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.
The SECs Office of Compliance Inspections and Examinations, in a September 4 Risk Alert, lets advisers know the most frequent principal trading and agency cross-transaction compliance issues that examiners observed – and therefore what firms can expect examiners to make a point of looking at during future visits. Specifically, the Risk Alert focuses on compliance […]
The latest Risk Alert from the SECs Office of Compliance Inspections and Examinations is written to help transfer agents comply with safeguarding requirements, but advisers can make use of it, too.
The SEC is finding that its progress in creating a comprehensive electronic blueprint of securities transactions, the Consolidated Audit Trail (CAT), is proving as difficult as getting real cats to do what you want. It issued a statement that demonstrates the forward-and-back nature of this project: the arrival of a detailed master plan, but the delay of three key deadlines by a year.
Its always easier for enforcers to go after the low-hanging fruit, and in the case of the SEC, that fruit happens to be cherries. The agency on August 17 took another step in its ongoing crackdown against cherry-picking, reaching separate settlements with an advisory firm and an investment adviser representative who worked for it.
Trade pre-clearance and blackout periods are two reliable methods used by advisers seeking to avoid certain kinds of problems when trading securities or with personal trading. Thats not to say, of course, that these methods dont carry their own problems if not done right.
Many advisory firms maintain "restricted lists:" compiled names of companies and securities with which they do not allow trading. These lists protect an advisory firm from a number of dangers - but advisers with such lists need to ensure they are properly updated, monitored and that they avoid mistakes that may cause problems down the road.
The F-Squared Investments saga seems to open or close a new chapter every few months since 2014, when the SEC first brought charges against the advisory firm for allegedly making false and misleading statements about its investment strategy algorithm. The latest development occurred March 22, when a federal judge ordered that F-Squared founder and former CEO Howard Present personally pay $13 million, including a $1.58 million civil money penalty, following his loss at trial this past October.
Just because a state allows its public pension plans to place money in types of funds that it had previously not allowed does not mean that advisers should rush in with investments. As with any type of investment, the fine print needs to be read first.
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 - better known as the CAT - 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.