The SEC’s Office of Compliance and Inspections (“OCIE”), recently, issued an alert—more like a shot across the bow—to BDs and RIAs regarding its concerns over activities in the industry concerning the challenges encountered by COVID-19. See https://www.sec.gov/files/Risk%20Alert%20-%20COVID-19%20Compliance.pdf. As part of its efforts, OCIE made certain recommendations concerning: (1) investor asset protection; (2) personnel supervision; (3)
In 2 separate actions, the SEC came down very hard on private equity/hedge funds regarding both disclosure and operational issues. See https://www.sec.gov/enforce/ia-5478-s; and https://www.sec.gov/enforce/ia-5485-s.
In the first action, a firm settled for $1 million because it allegedly mischaracterized its prior investments in its marketing materials. This purported misrepresentation led to an over-statement of the fund’s
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Compliance personnel– especially, chief compliance officers– cannot ignore problems because, as one SEC ALJ determined, it will lead to censure and fines for ignoring compliance obligations. See https://www.sec.gov/alj/aljdec/2020/id1400cff.pdf.
Apparently, for over 10 years, a registered investment advisor hired a series of unskilled CCOs, and ignored compliance and audit requirements. The RIA tried to claim that
The SEC recently brought and settled an action against a former wannabe fund manager, who lied to prospective investors that he already had raised millions of dollars in the fund from other (fictitious) investors. The fund manager was barred from the securities industry for 10 years. See https://www.sec.gov/litigation/litreleases/2020/lr24783.htm.
The SEC also claimed that the fund
Recently, a REIT sought to avoid using a broker-dealer in a distribution. Woe, onto those who seek to avoid the broker-dealer, especially when it leads to a SEC investigation and enforcement action.
The REIT charged a 3% commission as part of its sales process, and used its website, social media, and radio ads. These commissions
Way back in 2017, the SEC obtained an emergency asset freeze against an internet-based ICO involving certain Canadian residents, who had raised over $15 million on a variety of social media sites through an alleged fraudulent scheme. http://www.sec.gov/litigation/complaints/2017/comp-pr2017-219.pdf.
At the time, it made major news and helped launch the SEC’s Cybersecurity Unit. Of course, there
Over the last several months, there has been an increase in questions from registered investment advisers relating to using hypothetical performance information. Generally, the use of such information is fraught with danger as well as SEC scrutiny. Not so long ago, the SEC went after a number of investment advisers and forced them to pay
Ever wonder what it’s like to argue in front of the Supremes? Fox partner Ernest E. Badway will moderate a forum with two Supreme Court advocates – Robert G. Heim and Howard Meyers – that will offer a fascinating glimpse into one of the most intense experiences in the practice of law. The program will
A chief compliance officer (“CCO”) for a registered investment adviser (“RIA”) found himself barred from any compliance or supervisory role in the future because he willfully refused to fix a number of compliance issues. See https://www.sec.gov/litigation/admin/2017/34-82397.pdf.
The RIA had conducted a review that uncovered numerous compliance problems. Despite having notice of the results of this
We are regularly approached by both our RIA (and BD too) clients, who inquire, usually around election time, how they should make political contributions. Our advice is usually do not make the political contribution and you can blame your lawyer!
However, those persons, ignoring that advice, should be concerned that the SEC, recently, fined an