See why ACA Insight is the leading newsletter on regulatory compliance. Sign up for a free 1-week trial.

The weekly news source for investment management legal and compliance professionals

SEC Adopts Guidance on Adviser Use of Proxy Advisory Firms and Voting

The Commission bit the bullet this past week and issued guidance to advisory firms on their responsibilities in terms of proxy voting, including the contentious issue of how they should work with proxy advisory firms. The SEC’s 3-to-2 vote in favor of the guidance most likely does not bring an end to the strong feelings that have previously been expressed on this topic, but it does set a benchmark against which future efforts may be judged.
Continue Reading

Future Rulemaking: What the SEC’s Standards of Conduct Adoption Tells Us

The past, as they say, is prologue. The SEC, having earlier this year adopted its Standards of Conduct package, is now turning its attention to other rules, amendments and interpretations. With Regulation Best Interest, the advisory form interpretation and Form CRS in the rear view mirror, what can we learn from how Chairman Jay Clayton’s agency does rulemaking to inform our expectations for rules yet to come?
Continue Reading

‘Incubator Fees’ Land Private Fund Adviser in Court

One of the SEC’s perennial targets is advisers charging excessive fees – and then failing to disclose those fees to its clients or funds. In a complaint this month in federal court, the SEC charged an advisory firm to private venture capital funds and its owner with doing both.
Continue Reading

Recent Stories

CCOs Must Keep Pace with Changes in How Firms Retain Books and Records

The world of information technology has changed virtually everything it has touched since the advent of email, data management and the Internet. Compliance with the SEC’s Rule 204-2, the Books and Records Rule, is no different. Advisers today typically keep some, if not most, of their documents electronically – and must remember to adapt their compliance efforts to match.
Continue Reading

As Election Season Heats Up, Pay Attention to Pay-to-Play

Presidential candidates and talk about the 2020 elections is in the news – and likely to increase as the months progress. Too far away to pay attention? Not for advisory firm chief compliance officers. Now, in fact, is a good time to start ensuring advisory firm compliance with Rule 206(4)-5, the Pay-to-Play Rule.
Continue Reading

Insider Trading Settlement Notes Destruction of Evidence by Branch Manager

Trading in a company’s stock and options based on material non-public information obtained from a friend who worked at that company will doubtless draw the attention of SEC enforcers. Destruction of subpoenaed evidence is likely to only add to investigators’ fervor and increase settlement penalties – as one branch manager at a duly registered adviser/broker-dealer found out.
Continue Reading

Peirce Calls for Digital Token Safe Harbor

Long a backer of digital innovation in the securities markets, SEC Commissioner Hester Peirce on July 30 called for the creation of a digital token safe harbor that would permit issuers to offer tokens "under an alternative regime with robust requirements."
Continue Reading

SEC and CFTC Settle Mispricing Charges with Hedge Fund Portfolio Manager

Regulators take improper valuation and mispricing seriously, particularly when the party accused of doing so also allegedly tried to hide his actions. An advisory firm and commodity pool operator portfolio manager found this out the hard way after reaching settlements with both the SEC and the CFTC that together left him almost $850,000 poorer and barred from both the securities industry and futures trading for at least three years.
Continue Reading

Failure to Disclose Conflicts of Interest Lands Firm Founder in Hot Water

The founder and owner of an advisory firm that failed to disclose material conflicts of interest about investments he advocated has now experienced the cost of his alleged malfeasance. In a settlement this month with the SEC, he was barred from the securities industry for life and agreed to pay, together with his firm, more than $1.2 million in disgorgement and fines.
Continue Reading

SEC Staff Urges Market Participants to Begin Transition from LIBOR

The end of 2021 may still seem some far off, but in terms of advisers and other market participants that will need to transition from the London Interbank Offered Rate (LIBOR), it may be getting uncomfortably close. The SEC staff in July issued a statement urging all market participants using LIBOR to begin the process of moving away.
Continue Reading

SEC Report Card: OIG Focuses on Information Security and More

The SEC, those regulated by it may be glad to know, is itself scrutinized – by its internal Inspector General, whose office issues a report to Congress every six months. The most recent report makes clear that the SEC is not bulletproof, needs better information security, and is the subject of audits concerning its analytics initiatives, information technology investments and more.
Continue Reading