of the 2020 virtual ia workshop my name is lynn egan and i'm the deputy securities commissioner here at the csi thank you all for attending and before we'll get started i'm going to quickly over the process on how to ask questions to the presenters for today's webinar down at the bottom of your screen you can type questions in by clicking the q a function located next to the raise your hand button once your question is posted the presenter will answer the question as it timely fits into their presentation thanks again for participating in today's presentation and from here i'll turn it over to csi examiners ryan sullivan and mark murphy murray thank you thanks lynn go ahead and hear share my screen we'll get started all right so hello everyone my name is ryan sullivan i'm the securities examiner here at the csi been here since 2018 had the pleasure of meeting a handful of you so far welcome to part three of our third installment of the 2020 ia workshop i appreciate all of you taking time out of your busy schedules and days away from clients um to spend with us i'll do the first half of the presentation second half we'll hand over to mark murray who is our security examiner slash analyst he's going to speak to you a little bit about fraud and some other things all right so the csi we're one of the smallest agencies um here in state government uh but ironically we regulate two of the largest industries our goal is to protect investors promoting promote uniformity in the state markets encourage capital investment in montana and the through the regulation of securities securities professionals that want to do business in our state need to follow the rules we regularly conduct outreach throughout the state we try to teach seniors and other investors how to spot scams and invest wisely now before we go any further as we all know by now all in-person events have been canceled we're stuck at home virtual meetings are up a thousand percent since covet hit and uh video conferencing tools have been in high demand i read a statistic the other day that zoom itself has over 300 million active participants every single day which is pretty amazing i've got a short clip here that actually brought from our executive staff so i won't take full credit but you want to watch and then we'll go forward oh can you hear me [Music] [Music] great [Music] version of the classroom [Music] [Music] oh schedule from this point last year we had a great q1 am i frozen yeah [Music] beth are you with us oh yeah okay everyone [Music] okay [Music] [Music] okay all right everybody i'll see you later [Music] all right so uh pretty relatable you know this is just the time that we're in right now everybody can relate a little bit to that those scenarios i myself had one of those yesterday with my kids at home during part two so quick uh stats here as you can see our office the number of registrations has grown immensely over the last 15 years but that being said our staff size has gone the other way so you know we we work efficiently together we work well and um and yeah so that's just a pretty clear view of where the direction that we're going so we'll jump into the exam process states examination authority falls under 3010 201 basically states that every registered broker dealer or investment advisor shall make and keep accounts in other records all records are subject to examinations with or within the state by representatives of the commissioner by mark and myself and lynn and it's as we deem appropriate in the public interest or the protection of investors uh going forward for 2021 we're going to be looking at doing uh virtual exams and honestly i don't really see this uh being that much different than an in-person exam except for we're going to be doing it over a webcam the program is still being developed it's definitely going to happen this winter 2020 and spring of 21 and we ask that you have a working webcam so we can have this type of face-to-face interaction because for obvious reasons that we think it's important to see you guys you just see us so the exam process just flows a little bit smoother we're currently using two platforms zoom which you're all using now we also have the ability to use microsoft change all right so a question here how does the state determine who needs to be examined well currently we have 70 to 80 registered ias here in the state of montana and our goal is to get to you guys every three years with covet again it's kind of thrown a wrench in the exam schedule this year but uh going forward we're hoping to meet with you guys virtually and why is the state here that that question is simple the simple answer is to protect investors when a consumer invests money into a security they have the rights to be protected under federal and state securities and that's where we come in our office works to ensure the consumer investing rights are protected by making sure the securities industry adheres a certain standard part of the the process that we look at here is the the date of last filing you know we want to make sure you guys are updating your part one and part two of your adv's the part two brochure is uh if there's some concerns that we might see if your part two brochure is not updated in the past year uh language isn't consistent if it's not appearing to be adequate to disclose uh certain conflicts of interest nand if uh supplements are not listed uh how long does the examination take um here i'm sorry there we go additional factors to consider