M. Jacko

Managing Partner and CEO

Michelle L. Jacko, Esq.

Managing Partner and CEO

Michelle L. Jacko, Esq. is the Managing Partner and CEO of Jacko Law Group, PC (“JLG”), which offers securities, corporate, real estate, and employment law counsel to broker-dealers, investment advisers, investment companies, hedge/private funds and financial industry professionals. In addition, Ms. Jacko is the Founder and CEO of Core Compliance & Legal Services, Inc., a compliance consultation firm.

Ms. Jacko specializes in investment adviser, broker-dealer, investment company and private fund regulatory compliance matters, internal control development, regulatory examinations, transition services, and operational risk management. Her consultation practice is focused on the areas of regulatory exams and formal inquiries, investment and merger and acquisition transactions, exit and succession planning, annual reviews, policies and procedures development, testing of compliance programs (including evaluation of internal controls and supervision), mock exams, senior client issues, cybersecurity, Regulation S-P, and much more.

Over the years and through a transformative market, Ms. Jacko has also developed service solutions throughout her practice, focusing on regulatory, compliance, commercial and corporate strategic solutions for the financial industry. Her practice focuses on formations and registration of broker-dealers, investment advisers and funds and platforms associated with each of these business models. She focuses on transition and succession planning for companies, spearheading Jacko Law Group’s mergers and acquisitions practice area. She aligns her legal team to directly apply experienced legal acumen and business-savvy foresight to assist clients navigate and traverse the breakaway, formation, and growth plan for their corporation’s continued achievement, expansion, and upward trajectory.

Throughout this process, Ms. Jacko uses her 27 years of regulatory compliance experience to provide risk mitigation strategies to businesses. She provides her clients with risk assessments, annual reviews and gap analysis, and serves as lead attorney for SEC and FINRA enforcement matters, regulatory formal inquiries, and regulatory examinations. She has developed a practice that successfully helps our clients to be prepared for examinations through meticulous preparations, including mock interviews, compliance program document reviews, and counsel to members of senior management and interfacing with regulators throughout the process. She frequently provides counsel on Chief Compliance Officer liability issues, assists advisors with regulatory reporting of disciplinary events and customer complaints, provides counsel on various representative onboarding and exit considerations and drafts complex agreements and client disclosure documents.

Utilizing an unparalleled service with a visionary strategy, Ms. Jacko’s counsel contributes to client success. She fosters trust amongst her team and has forged a path for JLG’s growing and multifaceted merger and acquisition practice, general corporate counsel services and regulatory compliance practice areas.

As a frequent presenter at national financial industry conferences, Ms. Jacko delivers insightful and thought-provoking workshops regarding industry hot topics and rising compliance issues. She is a frequent contributor to various industry journals and publications, including Barron’s Advisor, Charles Schwab, Investment Adviser Association’s IAA Today, National Society of Compliance Professionals’ Currents, Lawyer Monthly Magazine, Thomson Reuters, and more. She also is a featured author in Modern Compliance, Vol. 1 and 2.

Ms. Jacko served as the former Vice-Chair of Education of the Corporations Committee for the State Bar of California Business Law Section and is a two-time Board member alumn of the National Society of Compliance Professionals. She is the Co-Founder and a member of the Southern California Compliance Group and also is a FINRA Arbitrator. Ms. Jacko is a member of Vistage International and actively participates in her community.

JLG and Ms. Jacko are proud to be members of the National Women Business Owners (NABWO) Corporation.

Throughout her career, Ms. Jacko has established herself as an influential leader, both locally and industry-wide. She has received numerous accolades and recognitions for her contributions, impact, and thought leadership. Since 2019, she has been selected as a finalist for San Diego Business Journal’s (SDBJ) CEO of the Year Award (2019-2022). She has also been selected for inclusion for the SDBJ’s 2022 Women of Influence 50 over 50, 2021 -2022 Women of Influence in Law SDBJ’s 2018-2022 Business Woman of the Year, 2020-2022 San Diego 500 Influential Business Leaders Award, 2020-2022 SD500, and prestigious 2020 Most Admired CEO Awards. Alongside the many awards from the SDBJ, Ms. Jacko also was selected as a finalist for San Diego Magazine’s 2020–2021 Influential Women: Woman of the Year Award and was honored as a finalist for the 2019 NAWBO Bravo Awards - San Diego. International magazine CEO Today also selected Ms. Jacko as one of the 2019 and 2020 Business Women of the Year Awards. She also received Acquisition International magazine's Global Excellence Awards: Most Influential Woman in Securities Law 2019–2020 - San Diego, and locally was selected by San Diego Metro as one of the 12 Women of Influence in San Diego, CA.

