Enforcement

Two More Advisers Settle Aequitas-Related Conflict-of-Interest Cases

Investment advisers in New Jersey and California recently reached settlements with the SEC in regard to client investments in entities tied to former Oregon-based firm Aequitas Management. Those settlements, like a July agency settlement with a Massachusetts advisory firm, resolve allegations involving conflicts of interest and inadequate disclosure.

Adviser’s Ownership Interest Triggers Principal Trading Settlement

An investment advisory firm and its founder/chief executive officer reached a settlement with the SEC after the agency charged both with principal trading violations. The founder’s ownership interest in a fund his firm managed when the trades occurred was more than 35 percent, the agency said, well above the 25 percent limit mentioned in a recent agency Risk Alert, and apparently triggered the agency investigation.

SEC Warns against Insider Trading during Coronavirus

The SEC wants to make sure that no one takes advantage of the business situation created by the coronavirus and the government and business reactions to it by misusing material non-public information and engaging in insider trading. It issued a warning to that effect.

Side Compensation without Disclosure Leads to Court Charges against Adviser

The SEC recently filed charges in federal court against an advisory firm, its owner and a former owner, claiming that the three breached their fiduciary duty when they failed to disclose to their clients that they were accepting compensation that created a conflict of interest. Now the defendants face not only the charges, but the possibility of disgorgement and financial penalties.

SEC Notes Failure to Self-Report in Latest Share Class Settlement

The SEC, in its latest share class disclosure settlement with an advisory firm, makes a point of noting, fairly prominently in the settlement order, that the firm chose not to self-report its alleged violations to the Division of Enforcement. The result appears to be that the adviser got hit with more than $900,000 in disgorgement and civil money penalties – part of which could have been avoided by voluntarily coming forward.

Fund Manager Settles Charges of Risk Misrepresentation, Failure to Supervise

An advisory firm and its owner settled charges with the SEC that they misled investors about the degree of risk they faced when placing their money in a fund that primarily invests in futures contracts. The agency said that the two misrepresented risk protections that they, and a senior portfolio manager had told investors were in place. The settlement will cost the adviser and its owner more than $10 million in disgorgement and fines.

Conflict of Interest Settlement Yields Millions in Disgorgement and Penalties

An SEC settlement with two Florida-registered advisers leaves the two individuals agreeing to collectively pay more than $7 million in disgorgement and interest, as well as $200,000 in civil money penalties. The two got in trouble when the agency alleged that they failed to disclose conflicts of interest involving their ownership interests in an insurance holding company, an investment advisory firm, and a lender.

SEC Disgorgement Power at Risk in Supreme Court Case

The SEC this month filed a brief in the U.S. Supreme Court that may make the difference between whether it can continue to request that courts impose disgorgement against defendants or whether it can no longer do so. If the Commission loses the argument before the high court, the ramifications are likely to be significant, not only for the SEC and those it regulates, but for other federal agencies, as well.

Former Hedge Fund Analyst Pays the Price in Insider Trading Settlement

When an advisory firm employee uses material non-public information (MNPI) from a client to increase his own profits, that most likely constitutes insider trading. A former healthcare analyst at a New York City-based registered advisory firm found this out the hard way on January 10, when he settled insider trading charges with the SEC.

2020: New Rule Consequences, Election Fallout, Enforcement and More

Every year brings new developments and challenges, but as far as investment advisers and funds go, 2020 may pack quite a wallop. Aside from adoption of a final Advertising Rule, Proxy Advisory Firm Rule and others, expect the SEC to move forward with proposing a revamped Custody Rule and possibly more self-reporting initiatives along the model of the concluded Share Class Disclosure Initiative. As if that isn’t enough, fund managers will need to ensure their funds comply with the requirements of the recently adopted ETF and Liquidity Risk Management Rules.

Audio Interviews

How to Read an SEC Enforcement Action

Stern Tannenbaum law firm partner Aegis Frumento on how to get the most from reading an SEC administrative order or court complaint.

Most Important Supreme Court Decisions for Advisers and Funds

Find out the high court decisions from recent years that are likely to affect how advisers and investment companies work from Debevoise partner Robert Kaplan. 

Top 10 Cybersecurity Steps to Take Now

Sutherland law firm partner Brian Rubin shares the most urgent cybersecurity steps for investment advisers.

Top Marketing Problems … and Solutions

Get solutions for the top marketing challenges that advisers face from ACA Compliance Group managing director Kimberly Daly

Watch Out for 5 Cybersecurity Myths

ACA Aponix Director Pascal Busnel on the most common cybersecurity myths that may cause firms to spend resources where they may not be needed.

The Hidden Costs of Non-Compliance

Proskauer law firm partner and former SEC Division of Investment Management deputy director Robert Plaze on why the costs of non-compliance go way beyond an SEC penalty.

CCO Liability: How to Protect Yourself

Find out from Blue Edge Capital CCO Margaret Fretz what chief compliance officers may be liable for and best practices to make sure you are protected.

Ethics or Compliance: Making the Choice

Find out the difference an ethics, rather than a compliance, perspective makes at an advisory firm from former Ethics and Compliance Officer Association COO Timothy Mazur.