assets under management the number of clients you have number of years you've been in business um conflicts of interest you may have do you have a dual registration with the broker dealer do you require the use of affiliated broker dealer custodian and possibly relationships with an issuer how long does the examination take uh this kind of depends so typically it's between two and three hours is what we look for on-site examination time um on a routine schedule exam i always ask for a like a laundry list of information beforehand and uh the documents that i want will help me kind of proceed with how the on-site examination is going to go it's important that i get all this information ahead of time because it's going to save you time in the long run uh what about your clients during the examination you know i understand your clients are your most important asset i understand how busy everybody can get but the exam process is important and it's important for your business and also for your clients all if you have scheduled appointments you know i expect those to be rescheduled if we agree on a date and a time you know that's my time being there and i take mostly day trips out of helena so and sometimes i'm meeting with other ias so yeah when we hammer down that date and time uh that's the time i expect you know we can be flexible uh i do understand things come up if we're doing an exam and you need to urgently need to take a phone call that's all understandable all right so client privacy you know i've had quite a few ias ask me about client privacy and i actually appreciate that you know it shows you care about your clients and where that information is going and this falls under mca 3010 107 which basically says it's unlawful for anybody in our building to use any information obtained in an exam for a personal benefit you know any information filed or obtained by our office will never be made available to uh members of the public or even outside our agency you know your client information and your your data your business data is incredibly important and our office understands that and that's why our office we use the state of montana secure file transfer system and when we do an exam you'll have to sign up and register because it's a critical highway for us to be able to share information electronically because it's all encrypted it's really simple to sign up you know before i uh initiate the exam i always send you a link to sign up through the through the website it's a free service all you need is a web browser the information is only stored for about 15 days which is also nice after that it's automatically deleted off of the servers right so there's kind of two types of exams that we do uh routine and uh for cause it's pretty straightforward our routine program should be on a three year cycle um you know we're gonna schedule so i get all the property documentation ahead of time on the other side of the coin for cos exam could normally be uh you know it could be unannounced uh we could just show up your door and it could be uh it could point to a potential problem but then again it may not because uh you know when i'm out in the field sometimes it's nice for me to pop in and see some of you guys and and see what you're up to so i don't want to say always or never all right the exam itself our office we use a program called nemo it's through nasa which is the always butcher this one it's the um it's the north american securities industries association and uh this piece of software has just been updated to a completely web-based software and it's been great it's helped with the speed and the effectiveness of the exam the exam goes much quicker quicker the questions i ask flow a lot um a lot more smooth when nemo was originally launched in 2010 2019 i got a complete facelift and it's been a a great tool for us to use to go through the exam and also store the information in the exam all right so here is a list of kind of the the types of things that will happen during the exam and this is kind of pulled directly from nemo when i show up uh i'll ask kind of a walkthrough of the office i kind of like to know who's in the office and kind of what uh where things are located at you know do you have a receptionist in the office are you sharing the the building with with another common um uh business and we'll go through the books and records financial matters investment activities will review your uh your fees and also the uh client agreements the file records this is kind of what we want to see in your file records for each client i want to see a written agreement investment policy statements risk analysis target asset allocation if applicable of course fee invoices i want to see statements quarterly reports those types of things should all be in a client file some questions that i normally get about the exam uh will i receive an examination report a copy generally no we don't generate a full report and that's not provided back to the ia will you receive a uh is there a follow-up by csa csi regarding a correction of a deficiency answer that is yes um we expect any deficiencies to be changed usually within six months depending on what that deficiency is that could include an on-site follow-up within that six months and again that kind of falls under if i'm in your area and you had deficiency i could pop in just to make sure that that's been correct next question what are my rights uh regarding deficiency findings from the exam how can i challenge