Before starting both companies, Ms. Jacko previously served as Of Counsel at Shustak & Partners, PC. Prior to that, she was Vice President of Compliance and Branch Manager of the Home Office Supervision team at LPL Financial Services, Corporation (Linsco/Private Ledger). She also served as Legal Counsel of Investments and Chief Compliance Officer at First American Trust, FSB and held the position of Compliance Manager at Nicholas-Applegate Capital Management. In addition, Ms. Jacko was with PIM Financial Services, Inc., and Speiser, Krause, Madole & Mendelsohn, Jackson.

Ms. Jacko received her J.D. from St. Mary’s University School of Law and B.A., International Relations, from the University of San Diego. She is admitted to the State Bar of California and United States District Court, Southern District of California. Michelle holds NSCP’s Certified Securities Compliance Professional (CSCP) designation and is a member of the National Association of Women Lawyers (NAWL).

In addition to her many accomplishments, Ms. Jacko is also dedicated to giving back to her community and charitable organizations. Throughout the years she has dedicated her time and efforts to numerous organizations, including the Autism Tree Project, Wounded Warriors Project, the ASCPA, the San Diego Food Bank, School of the Madeleine and more. She also supports whenever she can the military community. It is her dedication to her team, her practice and her community that has laid the foundation for JLG’s impact and continued growth and success.

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Mergers & AcquisttionsPrivate Equity & Private Fund ServicesSEC/State: Regulatory Compliance Services

SEC Examination Priorities In 2016: How They May Impact Your Compliance Program

Legal Risk Management Tips

February 1, 2016

Last month, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) issued its examination priorities for 2016.¹This letter, issued annually as part of the SEC’s National Exam Program, allows registrants the opportunity to focus its compliance program efforts on those areas of particular interest to the staff. This month’s Legal Tip will highlight some of the most notable areas that could impact the compliance programs of investment advisers, investment companies, broker-dealers, and advisers to private funds. At the conclusion of this summary, will provide certain risk management tips for firms to consider when advancing their compliance programs in 2016.

Notable Examination Priorities for 2016

In formulating the examination priority areas for 2016, the SEC concentrated on three thematic areas: protection of retail investors, market-wide risks and data analytics to identify potentially problematic registrants. Within each of these thematic areas, there are numerous sub-categories. For purposes of this Legal Tip, we are focusing on those sub-categories that we believe may have the broadest impact on our client base. The following list is not all-inclusive, and therefore, JLG strongly encourages you to review the SEC’s examination priority letter in its entirety.

1. Protection of Retail Investors

As the staff has identified, now, more than ever, retail investors are making independent investment decisions, particularly for retirement. As a result, the SEC believes that additional steps should be taken to help protect such retail investors. Examination initiatives this year will include evaluation of:

a. Retirement-Target Industry Reviews (also known as “ReTIRE”), which focus on the suitability of recommendations made to consumers, conflicts of interest, supervision and marketing practices;

b. Exchange-Traded Funds, and specifically sales tactics, disclosures, trading practices, suitability and adherence to regulatory requirements

c. Fee Selection and related conflict of interest disclosures, including whether clients who trade infrequently are being appropriately placed in a fee-based account (versus a commission-based account) or in other account types which may not be in the best interest of the consumer;

d. Conflicts of Public Pension Advisers, including undisclosed gifts and entertainment and pay-to-play considerations; and

e. Branch Office Exams, and methodologies employed by the firm to supervise branch office activities, including potentially inappropriate trading.

