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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

The SEC Believes a Bar Only Relates to the Future Not the Past, Yeah Right!!

Posted in Hedge and Private Equity Funds, Investment Adviser Regulation, SEC Enforcement

As many know, the Dodd-Frank Act confirmed the SEC’s power to seek and/or impose certain penalties and remedies.  A recent case against a hedge fund manager illustrates just how far the SEC is willing to go.  In the Matter of John W. Lawton,  http://www.sec.gov/litigation/opinions/2012/ia-3513.pdf.th[8].jpg

The manager was accused of fraud.  After a hearing, the SEC banned this manager from association with a BD, RIA, and municipal securities dealer, among others, despite the fact the conduct occurred before the Dodd-Frank Act.  The SEC claimed this “collateral” bar– as it is termed– was not done retroactively, but prospectively.  As such, the SEC was “only” protecting the public and not punishing conduct arising before the statute.  

Alas, another SEC over-reach, however, it is unlikely to end any time soon so those securities professionals must be ever vigilant to avoid the SEC’s wrath.