those that's kind of yes and no you know our our office is always willing to have a conversation with you if we do discover deficiency you know we're flexible our main goal is you have to have you correct that deficiency and move uh forward this exam show up on the iard answer that simply no we don't share any information outside of this agency and that falls in line with the next question you know can the public request a copy of the exam again that's no that falls into that mca 3010 107. that information is strictly for our office and for you common issues that we find during the exam process the big one i'm sure most you know if we've met already is the cyber security and data breach stock you know nasa is really pushing us to push you guys to take certain steps to fall into compliance with with the cyber security measures you know eric fulton spoke uh yesterday or the day before i'm sorry uh regarding his cyber security and uh it was great you know he made a lot of great arguments presented a lot of good information on what you should be considering and another part of that falls under the cyber security data breach insurance that should be something that you may want to look into going forward all right so uh another common issues we see are a data backup business continuity plans disaster recovery plans uh lyndon blinn had mentioned yesterday uh csi sent out a survey this spring right when code hit and uh we've had great feedback from that um from that survey i appreciate most everybody got back to us and it seems like most of you all have a pretty good plan in place with backing up data having a continuity plan and a disaster recovery plan um again going back to eric fulton's presentation on tuesday you know it's important that you're backing up all of your luck electronic data and safeguarding that information you know it's critical going forward for investigators to establish implement and maintain procedures relating to your business continuity plan it's something that you should be constantly revising and making sure that it's up to date for times like these all right hard copy records um regarding hard copy records we kind of now live in the digital world i'm kind of a digital guy i like to have everything backed up to the cloud you know there's programs and services out there now the where your information will just be continually backed up you don't even have to worry about it you know most one or two person offices you know they're likely to be pretty confident in backing up their information but you should be asking yourself some questions if you have a lot of hard copies you know some of those questions could consider you know what about you know what what happens if your office burns down or floods you know are you going to be able to recreate all those hard copy records you know is it feasible to maintain and duplicate all those records off-site somewhere so these are all questions that you should be thinking about all right so working from home we're kind of back there where uh you know things have changed and now working from home uh we're in an environment where there's there's so much going on and the potential for cyber security threats you know has risen you know the the best line of defense for preventing a cyber security attack is you you're kind of like the ultimate uh best defense in uh preventing something that would happen and this could also include um you know making sure that your network is updated is everything password all right is your computer updated um is the software and apps are using updated and again is everything being backed up um passwords here it's important to have creative passwords uh never use the same password twice as you can tell here this person got kind of creative with the word password instead of using a's using the at signs instead of o using the zero those types of things and i thought this next slide is kind of interesting the amount of time to crack a password if you look at the difference between 10 characters and 11 characters four months versus one decade it's pretty substantial i'll make sure that you have good passwords like eric said yeah the other day make sure those uh you're using like a passphrase or something that has a significant amount of characters all right so before i turn over to mark murray i wanted to share a short clip from one of my all-time favorite shows the office michael scott some of you probably watch this show he's kind of an idiot and he'll kind of show you an investment he gets wrapped up in all right guys i apologize i guess my video didn't work very well but um i'll go ahead and pass it off to mark for the next segment okay uh can everyone hear me all right go ahead what what's that yeah we can hear you go ahead okay well my name is mark murray i've been with the with csi for eight years um i primarily uh investigate fraud and my my job is uh is as i guess investigating the fraud but um i thought we'd we talked a little bit about investment fraud ponzi schemes and pyramid schemes that that video that that didn't play very well was relative to a pyramid scheme and then i want to talk a little bit about elde abuse and montana code 30-10-3-4 so um investment theft is uh where an investment broker actually steals directly from their client and uh hopes that the client doesn't uh doesn't notice it we we uncover these a lot of times in our examinations and so uh when when ryan will do an examination if he finds um some sort of investment thr