2. Market-Wide Risks

To help maintain a fair, orderly, efficient market, the SEC expects registrants to take proactive steps to identify and mitigate against structural risks. To that end, OCIE will be examining the following areas in 2016:

a. Cybersecurity – Based on guidance provided for the past two years from the SEC and the Financial Industry Regulatory Authority (“FINRA”) on regulatory expectations for developing a dynamic cybersecurity program,²the staff will review what tests and assessments are employed by the registrant to implement procedures and controls; and

b. Liquidity Controls – For those registrants that have exposure to potentially illiquid fixed income securities or have become a liquidity provider, the staff will review controls implemented for valuation, trading, market risk management and liquidity management.

3. Data Analytics to Identify Potentially Problematic Registrants

Data analytics serves as a strong tool to identify trends and patterns that exist which can indicate a potential problem within an industry sector or internal control structure. Specifically, the staff uses data analytics to evaluate the risk profiles of its registrants. Based on risk mapping, examinations in 2016 will focus on the following areas:

a. Recidivist Representatives, and those firms who are employing individuals with a track record of misconduct, to see whether supervisory controls are in place for effective monitoring;

b. Anti-Money Laundering, and whether registrants are filing suspicious activity reports, as necessary, fulfilling independent testing obligations and adopting where applicable controls to mitigate against terrorist financing risks;³and

c. Product Promotion, for new, complex and high risk products. Notably, one of the initiatives mentioned with this release includes private placement products, including Regulation D offerings made pursuant to the EB-5 Immigrant Investor Program and related suitability and regulatory obligations. JLG will be providing additional guidance and highlighting regulatory considerations for EB-5 programs in an upcoming monthly Legal Tip.

Conclusion

From the above-list, it is clear that OCIE is expanding its examination program to review systemic risks within the securities industry. To help registrants evaluate how their compliance programs can address these areas, consider the following analytics, which may help identify gaps within existing internal controls:

Consider whether the firm has adopted a surveillance system for evaluating suitability of retirement investment recommendations, including conflicts of interest related to such recommendations.
Evaluate the types of ETFs being offered to clients and whether adequate disclosures, particularly related to the risk of niche or leveraged/inverse ETFs are provided.
Assess whether the firm has provided training and examples to sales personnel as to when it is and is not appropriate to transition a client to asset-based fees, hourly fees, wrap fees and commissions.
Evaluate pay-to-play policies to ensure that they are effective in identifying conflicts of interest (and the appearance of potential conflicts of interest) that may exist as a result of undisclosed gifts.
Consider how the firm currently is supervising and evaluating product and securities transactions in branch offices for appropriateness, and assess whether such efforts comprehensive enough to detect inappropriate trading.
Determine if the firm has developed an effective plan as to what will happen if a cyberattack occurs (i.e., what is the communication plan with clients, staff, law enforcement, etc.) and test by questioning firm members as to what they would do.
Evaluate the strength of the firm’s liquidity controls, including the overall process of liquidity management.
Assess whether compliance and human resources are working together prior to the point of hire to address potential risks of hiring advisors with a track record of misconduct.
Determine if AML controls are evolving with risks facing the financial system, including terrorist financing risks.
Consider if the types of products being promoted by the firm, and particularly complex or alternative investments, have characteristics which require sales practice training and enhanced compliance oversight.

For more information on this topic, including assistance with evaluating your firm’s internal controls, please contact us at (619) 298-2880 or at info@jackolg.com.

Author: Michelle L. Jacko, Esq., Managing Partner, Jacko Law Group, PC. JLG works extensively with investment advisers, broker-dealers, investment companies, hedge funds, banks and corporate clients on securities and corporate counsel matters.

This article is for information purposes and does not contain or convey legal advice. The information herein should not be relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.

¹See https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2016.pdf.

² For more information, please refer to https://www.sec.gov/ocie/announcement/ocie-2015-cybersecurity-examination-initiative.pdf; https://www.sec.gov/ocie/announcement/Cybersecurity-Risk-Alert–Appendix—4.15.14.pdf; http://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2015.pdf;https://www.sec.gov/about/offices/ocie/cybersecurity-examination-sweep-summary.pdf;https://www.finra.org/file/report-cybersecurity-practices.

³ In its 2016 examination priorities notification letter to members, FINRA also identified suspicious activity monitoring as one of its initiatives. For more information, see http://www.finra.org/industry/2016-regulatory-and-examination-priorities-letter.

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