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

Topic: Fund Disclosure

Warning: Avoid Mixing Client and Adviser Money in the Same Illiquid Assets

September 8, 2016
Itís a recipe for conflict of interest: An advisory firm with an equity stake in certain illiquid assets adds client dollars to those assets Ė and fails to disclose to the clients that it is doing so. Sound unlikely? Charges alleging just that were leveled against a Salt Lake City-based adviser and two of its executives.

Read More

New OCIE Target: Adviser Share Class Recommendations

July 15, 2016
The SECís Office of Compliance Inspections and Examinations has found its next target: Advisers that receive compensation or financial incentives for recommending mutual fund and 529 Plan share classes with substantial loads or distribution fees. OCIE wants to know whether such arrangements involve conflicts of interest, are properly disclosed, and are covered by an advisory firmís written compliance policies and procedures.

Read More

New Guidance Calls for Disclosure of Risks from Changing Market Conditions

March 18, 2016
The SEC is relentless in seeking that funds and the advisers that manage them disclose risks to investors. It has done so for risks involving a fundís principal investments; the volatility, leverage, liquidity and other risks that come with investments in derivatives; and even the risks posed by fund names that may be perceived as suggesting safety and protection from loss. Now it wants updated disclosures of risks caused by changing market conditions.

Read More

Investment Strategy Changes: Don’t Get Burned by Failing to Disclose

March 4, 2016
Many advisers will re-evaluate and change their investment strategies over the course of a clientís life. Itís part of making sure that clients get the best returns. What a shame, then, when some of those advisers cause new problems for themselves and for their clients by failing to disclose those changes.

Read More

White Justifies SEC Push to Go Beyond Disclosure

February 26, 2016
SEC chair Mary Jo White last week laid out her case for agency actions that take the SEC beyond its traditional role of requiring disclosure to one of requiring more substantive steps, among them the recently proposed rules on derivatives and liquidity management. Advisers should take note: Itís not your grandparentsí SEC anymore.

Read More

Broken Deal Expense Allocations: A Question of Disclosure

February 19, 2016
The key for private equity and other funds allocating broken deal expenses is that they explicitly disclose in the fundís governing documents just how those expenses will be allocated. Failure to provide such disclosure is a red flag likely to draw SEC attention.

Read More

Multiple Disclosure Issues Lead to Enforcement Against Hedge Fund Manager

February 5, 2016
Disclosure is a basic requirement of most SEC regulations. If you want a visit by the SEC, failure to disclose, particularly when it occurs more than once, is one of the best ways to ensure that you get one.

Read More

Failure to Disclose Change in Investment Strategy Likely to Draw SEC Ire

November 20, 2015
Firms that plan to change a fundís investment strategy would be wise to let their clients know before, rather than after, they execute the change. Those that donít may not only face unhappy investors, but the wrath of the SEC.

Read More

Private Equity + Conflict of Interest + Failure to Disclose = SEC Enforcement

November 13, 2015
Hereís a recipe sure to draw the SECís attention, direct from the Division of Enforcementís cookbook: Take one private equity firm, add a tablespoon of conflict of interest, mix, and then bake. When done, divide among selected colleagues and enjoy the finished product in private. Be sure not to share the recipe with clients, investors or board members. Warning: This recipe may prove significantly more expensive than expected, and you may not be doing much more baking after agency charges lead to a costly settlement.

Read More

Proposed Liquidity Management Rules Would Change How Mutual Funds Work

September 25, 2015
The SECís proposed set of liquidity risk management rules for mutual funds and exchange-traded funds are likely, if adopted as written, to make major changes in how those funds, and the advisers who manage them, do business.

Read More

Accurate Small Print Disclosures Will Not Make Up for Misrepresentations

August 28, 2015
"Itís in the written materials" is not an adequate defense for firms whose representatives otherwise misinform clients about the risk level of investments. Advisers need to review all representations, written and oral, to ensure that they provide accurate and consistent disclosure. Two Citigroup affiliates learned this lesson on August 17, after they agreed to pay almost $180 million in disgorgement and interest to settle SEC charges that they defrauded investors in two hedge funds.

Read More

Master the Keys to Successful PPMs and Subscription Documents

July 24, 2015
A fundís private placement memorandum and accompanying subscription documents are the window through which both investors and regulators view a fund and an adviserís management of it. Take the time to get them right Ė youíll find itís time well spent.

Read More

New Guidance Clarifies Personal Securities Transactions Reporting

July 10, 2015
Better go back and check the arrangements your employees have with the managers of their trusts and third-party discretionary accounts. If access persons in your firm arenít reporting their personal securities holdings and transactions for these accounts, they may need to start.

Read More

Fees and Expenses: What Examiners Want to Know

June 18, 2015
Do what you say, and say what you do. Securities regulations have been described as a disclosure regime. As long as a firm discloses to clients what it plans to do with their investments Ė and does so in a way that will be read and understood by a reasonable person Ė the firm in many instances can rest easy that it is not breaking its fiduciary duty to those clients.

Read More

OCIE Turns Its Attention to Never-Before-Examined Investment Companies

May 1, 2015
Mutual funds, open-end funds and other investment companies that have never been examined should start getting a bit nervous: Examiners may be coming.

Read More

SEC Charges Firm with Conflicts of Interest Involving Inter-Fund Loans

March 20, 2015
Almost as if to demonstrate Asset Management Unit co-chief Julie Rieweís point (see story this issue), the SEC on March 16 settled a case involving multiple conflict-of-interest charges against an adviser and its owner.

Read More

SEC Keeps Its Eye on the Alternative Mutual Fund Ball

November 7, 2014
Sunlight is often described as the best way to prevent infections. The SEC wants the sun to shine very brightly on alternative mutual funds.

Read More

Conflict of Interest and Disclosure Charges Over Alleged Deal to Sell Firm

September 26, 2014
One false and misleading Form ADV may lead to another Ö and another Ö and another. Then the SEC may come calling.

Read More

New SEC Crackdown: Failure to File Beneficial Ownership Papers

September 19, 2014
Documentation is important Ė and so is filing documents on time.

Read More

SEC Commissioner Fires Latest Salvo in Disclosure Debate

June 20, 2014
Disclosure: Just how much is enough?

Read More