fraud he can refer the case over to me ponzi schemes i'm sure that you're all very aware of ponzi schemes we've been having how uh is that is that a little better ryan i know i can hear you go ahead mark you froze there for a second but now you're good okay i i i hope my volume isn't too high but um so um ponzi schemes we we are dealing an awful lot with ponzi schemes a lot of investment fraud is coming into our office especially since covet we've we've um we've had a whole um number of of these cases come come into play and then finally pyramid schemes are schemes were involved basically the payment of fees um and there's usually not a product but sometimes they'll increase the fees to try and um bring up additional people into the pyramid scheme so now i'd like brian if you go to the next screen i'd like to talk about montana code 30-10-340 in 2017 the legislature passed house bill 24 which which granted immunity to stock brokers and investment advisors if they have a reason to believe that um one of their clients is is being exploited or if there's fraud involved relative to a vulnerable adult they have their responsibility to to contact csi and then to notify a third party that's closely connected with the senior and verbalize the fact that they have concerns and then 30-10-342 gives the investment advisor the authority to freeze their account for 15 days and then csi can become involved we will become involved because you will have advised us and we can freeze the account for an additional 10 days or longer if we feel there is a need by getting a court order from a judge we are involved with a number of these cases i have seven open elder abuse vulnerable adult situations in my active inventory right now a lot of them involve children who are um taking funds from their parents um we work directly with adult protective services and we document and and and try to um control these um these exploitation cases so kill the next screen okay could you go to the next screen ryan is that the right one sorry mark i'm freezing up a little bit okay the next one should be financial exploitation just some examples of okay um financial exploitation um this is a broad scope but it's the it's the wrongful or unauthorized taking or withholding our use of money or assets from a vulnerable person um any act of omission taken by a person included through the use of powers of attorneys guardianships or conservatorships of a vulnerable person uh the attempts to obtain control through deception intimidation fraud menace or undue influence over the vulnerable person's monies assets or property and then the conversion of money assets or property of the vulnerable person to deprive deprive this person of the ownership use or assets of their property um go to the next screen ryan there's a whole bunch of red flags that that we are seeing um if you happen to have a person a company an elder uh person or if they show excessive interest in the finances of an elder person um if an elder shows an n degree unusual degree of um fear or anxiety or submissiveness um if elders seem to lack knowledge about their financial status and they show a re you know a reluctance to discuss their financial matters with you or if they move away from relationships like if you have a really strong relationship with an elder individual and they start to move away from you and they involve other friends or strangers if you're unable to go the next screen if you're unable to speak directly to the elder person if they display unexplained or unusual excitement over a financial windfall if there's notice noticeable neglect or decline in appearance and grooming if they happen to come into your office or the sudden appearance of a previously uninvolved relative claiming rights to the elders assets and possessions the next next screen or a new caretaker or any abrupt changes in the financial documents such as powers of attorney or account beneficiaries changes in wills and trusts uncharacterized uncharacteristic non-payment of services which may indicate a loss of funds or access to funds or closing accounts without regards to penalties next noticeable changes in seniors banking and and financial habits frequent large withdrawals sudden nsf activity or inconsistent transactions these are all red flags that um that were you know we're seeing in the cases that that are coming back and go the next slide to ryan um there's a couple more you know suspicious signatures changes of address unexplained disappearance of funds go the next um we have a we have an example here of uh one of the things that we're bumping into frequently in montana is romance scams match.com seems to be a place where elder people go to look for for companionship in this particular situation the gentleman involved in this was known as the casanova khan and uh he he convinced this one woman to wire eight hundred thousand dollars to him um she uh she said that she was engaged to him when we contacted her and she reported that he was in france i have others where uh gentlemen have convinced um ladies and and uh to forward funds to them care of um clearing houses that once the funds are transferred the clearinghouse uh after investigating the the transfers the clearinghouse no longer exists um so we're bumping into an awful lot of this and and when we work these cases we're um we're cooperating with the attorney general's office um the department of justice the office of consumer protection of course adult protective services the