Fund Expenses

Compensation Conflicts of Interest: SEC Staff Issues Disclosure FAQs

If the SECs recent string of settlements involving share class selection and other compensatory arrangements is not enough, the agencys Division of Investment Management is leaving no stone unturned. In a new set of answers to frequently asked questions, Division staff make it clear just what disclosure they expect from advisers when there is a compensation conflict of interest.

Adviser in Court after SEC Charges Owner and Firm with Improper Transaction Costs

The owner of both an advisory firm and a broker-dealer found himself in federal court after the SEC filed charges that he and his advisory firm invested their clients in a version of a security that charged significant transactional sales charges - most of which the broker-dealer allegedly pocketed - when the identical security was available without these costs.

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.

16 More Advisers Avoid Civil Money Penalties under SECs Share Class Initiative

As if the 79 settlements announced in March were not enough, the SEC on September 30 announced settlements with 16 more advisory firms that self-reported share class violations. While all had to collectively pay almost $10 million in disgorgement and prejudgment interest, they were able to avoid paying civil money penalties. Meanwhile, a 17th adviser […]

SEC Alleges Adviser Engaged in Share Class Violations and Other Conflicts of Interest

The SECs focus on advisers placing clients in certain higher-fee mutual fund share classes when less expensive share classes of the same investment are available shows no sign of abating – as evidenced by the agencys August 29 complaint in federal court charging a dually registered adviser with doing just that. Denver-based advisory firm Cetera […]

Incubator Fees Land Private Fund Adviser in Court

One of the SECs perennial targets is advisers charging excessive fees – and then failing to disclose those fees to its clients or funds. In a complaint this month in federal court, the SEC charged an advisory firm to private venture capital funds and its owner with doing both. California-based Frost Management Company and its […]

SEC Charges Former Advisory Firm COO Overbilled to Give Himself a Raise

Dont steal from your clients and dont steal from your employer. These seem like fairly easy rules to understand and follow - but the SEC and the U.S. Attorneys Office for the Southern District of New York, in separate enforcement actions on March 28, charged a former advisory COO with doing both.

Multiple Adviser Settlements Demonstrate Clout of SECs Share Class Initiative

The SEC knocked it out of the park this month, demonstrating to naysayers that its Share Class Selection Disclosure Initiative has been effective in appealing to advisory firms. The agency on March 11 announced settlements with 79 different advisory firms that chose to self-report their violations. While these firms collectively agreed to pay more than $125 million in disgorgement and interest, they also escaped having to pay civil money penalties.

SEC Share Class Crackdown Continues and Shows No Sign of Abating

The SEC in late December settled charges against three advisory firms involving their alleged placement of clients in mutual fund share classes that assessed certain fees when less expensive share classes of the same funds were available. These settlements, as well as the inclusion of this practice in the agencys 2019 examination priorities list, make clear that advisers, mutual funds and their legal representatives should not expect any let-up in these enforcement actions in the near future.

Failure to Offset Fees May Result in Payments to Both Clients and the SEC

Its great when fees come in, whether for management, consulting or something else. But check your governing documents - not all fees are meant to be kept by the advisory firm, and keeping such fees may result in a visit from the SECs Division of Enforcement staff.

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.