Custody Rule

News & Analysis as of

This Week In Securities Litigation

The SEC issued its final Dodd-Frank pay ratio rules this week by a 3-2 vote. It also issued its final registration rules for Security-Based Swap Dealers and Major Security-Based swap participants. More questions were...more

Investment Funds Update - Europe: Legal and regulatory updates for the funds industry from the key asset management centres and...

Enforcement – FCA Fines £13.2 Million for Transaction Reporting Failures - The FCA fined Merrill Lynch International (MLI) £13.2 million on 22 April 2015 for incorrectly reporting 35,034,810 transactions and failing to...more

Bridging the Week - April 2015 #3

CFTC Commissioner Bowen Argues for User Fees During House Subcommittee Hearing; Commissioner Wetjen Calls for Bankruptcy Law Amendments to Permit Individual Segregation of Customer Funds - Commodity Futures Trading...more

Financial Services Weekly News Roundup - April 2015

FINRA Requests Comment on Current Membership Application Rules. As part of its ongoing retrospective rule review process, FINRA has published, in Regulatory Notice 15-10, a request for comment on the effectiveness and...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - 2015 Legislative Agenda Includes Dodd-Frank Revisit and Cybersecurity. Enforcement - SEC Enforcement Action Underscores Importance of Custody Rule Compliance - Joint SEC/State...more

SEC Fines Alternative Mutual Fund Adviser for Improper Handling of Fund Assets

On February 12, 2015, the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other charges, failure to comply with the...more

SEC Charges Alt Fund Adviser with Custody Violations

The Securities and Exchange Commission on February 12, 2015, entered findings against an investment adviser to several alternative mutual funds for maintaining $247 million in cash collateral at broker-dealer counterparties...more

The SEC’s 2015 Examination Priorities: Implications for Private Equity Fund Managers

The Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) recently released its examination priorities for 2015 for investment advisers, broker-dealers and transfer agents...more

Private Equity: SEC Custody Rule—One Size Does Not Fit All

As a result of the Dodd-Frank Act, since 2012 investment advisers that operate pooled investment vehicles such as hedge funds and private equity funds with $150 million of assets under management became subject to the...more

2014 Top 10 SEC Enforcement Highlights

Mary Jo White was confirmed in April 2013 as Chair of the Securities and Exchange Commission (the “SEC”), becoming the first former United States Attorney to serve in that role. Given her background, and despite criticism...more

SEC Seeks Serious Penalties Against Sands Brothers and its Senior Officers for Alleged Repeated Custody Rule Violations - Former...

On October 29, 2014, the SEC announced that it had instituted administrative proceedings under the Investment Advisers Act of 1940 against Sands Brothers Asset Management LLC (Sands Brothers), its two co-founders and the...more

Repeated Violations of the Custody Rule Result in SEC Administrative Action

On October 29, 2014, the Securities and Exchange Commission (SEC) announced an administrative proceeding against a registered investment adviser, its principals and its chief compliance and operating officer for violating...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - Assets Under Management by Registered Investment Advisers Have Increased Substantially - Will “Accredited Investor” Definition Be Changed? - Excessive Fee Case Withstands Dismissal -...more

This Week In Securities Litigation

The Commission brought a series of administrative proceedings this week and one civil injunctive action. The civil injunctive action was an insider trading case. The administrative proceedings centered on FCPA violations, the...more

SEC Charges Recidivist Adviser, Co-Founders With Violations of Custody Rule

The SEC has brought a number of custody rule cases as part of its broken windows initiative. Its newest proceeding centered on the custody rule, however, is a contested administrative proceeding which names as Respondents an...more

Providing Audited Financial Statements Late Leads to Charges of Custody Rule Violations

The SEC announced charges against an investment advisory firm and three of its top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money...more

"SEC Provides Guidance on SPVs and Escrows Under the Custody Rule"

In June 2014, the Securities and Exchange Commission (the “SEC”) issued a guidance update (the “Update”) on the application of the custody rule of the Investment Advisers Act of 1940 (the “Custody Rule”) to special purpose...more

Barclays Is Sanctioned By The FCA and The SEC

Barclays took a double hit from regulators yesterday. First the Financial Conduct Authority in the UK fined Barclays Bank Plc, about £38 million for putting £16.5 billion of client assets at risk. Then the SEC imposed a $15...more

SEC Staff Provides Guidance on Custody Rule Compliance When Private Funds Use SPVs and Escrow Accounts

The staff of the SEC’s Division of Investment Management issued IM Guidance Update No. 2014-7 (the “Guidance Update”) to provide guidance on how Rule 206(4)-2 under the Investment Advisers Act of 1940 (the “Custody Rule”)...more

The SEC Provides Guidance on Custody Rule Compliance for Private Fund SPVs and Escrow Accounts

In June 2014, the staff of the Securities and Exchange Commission’s (SEC’s) Division of Investment Management provided guidance (the Guidance Update) on how private fund managers using special purpose vehicles (SPVs) and...more

New SEC Guidance on Application of Custody Rule to SPVs and Escrow Accounts

The Securities and Exchange Commission (SEC) recently issued a guidance update (Update) on Rule 206(4)-2 of the Investment Advisers Act of 1940 (Custody Rule), which regulates the custody practices of registered investment...more

SEC Issues Guidance on Application of Custody Rules to Special Purpose Vehicles and Escrows

The Division of Investment Management of the Securities and Exchange Commission (the SEC) recently released an IM Guidance Update with respect to the custody rule, Rule 206(4)-2 (the Custody Rule) under the Investment...more

SEC Charges Investment Adviser with Custody Rule Violations

The Securities and Exchange Commission recently announced that it had charged Professional Investment Management, Inc. (PIM), an investment adviser, and its president, Douglas E. Cowgill, with violating rules governing the...more

It Starts with the Custody Rule

If you’re an investment adviser with custody of your client’s assets, is there a more important rule to be sure you’re on top of than the custody rule? If you’re on the SEC’s IA exam staff, is there a more important rule to...more

This Week In Securities Litigation (Week ending May 9, 2014)

The Commission issued an order which stayed the small segment of its controversial conflict mineral rule which the Court of Appeals concluded violated the First Amendment. The order does not impact the bulk of the rule. This...more

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