county attorneys and the fbi you turn to the next example ryan we had a 101 year old woman living in a nursing home in eastern montana um her family just discovered that she'd been six months in a rear in paying for her assisted living facility and that 73 thousand dollars had been taken from her account by a trusted insurance agent the nursing home was ready to evict her we we got involved and we actually got a conviction against this individual we we do work with medicaid um investigators adult protective services um and county attorneys okay next next um slide this one involved a 92 year old man who was living in a nursing home who has dementia and a brokerage firm notified csi that his daughter had obtained poa and she'd withdrawn 200 000 from his ira account over a two-year period we got a court order we were able to freeze that account and investigate we subpoenaed the daughter's um bank records and um we were able to move forward with uh with the attorney general in our office to um push for a conviction on this situation um then the final slide ryan if if the elder abuse case doesn't involve a security if you if you um forward your concerns to our office and we investigate it and it doesn't actually involve a security we work hand in hand with adult protective services we evaluate all these situations we've been doing an awful lot of forensic accounting for adult protective services in a in a cooperative fashion and we're working together with with that agency to try and come up with um resolutions to these problems we work with um the department of justice and our own legal staff in trying to resolve these situations i think that that i wanted to mention as well that's that's that's coming up frequently we've had four of these um type cases in our inventory over the last uh six months primarily since kovid and they deal with precious mental investments we've seen an awful lot of um a fraud developed over um the purchase of of gold and silver so if you're if your clients are coming to you with with um discussion relative to investments in in the metals industry um it might be worth a a a call to our office to at least discuss who the who the firms are that your clients are considering using because we've um we've had some some very um large dollar situations where these metals companies are are soliciting investors to go in and cash in their iras and transfer the funds to um to hard metal but the fees and the commissions associated with these situations are extremely high and the the losses are also extremely high so i would just like to stress that um if you have any concerns relative to um not just um elder abuse or elder um situations but anything that that comes across your desk that it doesn't feel proper um under montana code 310 340 or 3010 340 you do have to refer that desk but you can also call our office and talk to me or lynn or ryan and we can um we can discuss those situations with you i want to thank you for your time uh for being with us and uh then we'll we'll take questions uh if anyone has any um ryan can we can we share on these slides yeah i think that's something we could probably make available um uh yeah we'll we'll see we can do it yeah this entire three day workshop will be made available on youtube so for investment advisors that were unable to attend we will send the link out so they can watch it all this material is available okay and again this is lynn the deputy securities commissioner i want to reiterate what what mark talked about we are in a pandemic of elder exploitation seniors are isolated they're being scammed and it's ramped way up phishing is up 600 percent according to the ftc um if you have a senior that has anything that seems to be odd call our office as mark explained our the securities act provides immunity to you for notifying our office it provides immunity for you if we delay a disbursement or freeze an account it provides immunity to you if you contact a trusted family member i was speaking to one of you this morning on the phone and please feel free to call us we are here you are our eyes and ears you have your fingers on the pulse of what's happening with your clients i would strongly encourage everyone on the phone and any investment advisor in montana when they open an account for somebody 50 or older to have them fill out a trusted contact form it can be something you can build into your contract you don't have to require it but encourage them that if you ever suspect something is amiss it gives you the permission to reach out to somebody and you know who that trusted contact is so that's another tool that's out there mark provided you with i think five examples the example of the woman that was gonna what eight hundred thousand dollars to the condo to her fiance we investigated that and we found out the 800 000 was being wired to his actual fiance but we stopped it we put a delay on the disbursement reached out to her daughter her daughter reached out to her mother that money didn't leave montana we got to that in time the insurance agent that was was causing our 101 year old victim to be evicted from her nursing home for non-payment we never got that money back but that victim i talked yesterday about the securities restitution assistance fund we were able to get 50 000 for that victim since she lost everything and we were able to pay um for the nursing home with those funds it kept her there until she passed at the age of 102. the um scam involving the daughter who had taken