Category Archives: Conflict of Interest
 

SEC Brings an Enforcement Action Against an Investment Adviser’s Portfolio Manager for Failing to Disclose a Conflict of Interest Caused by Trying to Help His Daughter’s Career

January 20, 2023

The U.S. Securities and Exchange Commission (“SEC”) recently brought an enforcement action against an investment adviser’s  former portfolio manager of a closed-end investment company for allegedly failing to disclose a conflict of interest caused by the portfolio manager’s efforts to help his daughter’s acting career.

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Fiduciary Advice Exemption Enforcement for PTE 2020-02 Now in Effect for Investment Advisers

February 01, 2022

As of February 1, 2022, the U.S. Department of Labor (“DoL”) will begin enforcing PTE 2020-02, a fiduciary advice prohibited transaction exemption that applies to IRA rollovers. Previously, the DoL had issued a temporary enforcement policy in Field Assistance Bulletin 2018-02 indicating that the DoL would not pursue enforcement claims related to prohibited transaction claims so long as an investment adviser could demonstrate that it was complying with the Impartial Conduct Standards “in good faith and with reasonable diligence.” The temporary enforcement policy ended on January 31, 2022.

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SEC Enforcement Action Against an Investment Adviser Over Limiting Wrap to NTF Funds

August 31, 2020

On July 28, 2020, the United States Securities and Exchange Commission (“SEC”) filed an order instituting an enforcement action/administrative cease-and-desist proceeding against an SEC registered investment adviser firm for allegedly failing to disclose material conflicts of interest related to its mutual fund share class selection practices, receipt of revenue sharing, avoidance of transaction fees, receipt of compensation pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”), and failure to seek best execution.

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SEC Issues Cease and Desist Order Against Dual BD/RIA for Revenue Sharing on Money Market Cash Sweep

August 24, 2020

On August 13, 2020 the United States Securities and Exchange Commission (“SEC”) filed an order instituting administrative cease-and-desist proceedings to a dually registered investment adviser firm/introducing broker-dealer firm for allegedly failing to disclose material conflicts of interest related to its mutual fund share class selection practices, receipt of compensation pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”), and money market revenue sharing agreements.

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SEC Risk Alert – Supervising IARs and Conflicts of Interest Deficiencies

July 31, 2019

On July 23, 2019 the Office of Compliance Inspections and Examination’s (“OCIE”)  of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the oversight practices of SEC-registered investment advisers who employ or employed individuals with disciplinary histories. Of the over 50 advisers that were examined,  nearly all of the examined advisers received deficiency letters. The OCIE exams did not focus solely on supervisory practices as they relate to the individuals with prior disciplinary histories. Instead, OCIE reviewed the advisers’ supervisory practices firm-wide. OCIE’s findings relate to all investment advisers regardless of whether they have someone with a disciplinary history. The deficiencies identified related to compliance and disclosure issues, including undisclosed conflicts of interest.

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SEC Settles Charges of Undisclosed Conflict in Advisory Decision

September 06, 2018

The U.S. Securities and Exchange Commission (“SEC”) recently announced that it has settled charges with an investment adviser firm. The SEC alleged that the investment adviser failed to disclose a conflict of interest. The settlement ended in payment of $8.9 million to the SEC by the investment adviser.

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OMB Approves Request for DoL Fiduciary Rule Delay

August 31, 2017

The U.S. Office of Management and Budget (“OMB”) recently approved a request by the U.S. Department of Labor (“DoL”) that seeks to postpone implementation of the final portion of the DoL’s controversial fiduciary rule. Originally scheduled to go into effect January 1, 2018, this newest proposal by the DoL would see the fiduciary rule delayed eighteen more months, until July 1, 2019. Click here to view the regulatory review update on the OMB’s website.

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