Today, the United States Securities and Exchange Commission (“SEC”) passed long-proposed changes to the disclosure statements that federally registered investment advisers provide regulators and clients. Originally, the SEC proposed changes to Form ADV Part 2 in 2000. That proposal was never adopted, but a second proposal was issued in 2008 and finally passed today.
Category Archives: SEC
On June 30, 2010, the United States Securities and Exchange Commission (“SEC”) unanimously adopted Rule 206(4)-5 under the Investment Advisers Act of 1940 which is designed to curtail “pay to play” practices by registered investment advisers. (Click here for a link to the SEC press release). “Pay to play” is the practice of making contributions to public officials in exchange for the award of pension management contracts. The SEC believes that these practices favor large investment advisors over smaller ones, reward political connections rather than investment skill, and give consumers sub par performances for superior prices. Therefore, the SEC adopted Rule 206(4)-5 which is designed to eliminate the pay to play practice and to level the field for investment advisers so that management contracts are awarded based upon investment skill and quality of service.
SEC to Vote On Whether to Ban Pay-to-Play Contributions by Investment Advisers to Elected Officials
June 29, 2010
On June 30, 2010, the Commissioners of the Securities and Exchange Commission (“SEC”) will vote on whether to restrict investment advisers from participating in “pay to play” transactions with public officials. The purpose of the proposed rule is to eliminate potential corruption from the process of awarding management contracts for public retirement funds. If approved, the rule would prohibit investment advisers from making or soliciting political contributions to or for officials who are in a position to award the management of pension funds.
Section 31(a) of the Investment Company Act of 1940 (“ Investment Company Act”) requires that each registered investment adviser “maintain and preserve” records of accounts, correspondence, memorandums, tapes, discs, papers, books, and other documents or transcribed information. These books and records are to be maintained for a period of five years and are subject to random periodic inspection by the U.S. Securities and Exchange Commission (“SEC”). Likewise, under Rule 204-2 of the Investment Advisers Act of 1940 (“Investment Advisers Act”), the SEC requires certain books and records to be maintained by a registered investment adviser regardless of whether of the investment adviser is associated with a registered investment company.
On June 21, 2010, the U.S. Securities and Exchange Commission (“SEC”) charged a New York based registered investment adviser and three affiliated firms with the fraudulent management of collateralized debt obligations (“CDOs”) tied to mortgage backed securities. The SEC alleges that ICP Asset Management LLC, and its owner/president Thomas Priore, made fraudulent misrepresentations that earned the firm several million dollars in advisory fees and also caused four CDOs to lose tens of millions of dollars.
During the keynote address at the Compliance and Legal Society of the Securities Industry and Financial Markets Association 2010 Annual Seminar on May 6, 2010 (click here to read the entire speech), Mary Shapiro, the Chairman of the U.S. Securities and Exchange Commission (“SEC”), stated that her staff is preparing to present to the full Commission a proposal regarding adoption of Form ADV Part 2.
SEC Commissioner indicates SEC to Re-Consider New Form ADV Part 2 for Investment Advisers
May 04, 2010
In a speech at the Investment Adviser Association Annual Conference on April 29, 2010 (click here to read the entire speech), Luis Aguilar, Commissioner at the United States Securities and Exchange Commission (SEC), stated the SEC is expected to soon revisit proposed changes to Form ADV Part II. According to Commissioner Aguilar, “the need to update Part II has been clear for over a decade.” In April 2000, the SEC originally proposed comprehensive amendments to Part I and II of Form ADV. However, at that time only changes to Part I were passed and the proposed changes to Part II were allowed to lapse without implementation. Then, in March of 2008, the SEC re-proposed various amendments to Part II.
House Financial Services Committee Advances Investor Protection Act
November 06, 2009
Here’s our update regarding proposed changes to the regulation of investment advisers.
The Adminstration Seeks Fiduciary Duty for B/Ds — Is the SEC Chairman Advocating the Establishment of an SRO for RIAs?
June 20, 2009
In the white paper, “Financial Regulatory Reform: A New Foundation,” recently released by the U.S. Treasury Department, the Obama Administration proposes the establishment of a fiduciary duty for broker-dealers offering investment advice and harmonization of the regulations of broker-dealers and registered investment advisers.
According to a recent article in Investment News which quotes an official of the Financial Planning Association (“FPA”), the chairman of the U.S. Securities and Exchange Commission (“SEC”), Mary Schapiro, is backing off of her previously discussed, but never formerly considered by the SEC, proposal to require each federally registered investment adviser to engage a third-party to conduct an annual compliance audit of the investment adviser.
