Earlier this year, the U.S. Securities and Exchange Commission (“SEC”) adopted rule changes under the Investment Advisers Act of 1940 in order to implement Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act. One of the more significant rule changes impacts all registered investment advisers as it centers on revisions to the Form ADV Part 1. Beginning January 1, 2012, all investment advisers registered with the SEC will have 90 days to complete and submit the revised Form ADV Part 1 confirming their eligibility to remain SEC registered. Investment advsiers registered with the SEC with November, December, January and February fiscal year ends are reminded they must also file their official Form ADV Part 1 Annual Amendment within 90 days of their fiscal year end and will likely choose to file their SEC eligibility amendment and annual amendment in conjunction.
Category Archives: SEC
The U.S. Securities and Exchange Commission (“SEC”) recently announced that during its previous fiscal year, enforcement actions against registered investment advisers increased thirty percent over the 2010 fiscal year. During the 2011 fiscal year, which ended in September, the SEC filed a total of 146 enforcement actions against investment advisers and investment companies. For a point of reference, from 2006-2009 the SEC filed on average 82 enforcement actions against registered investment advisers.
Professor Suggests Using External Auditors to Increase Investment Adviser Examinations
November 04, 2011
Section 914 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) required the U.S. Securities and Exchange Commission (“SEC”) to review the frequency of investment adviser examinations and to consider various ways to increase the frequency of such examinations, such as forming an investment adviser self-regulatory organization (“SRO”). As a result, Congress has begun to look at different ways to increase the frequency of examinations of investment advisers. The solutions that have been proposed and are being debated include forming an independent SRO, giving FINRA the authority to serve as the investment adviser SRO, increasing the SEC’s funding, charging investment advisers a user fee, or shifting the regulatory authority to the Bureau of Consumer Financial Protection. James Angel, a professor at Georgetown University’s McDonough School of Business has proposed another solution. In his article titled “On the Regulation of Investment Advisory Services: Where do we go from here?” Angel suggests that the best solution to provide increased regulatory oversight of investment advisers is to require investment advisers to hire external auditors to conduct compliance reviews. Angel’s research paper was supported by a grant from TD Ameritrade and his research paper indicates that his research included numerous conversations with broker, regulators, advisors, scholars and industry trade groups.
2011 Review – Are You Aware of the Regulatory Changes Made in 2011?
October 27, 2011
For registered investment advisors, 2011 gave way to many changes as various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) became effective. Understanding the changes made over this past year may help to confirm that your investment advisor is in compliance with the recent regulatory changes. Below is a brief overview of some of the regulatory changes that occurred during this past year.
Notice for Mid-Sized Investment Adviser Firms Transitioning to California State Registration
October 17, 2011
On October 7, 2011 the California Department of Corporations issued a notice to mid-sized investment adviser firms transitioning to California state registration. According the release, current investment adviser firms that are regulated under the U.S. Securities and Exchange Commission (“SEC”) that are considered mid-sized investment adviser firms (with assets under management between $25 and $100 million), are highly encouraged to file as soon as possible the appropriate state application and paperwork to transition to regulation under the State of California. The California Department of Corporations is anticipating a “high volume of transition applications, which will be reviewed in the order received.” The release also advised investment adviser firms to respond promptly to any requests for additional information and/or application revisions. The release highlighted some important dates for investment advisers to note:
New SEC Rule Requires “Large Traders” to Make Additional Filing
September 27, 2011
The U.S. Securities and Exchange Commission (“SEC”) recently adopted Rule 13h-1 that would require “large traders” to file new Form 13H with the SEC through its Electronic Data Gathering, Analysis and Retrieval (EDGAR) System.
The Use of Social Media Sites Can Create Compliance Problems for Registered Investment Advisers
September 27, 2011
Social media sites such as Facebook, Twitter, and LinkedIn can be useful business tools for investment advisers. However, there are several compliance issues that social media sites present.
Bank of America Whistleblower Judgment Highlights the Need for Investment Advisers to Have Whistleblower Policies and Procedures in Place
September 22, 2011
The Department of Labor recently required Bank of America to rehire and pay $930,000 to an employee who was fired for whistleblowing. The employee had been leading an internal investigation looking into wire, mail and bank fraud at Countrywide Financial, which merged with Bank of America in 2008. Shortly after the two companies merged, the employee was fired. The employee then filed a Sarbanes-Oxley claim alleging she was fired due to the internal investigation.
SEC’s New Performance Fee Rule Effective Sept. 19, 2011
September 18, 2011
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the U.S. Securities and Exchange Commission (“SEC”) recently amended Rule 205-3 of the Investment Advisers Act of 1940, which exempts a “qualified client” from the general prohibition against an investment advisor charging a fee based upon the share of capital gains or capital appreciation (also known as a “performance fee”).
Examining the House Financial Services Committee’s Investment Adviser SRO Draft Bill
September 16, 2011
Prior to conducting Tuesday’s hearing on whether to form a self-regulatory organization (“SRO”) for investment advisers, the Chairman of the House Financial Services Committee, Rep. Spencer Bachus posted a draft bill on the Committee’s website. The draft bill would form a self-regulatory organization for investment advisers under what would be known as the “Investment Adviser Oversight Act of 2011.”
