Category Archives: Uncategorized
 

SEC Risk Alert – Frequent Advisory Fee and Expense Compliance Issues

April 13, 2018

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.

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Protecting Senior Investors

February 06, 2018

On Jan. 24, 2018 the United States House of Representatives passed the Senior Safe Act.  The Senior Safe Act (referred to as “the Act,” formerly H.R. 3758) encourages financial services firms to train employees  to spot elder abuse, while granting limited immunity to individuals at financial institutions who report such abuse to law enforcement or regulators in accordance with the Act.

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NASAA Investment Adviser Coordinated Examinations Report

January 24, 2018

In September 2017, The North American Securities Administrators Association (NASAA) released its 2017 Investment Adviser Coordinated Examinations Report. NASAA’s report looked at 1,227 routine investment adviser examinations of state registered investment advisers. Once again, the area with the most deficiencies was books and records. Almost two out of every three investment advisers examined (64.6%) reported a deficiency in books and records retention. 

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SEC Fines Investment Adviser for Failure to Disclose Material Conflicts of Interest to Clients

June 20, 2017

The United States Securities and Exchange Commission (“SEC”) recently obtained final judgments by consent against an investment adviser firm and its chief executive officer, who allegedly failed to disclose material conflicts of interest to some of the firm’s clients. The investment adviser firm and its chief executive officer consented to the decree without admitting or denying the allegations in the SEC’s complaint.

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DoL Fiduciary Rule Delayed 60 Days

April 07, 2017

Today, the Department of Labor (DoL) published a rule delay for the fiduciary rule, delaying its applicability date by 60 days. The initial applicability date of the fiduciary rule was April 10, 2017.  The 60 day delay moves the applicability date to June 9, 2017.  This action also extends (for 60 days) the applicability dates of the Best Interest Contract Exemption and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs.

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FINRA Fines Firms for Deficiencies in Cybersecurity and Recordkeeping

December 29, 2016

The Financial Industry Regulatory Authority (“FINRA”) recently announced fines against 12 broker-dealers for alleged deficiencies related to their cybersecurity and record retention practices. In each case, the firms – who have consented to the fine without admitting or denying the charges – allegedly failed to properly store electronic records in a “write once read many” format that is meant to protect records from illicit alteration. The “write once read many” format is required by FINRA rules and protects broker-dealers against malicious interference with their vital business records, whether by outside hackers or disgruntled insiders.

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SEC Enforcement Action Alleges Cherry-Picking, Double-Dipping, and Fund Mismanagement

October 25, 2016

The U.S. Securities and Exchange Commission (“SEC”) recently instituted administrative cease-and-desist proceedings against a Washington-based registered investment adviser. The SEC alleges the investment adviser engaged in several schemes meant to defraud clients and unjustly enrich the investment adviser’s personal accounts. Among the alleged wrongdoing was the investment adviser’s scheme to “cherry pick” favorable trades for his personal accounts while allocating unfavorable trades to client accounts. During one relevant period, the SEC claims the investment adviser’s accounts showed a return of 1.39% while the affected client accounts had a -0.78% return. In total, the SEC asserts that the investment advisor profited almost $500,000 while client accounts suffered losses of more than $2 million.

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