Category Archives: Conflict of Interest
 

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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RIAs Required to Disclose Conflicts of Interest & Outside Business Activities

September 07, 2009

A registered investment advisor has a fiduciary duty to disclose all real and potential conflicts of interests to clients as well as all material arrangements. Often times this broad requirement encompasses outside business activities the registered investment advisor considers non-advisory and would otherwise not disclose to clients. For example, a registered investment advisor that spends only 10% of its time on investment advisory activities and 90% of its time on non-advisory activities is required to disclose this fact. It must be made clear to all clients that the registered investment advisor will not devote all of its time to investment advisory functions unlike other registered investment advisor firms whose only activity is acting as an investment advisor.

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SEC Takes Disciplinary Action Against Chief Compliance Officer

November 07, 2008

The U.S. Securities and Exchange Commission (“SEC”) recently issued an order bringing sanctions against an individual who had served as an investment adviser’s president and chief compliance officer regarding investment pools operated by an associated person of the investment adviser.

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Identifying and Handling Conflicts of Interest

October 06, 2008

Recently, FINRA published a webcast on identifying and handling conflicts of interest. Conflicts of interest may arise any time that the interests of a registered representative or investment advisory representative compete with the interests of their customers. This post will summarize the FINRA webcast, as conflicts of interest is an important issue that affects both registered representatives affiliated with a broker-dealer only, as well as investment advisory representatives affiliated with a registered investment adviser.

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