SEC Risk Alert
Category Archives: SEC
SEC Brings Enforcement Action Against RIA for Allegedly Failing to Disclose Adverse Info About Promissory Notes Issuer
February 07, 2021
The U.S. Securities and Exchange Commission (“SEC”) recently instituted a cease-and-desist proceeding against an SEC registered investment adviser firm and its principal for failure to disclose material information to a client regarding promissory notes issued by a third-party, which eventually was charged in June 2018 by the SEC with an offering fraud and placed under receivership in December 2018. Click here to view the SEC order in this matter; the following is a summary of the SEC’s allegations in this matter, RIA Compliance Consultants, Inc. has not verified the accuracy of such allegations.
SEC’s Investor Advocate Identifies Leveraged and Inverse ETFs as Risk to Retail Investors
January 26, 2021
Under Section 4(g)(6)B) of the Securities Exchange Act of 1934 as amended, the Investor Advocate of the U.S. Securities and Exchange Commission (“SEC”) is required to prepare a summary of the most serious problems encountered by investors with financial products. Accordingly, in its Report on Activities, Fiscal Year 2020 to the U.S. Congress, the SEC’s Investor Advocate reviewed the risks associated with leveraged and inverse exchange traded funds while discussing the Commission’s recent approval of the final version of the SEC’s Derivatives Rule which removed provisions that would have required investment advisers to exercise due diligence before approving retail investor accounts to invest in leveraged and inverse exchange traded funds (“ETFs”).
There is good news for investment adviser firms located in the United Kingdom (“UK”) desiring to register as an investment adviser firm with the United States Securities and Exchange Commission (“SEC”).
On December 22, 2020, the U.S. Securities and Exchange Commission (“SEC”) announced it has adopted amendments (also known as the “marketing rule”) to its rules under the Investment Advisers Act of 1940 (“Advisers Act”) that govern advertising and cash solicitation activities by investment advisers registered with the SEC. Unlike the proposed amendments, the SEC’s finalized marketing rule addresses both advertising and soliciting under a single rule. Click here to read the SEC’s final rule release for this new marketing rule for investment advisers.
On December 16 2020, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC-registered investment advisers and broker dealers with regard to Rule 13h-1, which was adopted to help the SEC identify and obtain information on certain market participants (referred to as “Large Traders”) that conduct a substantial amount of trading activity as measured by volume or market value, in national market system (“NMS”) securities. In the Risk Alert, OCIE noted that some advisers and broker dealers it examined were unaware of the rule or its specific requirements and, consequently, is encouraging all SEC-registered investment advisers and broker-dealers to review and update their compliance policies and procedures, as needed, to ensure compliance with Rule 13h-1. Click here to read the SEC’s Risk Alert for Large Trader Obligations.
SEC Risk Alert – Investment Adviser Compliance Programs
December 17, 2020
On November 19th 2020, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC-registered investment advisers with regard to SEC Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940. In its Risk Alert, the SEC noted that Compliance Rule deficiencies are among the most common discovered by OCIE during SEC registered investment adviser examinations. Click here to read the SEC’s Risk Alert for Investment Adviser Compliance Programs.
While completing the annual review of its compliance program, an investment adviser should update its self-identification of the risks facing the firm.
SEC Risk Alert – Investment Adviser Firms with Multiple Branch Offices
November 23, 2020
On November 9 2020, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released a Risk Alert about its assessment of the compliance practices of SEC-registered investment advisers that have multiple branch offices. In its Risk Alert, the SEC noted that its Multi-Branch Initiative (“Initiative”) focused on investment advisers practices relating to compliance programs and supervision, with a particular focus on the Code of Ethics Rule, Custody Rule, and fiduciary obligations relating to fees, expenses, and advertising. The SEC also evaluated how supervised persons at branch locations provided investment advice, focusing on oversight of investment recommendations, management and disclosure of conflicts of interest, and allocation of investment opportunities.
SEC Roundtable on Regulation Best Interest and Form CRS
November 10, 2020
On October 26, 2020, the United States Securities and Exchange Commission (“SEC”) hosted an online roundtable discussion on Regulation Best Interest and Form CRS, with contributions from senior staff at the SEC and the Financial Industry Regulatory Authority (“FINRA”). Divided into two panels, the online roundtable focused on issues and observations made by SEC and FINRA staff (referred to collectively here as “the staff”) regarding Regulation Best Interest and Form CRS. To view the archived webcast, click here.
