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: Trading Desk Issues

Clayton Rejects Request to Extend CAT Deadline

November 17, 2017
SEC chairman Jay Clayton on November 14 issued a nuanced statement?rejecting a request from the national securities exchanges and FINRA to delay the initial deadline of the Comprehensive Audit Trail Ė better known as the CAT Ė by a year, and other deadlines by a year or more. His decision leaves at least the short-term implementation of the much-discussed high-tech tool up in the air.

Read More

SEC Provides Temporary Relief from MiFID II Research Requirements

October 27, 2017
Advisers and broker-dealers can relax Ė at least a bit. In a trio of no-action letters issued October 26, the SEC assured them that they will not take enforcement actions against them if they fail to meet certain European Union requirements regarding research dollars and more that take effect January 3.

Read More

Jury Rules Against F-Squared Founder in Federal Court

October 13, 2017
The SEC came out the winner on October 6, when a federal jury ruled against advisory firm F-Squared Investments founder and former CEO Howard Present in a case the agency brought almost two years ago in federal district court.

Read More

Settlement Shines New Light on Old Practice of Scalping

October 6, 2017
With ever-more sophisticated securities transactions seemingly becoming the norm, the SEC increasingly relies on its own high-tech abilities to identify fraud. Elaborate new ways of investing and transacting should not, however, distract compliance departments from monitoring their firms for some of the most basic kinds of fraud. The practice known as "scalping" is a case in point.

Read More

12b-1 Fees: SEC Settles Share Class Charges with Two More Advisers

September 29, 2017
If you think the SEC only occasionally charges advisers for placing clients in expensive share classes when less expensive classes are available, recent events should change your mind. The agency reached settlements with two advisory firms involving share classes just last month, and those followed up on still other settlements and developments earlier this year and the year before.

Read More

Trade Aggregation and Allocation: Key Practices to Keep Your Advisory Firm Safe

July 28, 2017
The trading desk is, in many ways, the heart of what your advisory firm does. Itís where client securities are bought and sold, where critical decisions on investments are made Ė and where missteps can lead not only to bad investment results, but attention from government regulators.

Read More

Latest Cherry-Picking Case Includes Improper Fee, Investment Strategy Charges

June 23, 2017
Itís no secret that the SECís Division of Enforcement is targeting advisers that misallocate trade results to favor themselves, a practice known as cherry-picking. What is also turning up in some of these enforcement actions are additional charges, such as improper fees and deviations from investment limitations.

Read More

Portfolio Manager Charged with Stealing Dollars in Matched-Trades Scheme

April 28, 2017
Chief compliance officers know that high among the advisory firm employees they need to monitor are portfolio managers. After all, they sit at the nexus of the trading action. The SEC, in an April 24 complaint filed against a Massachusetts-based portfolio manager, makes clear just how serious the dangers are.

Read More

Another Wrap Fee Adviser Settles with SEC Over Tradeaway Disclosures

March 31, 2017
The SEC isnít letting up in its scrutiny of dually registered advisers/broker-dealers, particularly those offering wrap fee programs that result in clients paying unexpected fees for transactions that are "traded away" to other brokers. It settled two such cases a few months back Ė and on March 13 settled a new one.

Read More

Liquidity Risk Management Rule Compliance: Don’t Wait for 2018, Prepare Now

October 28, 2016
December 1, 2018 may seem like a long time away, and June 1, 2019 even longer. But smart chief compliance officers at advisory firms managing mutual and exchange-traded funds will not let those dates lull them into putting off needed preparations to comply with the SECís final liquidity risk management rule, adopted earlier this month. The time to begin compliance preparations is not in 2018 or 2019, but now.

Read More

SEC Charges Adviser for Steering Clients to More Expensive Share Classes

August 26, 2016
Less than three weeks after the SEC announced in a risk alert that it would be scrutinizing advisory firms that, without disclosure, place clients in mutual fund share classes that are more expensive than others, the agency charged an adviser with doing just that.

Read More

Trading Desk Challenges: What Advisers Need to Know

April 15, 2016
Advisers need to pay particular attention to their trading desks. Thatís where securities are bought and sold, and, for that reason, itís where a lot of things can go wrong.

Read More

Portfolio Rebalancing: Know When It’s Needed and Avoid Red Flags

March 25, 2016
One of a portfolio managerís responsibilities is making sure that portfolio investments match the allocation percentages listed in a clientís governing documents. When those percentages change, the portfolio managers may need to rebalance the allocations Ė and do so in a way that does not cause compliance problems.

Read More

Prearranged Trades May Set Your Firm Up for SEC Enforcement

January 15, 2016
Watch out for red flags telling you that portfolio managers prearranged trading to favor one set of clients over another. Failure to act on those flags is likely to prearrange two other results: an SEC investigation followed by an enforcement action.

Read More

Rule 105 Dragnet: SEC Snares Six More Advisers, One for the Second Time

October 30, 2015
Itís round three in the ongoing SEC Rule 105 initiative. With apparent satisfaction that its campaign against advisers that participate in public stock offerings after short selling those same stocks is going well, the agency recently announced six more settlements that brought in more than $2.5 million in fines.

Read More

Marking the Close: SEC Mostly Wins in Market Manipulation Appeal

July 30, 2015
Market manipulation is a big deal to the SEC. You can expect the Commission to hang tough when its orders in cases alleging such activities are challenged Ė and a recent U.S. Court of Appeals ruling would seem to back that strategy.

Read More

Long and Short: SEC Expects Accurate Data from Advisers

July 24, 2015
Next time you report trades to brokers, make certain you correctly characterize them. One firm just settled with the SEC for $4.25 million and was forced to admit wrongdoing in regard to the agencyís allegations of mischaracterizing long and short sales.

Read More

Trade Sequencing: Navigate Risks with Thorough Disclosure

October 10, 2014
How advisers sequence trades is a bit of an art as well as a science.

Read More

Rule 105 Crackdown: 19 More Firms Settle

September 26, 2014
The SECís Rule 105 dragnet continues. Nineteen advisory firms and one individual trader settled September 16 in the face of charges that they violated Rule 105 of Regulation M, part of the agencyís ongoing campaign to prevent violations of the Rule.

Read More

Failure to Disclose Trading Strategies Leads to Decision Against Adviser Execs

May 2, 2014
Two key players at an investment adviser acting as a fund sub-adviser learned the value of disclosure the hard way.

Read More