all the money from her father's ira and that caused him to incur 25 000 in penalty tax because he made beyond his rmd and had to pay substantial tax that wasn't a securities case there's nothing our restitution assistance fund can do on that one and that was reactive it wasn't proactive so if something doesn't smell right or look right the sooner you get to us the more likely we are to stop it um if if you wait until four or five withdrawals have occurred and the money's all gone before you contact us it's a sunk cost to the victim so seeing and hearing no further questions excuse me there was one uh question um the question is you uh do you have any resources we can use to educate our clients about current broad trends that they should be aware of um you know our office works closely alongside of the office of consumer protection um they have a lot of materials related to uh trendy scams and that sort of thing then do we have anything else in the office as far as we do have uh the north american securities administrators association has published during the pandemic covert related scams flight to safety which what mark talked about be on the lookout for your clients wanting to move to precious metals or non-traditional securities um resources along that line on how like cryptocurrency bitcoin gold and silver can be risky and you don't put all your eggs in one basket we can get those materials and put them on our website for you to have to share with your clients i will take an active role in finding all of those materials we have one on social isolation and its effects on seniors as a result of our current environment which may last a while longer and then retirement draining we've heard that you know the cares act has provided access to qualified funds with reduced penalties and a longer payback period we have heard of unscrupulous people and some unscrupulous stock brokers encouraging people to take money out of their qualified accounts and put them in risky investments and a chance to double down there are materials on qualified plans and retirement training so i will get those actively placed on our website and let you know when they're there and as a follow-up from yesterday shortly you'll be getting the the updated rules so are there any further questions one thing i did want to mention too that um a lot of times in these romance scams the the victim is so embarrassed that they have difficulty discussing the situation with us and you you folks are closer to um to your clients and so you may experience some of that embarrassment but um if you delve in a little bit further into what's actually going on where this money is and please report it to our office we'll certainly investigate these uh linda what's another question uh the question one is uh do you work with any local area aging services we do and and that's a great point we two years ago commissioner rosendale started a multi-jurisdictional task force and that involves adult protective services michael hagenlock it involves the con ag's office attorney general tim fox and the consumer protection division the fbi kurt almi and the u.s attorney's office a medicaid and medicare aarp numerous county attorneys county the county attorney's association and we've created the eastern montana elder exploitation task force it's got a nice acronym i can't remember it our goal is to set one of those up geographically throughout montana so any advisors on this call that are in eastern montana there's an awesome resource team and the purpose of the resource team is if we have a victim that needs to be interviewed by multiple jurisdictions we can come in under one hat and and do the interview once instead of putting the person who's embarrassed through multiple interviews we've got community volunteers from aging services that are helping us with these matters it's a great dynamic it will grow over time we started with eastern montana because that's where there's population concentration but so any advisors in eastern montana if you shoot me a quick email i can put you in touch with the contacts there and we we are ex-officio we're part of that as are all the state agencies that deal with elder exploitation um this is a it's called the silver tsunami every day a hundred thousand people turn 65 and it's going to continue and continue and continue and that population controls 75 percent of the nation's wealth of the cases as i talked about yesterday where we've made restitution assistance payments 81 of our victims are over the age of 60. in montana you're defined as an older person at the age of 60 but i can tell you that 81 average age is over 80. seniors are trusting they've got a landline they take phone calls and right now they're lonely and they want to talk to somebody so we're here we've got the tools we've got the partnerships and our goal is to keep everyone safe as is yours and it was great for you t call in and participate i hope you could make all three days again i will be sending out emails i want to thank uh mark and ryan and eric fulton who presented on tuesday for great information i promise you the next time we get together i i hope it's in person it's nice to see people and put a face to a face but thank you again we look forward to hearing from you you'll probably hear from ryan and mark in the near future on your virtual exam but we hope this helped you know what to expect and having no further questions we're letting you off 15 minutes early again today so thank you all