Fund Disclosure

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.

SEC Staff to Fund Managers: Verify Accuracy of Performance and Fee Disclosures

The SECs Division of Investment Management is apparently not happy with mutual fund disclosures of their performance and fees. In new guidance issued October 7, the Division staff lists a number of improper practices that it has observed and says that funds and fund managers need to verify the accuracy of their performance and fee disclosures prior to filing them with the Commission and providing them to investors.

SEC Staff Suggests Mutual Fund Disclosure Changes, Listing of Risks in Priority Order and...

Order risks by importance, tailor risk disclosures for specific funds, state that a fund is not appropriate for certain investors. These are some of the changes that the SECs Division of Investment Management staff would like mutual fund managers to consider. The Division staff on September 11 issued an “Improving Principal Risks Disclosure” accounting and […]

Conflict of Interest, Due Diligence and Disclosure Questions Draw SEC Attention

The SECs Division of Enforcement always has its eye out for advisers that may run afoul of its highest priorities, including conflicts of interest and failure to disclose. When it finds firms with these violations, expect the agency to investigate and, when these investigations bear fruit, possibly take enforcement action.

Proprietary Algorithms May Promise Profits But Bring the SEC

Advisory firms offering clients and investors big profits through the use of homegrown, supposedly surefire algorithms had better think twice. It is unlikely that any scientific formula can beat the market or regularly prevent losses - and advisers that use algorithms to lure investors and keep existing clients may find they get neither profits nor loss prevention, but instead find themselves facing SEC enforcement and fines.

SEC Modifies Form N-PORT Reporting to Address Cybersecurity Concerns

The SEC last week eased up a bit on its portfolio reporting requirements for investment companies. In an interim final Rule, it changed the frequency with which funds must file Form N-PORT with the agency from monthly to quarterly. Doing so, it said, will address both data and cybersecurity concerns.

Fraud Charges Demonstrate that Actions Must Match Disclosures

Telling investors one thing and then doing another is often a recipe for trouble. This may have been particularly true for one advisory firm that the SEC charged January 26 with promising some investors that portions of their profits would be used to protect their investments but instead were used to pay the living expenses of the firms owner.

Fund Association Wants SEC to Propose Rule for Summary Shareholder Reports

The Investment Company Institute (ICI) has made a proposal to the SEC as part of its answer to the agencys request for comment on ways to enhance fund disclosure for investors. The association, which represents regulated funds worldwide, suggested in a comment letter that the Commission propose a rule creating a new, optional summary shareholder report that would ostensibly make the full shareholder report easier for investors to understand while also helping them compare funds.

Blass Wants Readable Fund Disclosures, Opens Door to New Derivatives Rule

SEC Director of Investment Management Dalia Blass donned the mantle of a writing coach in a recent speech to investment company professionals, urging those who write fund disclosures to tell a clear story, write clearly and consistently, and watch for individual sentences that contain more than 70 words.

Concealing Asset Values Wont Solve Problems, May Bring SEC Charges

No adviser wants to see declines in the asset values of the client accounts they manage. Concealing those declines from clients and regulators, however, is not the answer. Not only will clients find out and likely be quite upset, but there is a good possibility the SECs Division of Enforcement will take notice. Better to come clean about the true state of affairs.

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.