Investment Adviser

News & Analysis as of

Return of the Cyborg Part II: First-Ever SEC Cybersecurity Enforcement Action Filed Against Investment Advisory Firm

As our last newsletter highlighted, the government is ramping up enforcement investigations against both regulated entities and public companies for perceived cybersecurity failures. Proving the point, on September 22, 2015,...more

FCA Enforcement: Recent Action Against Former Investment Analyst for “Cherry Picking”

On November 17, the UK Financial Conduct Authority (FCA) published its final notice addressed to Mothahir Miah, a former investment analyst at a large UK institutional asset manager, fining him £139,000 and banning him from...more

SEC Issues Report on Increasing Use of Outsourced Chief Compliance Officers

In November 2015, the Securities and Exchange Commission (SEC) released its Outsourced CCO Initiative Report. The report addressed the increased trend of outsourcing compliance activities to third-party consultants within the...more

Victim of Fraud Sued for Fraud

On November 16, 2015, the Securities and Exchange Commission (SEC) sued an investment adviser, Virtus Investment Advisers, Inc., who had hired another adviser, F Squared Investments, Inc., to sub-advise certain mutual funds...more

OCIE Extends Exams to Exempt Reporting Advisers

Marc Wyatt, Director of the U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE), indicated on November 20, 2015 that the OCIE staff is now examining “Exempt Reporting Advisers”...more

Upping the Ante: Cybersecurity, the SEC and the Perils of Being Unprepared

The U.S. Securities and Exchange Commission is finally getting serious about cybersecurity – and for good reason. If the ever-growing business and headline risks aren’t enough to scare investment advisers and broker-dealers...more

Bridging the Week - November 2015 #4

Deputy US Attorney General and SEC Enforcement Head Warn Corporate Individual Wrongdoers to Beware - Deputy US Attorney General Sally Quillian Yates provided further insight into the Department of Justice’s new emphasis...more

ISS Ignores Contrary Studies In Adopting Overboarding Policy Change

ISS released its 2016 Benchmark Policy Recommendations last Friday. I had previously criticized ISS for its proposal to change its recommendation on withholding votes with respect to directors who sit on too many boards...more

SEC Settles Charges with Private Equity Firm and Four Executives for Failure to Disclose Conflicts of Interest

The SEC recently reached a settlement with New York-based private equity firm, Fenway Partners, LLC, and four executives related to charges that Fenway Partners and several of its executives (“Respondents”) failed to disclose...more

Tennessee Securities Division Expands Exam Program

The Tennessee Securities Division, Department of Commerce and Insurance (Julie Mix McPeak, Comm’r) recently confirmed its launch of a comprehensive three-year cycle examination program covering all Tennessee-based...more

Investment Firms and Compliance Professionals Beware: SEC Finds Risks Associated with Outsourcing Compliance Function

On Monday, November 9, 2015, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities and Exchange Commission (“SEC”) released results from its evaluation of investment adviser firms’ use of third...more

Adviser Settles False Performance Claims With SEC

The SEC filed a settled action involving a registered investment adviser that made false statements in marketing materials about a strategy utilized by a sub-adviser. The adviser failed to evaluate statements in the materials...more

SEC Releases Guidance on Examination of Broker-Dealer and Investment Advisor Information Security Practices; NYSE Releases...

The Security and Exchange Commission’s Office of Compliance Inspections and Examinations (the “OCIE”) recently announced its 2015 Cybersecurity Examination Initiative, which describes the focus of the OCIE’s examination of...more

FinCEN’s Expanding Application of the Bank Secrecy Act and Anti-Money Laundering Regulations

The Financial Crimes Enforcement Network (FinCEN) is again flexing its regulatory muscles by increasing the breadth and scope of the types of entities regulated by the Bank Secrecy Act (BSA). Among other things, the BSA...more

"SEC Announces Enforcement Results for Fiscal Year 2015"

The Securities and Exchange Commission (the “SEC”) recently announced its enforcement results for fiscal year 2015. The release touted high-impact and first-of their-kind actions, as well as an increase in the number and...more

SEC Brings Actions Against Ponzi Schemer, Client

Ponzi scheme cases have, of course, become a staple of SEC enforcement since the discovery of Madoff’s unprecedented scheme. While there seems to be a virtually endless number of these cases centered on the preverbal “to good...more

MoFo Tax Talk - Volume 8, No. 3

Final and Temporary Dividend Equivalent Regulations Issued – Some Good, Some Bad, And Some Ugly: On September 17, 2015, the Internal Revenue Service (“IRS”) released final and temporary regulations under Section 871(m),...more

SEC Discusses Criteria for Charging Chief Compliance Officers

In remarks before the 2015 National Society of Compliance Professionals, National Conference, Andrew Ceresney, Director, SEC Division of Enforcement, outlined the type of criteria used to charge Chief Compliance Officers with...more

SEC, Adviser Settle Proceeding Centered on Conflicts

Conflicts of interest and a failure to disclose related party transactions continue to be key themes in Commission actions involving investment advisers. Undisclosed conflicts, as well as a failure to disclose related party...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - SEC Decides Against Mounting an Appeal in Koch Ruling - The July 2015 ruling by the D.C. Circuit Court in Koch v. SEC will apparently not be challenged by the SEC. The Court ruled in that...more

UK 2015 Summer Finance Bill Update: Proposed Taxation Changes for Carried Interest and DIMF

Further to our client alert in July this year, the UK Government recently proposed further changes to the UK taxation of carried interest and disguised investment management fees (DIMF). The UK Government proposed...more

SEC Proposes to Ease Intrastate Offering Exemption to Facilitate Crowdfunding

The SEC has proposed amendments to Rule 147 under the Securities Act of 1933, which currently provides a safe harbor for compliance with the Section 3(a)(11) exemption from registration for intrastate securities offerings....more

Court of Chancery Again Explains Claim Against An Investment Banker

In this unusual factual circumstance, the Court denied a motion to dismiss a claim against an investment banker for aiding and abetting a board’s alleged breach of its duty to act with care. Note that the board itself was...more

The Financial Report - Volume 4, No. 20 - October 2015 (Global)

Last Friday, the Securities and Exchange Commission published a 41-page report that provides private fund industry statistics and trends. The report aggregates data supplied by more than 2,600 private fund advisers on Form...more

Corporate Investigations & White Collar Defense - October 2015

"Wherefore Art Thou Due Process?" Part III - Why it matters: It is time for another installment in our continuing "Wherefore Art Thou Due Process?" coverage into the ongoing constitutional challenges to the SEC's...more

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