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The weekly news source for investment management legal and compliance professionals

Check Out Audit Team Members before Retaining Firm

It is essential that accounting firms hired to perform audits – and their individual audit team members – have credibility, and that asset managers that hire such firms know they can rely on their work. Failure on the part of advisory firms and other financial institutions to ensure that those performing the audit are up to snuff may result in serious consequences.
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Recent Stories

Inadvertent Custody: New FAQs Attempt to Clarify Enforcement

Sometimes a regulator articulates a new legal standard a bit too broadly, causing confusion among the regulated, and then seeks to clarify what it meant – only to cause still more confusion. Such may be the case with the Custody Rule and the SEC staff, which earlier this month issued two FAQs regarding the relatively new concept of "inadvertent custody."
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OIG Zeroes In on External Experts and EDGAR in its Latest SEC Report Card

Advisers, funds and broker-dealers used to dealing with examinations and investigations from the SEC might find some solace in the fact that the agency itself is continually under investigation by its own Office of the Inspector General. The OIG every six months issues a report card to Congress about the status of these investigations, and the latest, issued June 7, was not short on substance.
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Repeated Failures to File Form PF Lead to Censure and Fines from the SEC

The SEC is making no bones about it. When it requires registrants to complete and file a new form, it expects those requirements to be acted on. Form PF is a case in point. The agency on June 1 made an example of 13 private fund advisers that, it said, repeatedly "failed to provide required information" by being "delinquent" in their Form filings over multiple years.
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Hedge Fund Adviser Execs May Face Personal Fines if They Ignore Red Flags

A chief financial officer at a hedge fund advisory firm on May 8 settled SEC charges that he failed to act on red flags involving asset mismarking and insider trading. The firm ended up paying more than $10 million, and the CFO agreed to separately pay a $100,000 fine. The lesson: Advisory firm executives need to be on the lookout for signs of fraud, and act on them when they find them.
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Technology: IAA Urges Treasury to Recommend a Principles-Based Approach

As new technologies and networks proliferate among advisory firms and other non-bank financial institutions, many will require regulation, but will that regulation encourage innovation, or stifle it? The Investment Adviser Association, in a recent letter to the Department of the Treasury, urged the Department to support innovation by recommending and encouraging regulators to adopt regulations that are principles-based.
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SEC Keeps Gatekeepers in Its Sights with New Accounting Firm Settlement

The SEC made it known back when Mary Jo White was the agency chair that it would go after what it terms "gatekeepers" – attorneys, accountants, consultants and others – if it believes they took part in fraud. With its May 4 settlement with an accounting firm and two of the firm’s partners, chairman Jay Clayton signaled that his SEC will do the same.
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