On December 20, 2018, the Office of Compliance Inspections and Examination (“OCIE”) of the U.S. Securities Exchange Commission (“SEC”) released its 2019 Examinations Priorities for SEC registered investment advisers. After completing over 3,150 investment adviser examinations in 2018, a 10 percent increase over 2017, the SEC outlined several themes for the focus of investment adviser examinations which include the following:
Category Archives: SEC
SEC Risk Alert – Electronic Messaging
December 19, 2018
December 17, 2018 the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a new National Exam Program Risk Alert Relating to Electronic Messaging. The purpose of the risk alert is to remind SEC registered investment advisers of their obligations when their supervised persons use electronic messaging and to help SEC registered investment advisers improve their systems, policies, and procedures by sharing the SEC staff’s observations from its investment adviser examinations.
Spreadsheet for Investment Adviser to Document that Authority to Initiate First-Party Transfer Between Different Custodians Doesn’t Constitute Custody
October 22, 2018
Does your federally registered investment adviser firm have authority to initiate first-party transfers between the client’s accounts at different qualified custodians?
SEC Fines Investment Adviser for Cybersecurity Failures
October 09, 2018
The United States Securities and Exchange Commission (SEC) has recently fined an Iowa-based investment adviser $1 million for alleged cybersecurity failures that led to a data breach that compromised the personal information of its clients. According to the SEC, information from over 5,600 of the investment adviser’s clients was obtained by criminals impersonating independent advisers. The SEC claims that the intruders gained access through weaknesses within the firm’s cybersecurity procedures. Some of these weaknesses had been exposed during previous fraudulent activity. The investment adviser allegedly failed to update and fix those issues.
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.
The U.S. Securities and Exchange Commission (“SEC”) released a package of new rule proposals in April of 2018. The SEC’s proposed rules and guidance can be found here.
SEC Fines Investment Adviser for Failing to Refund Unearned Fees When Client Terminates Advisory Services
July 26, 2018
The U.S. Securities and Exchange Commission (“SEC”) recently settled with an investment adviser firm which allegedly had improperly refused to refund $131,000 in unearned advisory fees to 63 departing investment advisory clients. The SEC censured the investment adviser firm and imposed a $100,000 civil penalty on it. The SEC also imposed a $50,000 penalty on the investment adviser firm’s majority owner.
Private Fund Adviser Enforcement Action
June 26, 2018
The U.S. Securities and Exchange Commission (“SEC”) has charged 13 different registered investment adviser firms which advised private funds for failing to properly file reports with the SEC.
SEC Targets Investment Adviser for Misleading Clients
June 19, 2018
On June 4, 2018 the SEC (Securities and Exchange Commission) issued a press release announcing the imposition of an $8 million civil penalty against an investment adviser in New York for failing to disclose conflicts of interest to its clients. The SEC also announced the filing of a litigated action against two investment adviser representatives of the firm for misleading clients and concealing material conflicts of interest. The investment adviser neglected to disclose agreements with product and service providers that led to the investment adviser receiving undisclosed compensation. The Director of the SEC’s New York Regional Office said, “Investment advisers have an obligation to disclose direct and indirect financial incentives to clients.” Click here to read the SEC’s press release.
On April 12, 2018, the Office of Compliance Inspections and Examinations (“OCIE”) of U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert, “Overview of the Most Frequent Advisory Fee and Expense Compliance Issues Identified in Examinations of Investment Advisers.” The risk alert provides a list of compliance issues frequently identified in OCIE examination deficiency letters relating to fees and expenses charged by SEC registered investment advisers. Click here to read the SEC’s Risk Alert.
