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The weekly news source for investment management legal and compliance professionals

SEC Adopts Form ADV Reporting Rule Amendments

More than a year after proposing them, the SEC on August 25 adopted amendments to Form ADV that will, among other things, require advisers to provide aggregate reporting on separate accounts. The changes will also allow private fund advisers managing multiple entities as a single business to register and report on just one form, a concept known as "umbrella registration." Compliance by advisers is required by October 1, 2017.
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SEC Wins Key Round in Administrative Hearings Battle

A three-judge appellate court panel’s decision this month to dismiss a challenge to the SEC’s use of administrative law judges is the latest development in the ongoing dispute between the Commission and a coalition of advisers, defense attorneys and others that want to at least curtail the agency’s use of ALJs. But this most likely is not the end of the game.
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FINRA Proposes Raising Gift Limit

Twenty-four years may seem like a long time to some, but apparently not to FINRA, which this month proposed increasing its limit on gifts provided by broker-dealers from $100 to $175 to account for inflation. It’s the first such increase in the gift limit since 1992.
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Top Cybersecurity Mistakes Made by Investment Advisers

Investment advisers nationwide rate cybersecurity as the number one issue they face. The SEC has made it a top priority and is taking enforcement actions against firms that it finds are not properly addressing cyber risks. The upshot of all this is that advisory firms are increasingly taking steps to safeguard the privacy of client and business records, as well as the security of firm assets. But a key question they need to ask is: Are those steps the correct ones?
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Piwowar Renews Criticism of Prudential Regulation, Calls for Bank Disclosure

Asset managers are not the problem. Banks are – and attempts to head off another financial crisis by regulating advisory firms like banks will only exacerbate future crises. The answer is to impose more disclosure requirement on banks. Such is the view of SEC commissioner Michael Piwowar, who renewed his plea for regulators to cease attempts at adopting prudential, or banking, regulations for asset managers, and instead require banks to adopt the kinds of disclosure regimes that asset managers are already subject to.
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Wrap Fee Programs: Best Execution No Defense if ‘Trade Aways’ Not Disclosed

Best execution, best execution, best execution. Those two words are pounded into the minds of advisers and their trading desks so that clients receive the best deals possible. But they apparently made little difference to the SEC, which settled with a wrap fee program subadviser for failing to adequately disclose the frequency of trades it sent to non-affiliated brokers – even though the subadviser said those trades resulted in lower execution costs.
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Solve Social Media Compliance Problems Before Examiners Find Them

When SEC examiners visit your firm, expect social media and how it is used by investment staff and other employees to be high on their list of focus areas. The challenges facing chief compliance officers is not only to be prepared for the examination, but to be aware that social media poses a challenge different from many other compliance matters.
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Examiners Scrutinize Adviser Relationships with Broker-Dealers

Examiners visiting advisory firms spend increasing amounts of their time these days on cybersecurity and other hot topics du jour. But that’s by no means how they spend all their time. They also look into advisory firm bread-and-butter practices, not least among them relationships with non-affiliated broker-dealers.
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Senators Request Private Equity Investor Bulletin

SEC chair Mary Jo White found what may have been an unexpected missive in her office mailbox a few days ago: a letter from eight Senate Democrats and independent senator Bernie Sanders requesting that the agency publish an investor bulletin "that consolidates the SEC’s findings and warnings with respect to private equity investments."
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