Regulatory Alert
During the last several years, the United States Securities and Exchange Commission (“SEC”) has intensified its scrutiny of liability hedge clauses within investment advisory client agreements used by investment adviser firms.
During the last several years, the United States Securities and Exchange Commission (“SEC”) has intensified its scrutiny of liability hedge clauses within investment advisory client agreements used by investment adviser firms.
In the ever-evolving landscape of artificial intelligence and intellectual property, Google has recently introduced a new tool called Google Extended which may be helpful to investment advisers desiring to protect their proprietary content on their website. This new tool allows web publishers such as investment adviser firms to have their websites indexed for search engine purposes while opting out of having their data used for training Google’s artificial intelligence (“AI”) models, including Bard. This development has far-reaching implications for various industries, including investment advisers who are increasingly reliant on digital platforms for client acquisition and engagement.
In the age of artificial intelligence and machine learning, the use of large language models like ChatGPT presents both opportunities and compliance challenges for investment adviser firms. This post aims to discuss at least one risk associated with an investment adviser firm’s supervised persons using the consumer version of ChatGPT, specifically focusing on the potential for an investment adviser to share inadvertently non-public personal information (“NPPI”) of clients and several best practices for mitigating this privacy risk.
The United States Securities and Exchange Commission (“SEC”) recently issued a final set of rule amendments under the Investment Advisers Act of 1940, primarily aimed at enhancing the regulatory framework governing investment advisers to private funds. The new set of rules, as described in SEC Release No. IA-6383, is designed to protect investors who invest directly or indirectly in private funds. It focuses on increasing transparency in compensation arrangements and prohibiting conflicted arrangements involving private funds. Through an audited financial statement requirement, the new rules also aim to prevent fraudulent activities by registered investment advisers advising private funds. Finally, this set of new rules includes an amendment requiring all SEC-registered investment advisers to document in writing the annual review of their compliance policies and procedures.
The United States Securities and Exchange Commission (“SEC”) has initiated an administrative enforcement proceeding against an investment adviser firm registered with the SEC for allegedly failing to file the quarterly Form13F from February 2017 until April 2022.
The North American Securities Administrators Association (“NASAA”) recently released its 2023 Investment Adviser Coordinated Exam findings. The report provides valuable insights and empirical data with respect to the most common deficiencies found during 683 routine examinations of state-registered investment advisers located throughout the U.S. and conducted from January 1 to July 31, 2023.
In the ever-evolving landscape of securities regulation, it is crucial for investment adviser firms registered with the United States Securities and Exchange Commission (“SEC”) to stay vigilant and informed about current enforcement actions. A recent cease-and-desist proceeding instituted by the SEC against a clean energy company has sent a clear message regarding whistleblower protections and the use of severance agreements. As a result, we’ll explore the implications of this enforcement action and how it relates to investment adviser firms in light of SEC Rule 21F-17.
The Division of Examinations of the United States Securities and Exchange Commission (“SEC”) recently issued a Risk Alert dated September 6, 2023, that provides valuable insights into the examination process for investment advisers. This Risk Alert serves as a guide on how the SEC identifies investment advisers for examinations and the documents and information requested. Notably, it includes a separate attachment titled “Typical Initial Information Examiners Request of Investment Advisers” which is a helpful resource for investment advisers to understand what to expect during an SEC examination.
The United States Securities and Exchange Commission (“SEC”) recently initiated an enforcement action against with an investment adviser firm for allegedly failing to conduct sufficient fee audits which resulted in overcharging more than 10,900 investment advisory accounts, amounting to over $26.8 million in advisory fees. Without admitting or denying the SEC charges, the investment adviser firm has agreed to pay a $35 million civil penalty to settle this proceeding.
The United States Securities and Exchange Commission (“SEC”) recently announced an enforcement action against and settlement with an investment adviser firm related to solicitation arrangements with online content providers. The investment adviser firm allegedly paid over $8 million to more than 200 social media influencers and online newsletter providers for prospective client referrals without adhering to the required disclosure and documentation under the former Rule 206(4)-3 of the Investment Advisers Act of 1940. The investment adviser firm has agreed to a cease-and-desist order, censure, and a $250,000 civil penalty to settle the charges by the SEC.