News & Analysis as of

Investment Advisers Act of 1940 Enforcement Actions

SEC Staff Identifies Several Paths to “Inadvertent Custody” Under the Advisers Act Custody Rule

by K&L Gates LLP on

Last week, the staff of the Securities and Exchange Commission (“SEC”) clarified its views on certain arrangements that can result in investment advisers having “custody” of client assets, as defined in rule 206(4)-2 (the...more

Funds Talk: March 2017

OCIE Highlights Frequent Topics for Compliance Deficiencies for Investment Advisers - On Feb. 7, 2017, the Securities and Exchange Commission’s (SEC’s) Office of Compliance Inspections and Examinations (“OCIE”) published...more

Investment Management Update

by Ballard Spahr LLP on

SEC Issues Guidance on Mutual Fund Fee Structure - The Securities and Exchange Commission’s (SEC) Division of Investment Management recently issued a guidance update addressing disclosure issues and certain procedural...more

2016 Year In Review: Securities Litigation And Regulation

2016 was an active year in securities litigation. In the first half of 2016 alone, plaintiffs filed 119 new federal class action securities cases. It was also a busy year for SEC enforcement proceedings, with a record 868...more

SEC Charges Adviser With Concealing True Value of Accounts

by Dorsey & Whitney LLP on

When investment advisers and brokers misrepresent the value of the account to a client it is frequently because something untoward has occurred – huge trading losses, misappropriation or other malfeasance. The Commission’s...more

New FINRA Capital Acquisition Broker Rules May Offer Limited Relief to Private Investment Fund Advisers

by Jackson Walker on

The U.S. Securities and Exchange Commission (“SEC”) recently approved a Financial Industry Regulatory Authority (“FINRA”) proposal to adopt a new regime for the regulation of electing broker-dealer firms that meet the...more

The Commission’s Latest Message Case on Investment Adviser Conflict Disclosure

by K&L Gates LLP on

For any investment adviser who has not lived in a cave the last few years, the SEC’s focus on conflicts of interest in the investment management industry comes as no surprise. More than a half century ago, the Supreme Court...more

Mutual Fund Sales by Intermediaries – Fall-Out from DOL Fiduciary Rule and FINRA Enforcement

by Dechert LLP on

Mutual fund sales and distribution arrangements are once again under review. It has been reported that fund intermediaries are re-examining their practices relating to sales charges, share class structures and product...more

SEC's Focus on Private Equity Firms Continues with Recent Action

by Dechert LLP on

A settled enforcement action, announced by the U.S. Securities and Exchange Commission (SEC) on September 14, 2016, continues the trend of increased SEC scrutiny of private equity advisers concerning the allocation and...more

Regulatory Update and Recent SEC Enforcement Actions

by Blank Rome LLP on

On June 2, 2016, the SEC announced that it hired Christopher R. Hetner, a cybersecurity expert, as the Senior Adviser to the Chair for Cybersecurity Policy. The hire is indicative of the SEC’s focus on cybersecurity measures...more

Investment Management Update

by Ballard Spahr LLP on

The Securities and Exchange Commission Adopts Amendments to Form ADV and Investment Adviser Act Rules - The Securities and Exchange Commission (SEC) adopted amendments to Form ADV and Investment Advisers Act of 1940...more

SEC Enforcement Against Private Equity Firms - A Focus on Disclosure, Fees, and Conflicts of Interest

by King & Spalding on

The Securities and Exchange Commission announced two settled enforcement actions against private equity fund advisers last week involving certain fee practices and potential conflicts of interest. Consistent with its...more

Double-Check the Math: Advisers Should Not Provide Clients With Performance Data Created by Other Investment Managers Without...

In a series of enforcement actions this week, the SEC made it clear that investment advisers need to substantiate the performance records of investment management firms they recommend to their clients. In these cases,...more

SEC Busts Apollo for Disclosure and Supervisory Failures

The SEC charged four private equity fund advisers affiliated with Apollo Global Management for misleading fund investors about fees and a loan agreement and failing to supervise a senior partner who charged personal expenses...more

Putting a Premium on Illiquidity: Some Reflections on the SEC’s Scrutiny of Valuation Practices and Disclosures

Valuation is typically near the top of the list when the SEC’s enforcement division and exam staff disclose their priority topics for private funds.  We expect that trend to continue and, if anything, the focus on valuation...more

SEC Halts Scheme By IM Who Bilked Off-Shore Investment Manager

by Dorsey & Whitney LLP on

It can happen to anybody. The SEC has brought what seems like an almost endless string of investment fund and offering fraud actions. Typically small, unsophisticated investors, often known to the fraudster, are targeted with...more

ALJs are A-OK: D.C. Circuit Upholds Constitutionality of SEC In-House Courts

In several recent decisions we have covered, Federal Circuit Courts have unanimously ruled that respondents in an SEC enforcement action cannot bypass the Exchange Act’s review scheme by filing a collateral lawsuit in federal...more

D.C Circuit rejects constitutional challenge to SEC’s use of administrative law judges

by Ballard Spahr LLP on

A challenge to the constitutionality of the SEC’s use of administrative law judges (ALJ) was rejected by the U.S. Court of Appeals for the D.C. Circuit. In Raymond J. Lucia Companies, Inc. et al. v. Securities and Exchange...more

The Financial Report, Volume 5, Number 14

by DLA Piper on

Discussion and Analysis - As an increasing number of investment management firms experience financial distress, we often are asked whether there are any minimum capital requirements imposed on investment advisers....more

SEC Examiners Focused on Fund Share Class Conflicts of Interest

by Morgan Lewis on

OCIE recently published a Risk Alert announcing that it will examine the potential conflict of interest created by registered investment advisers being financially incentivized to recommend certain share classes to clients....more

This Week In Securities Litigation

by Dorsey & Whitney LLP on

Investment advisers were at the center of a number of actions brought by the Commission this week . Two proceedings involved a registered adviser and its COO that were involved in an unregistered and fraudulent offering; two...more

Barred Securities Professional Charged By SEC

by Dorsey & Whitney LLP on

The Commission brought an action against a hedge fund operator who had previously been barred from the securities business and his son. The case centers on undisclosed conflicts and preferential withdrawal rights for the two...more

This Week In Securities Litigation

by Dorsey & Whitney LLP on

The SEC filed a settled FCPA action in which the employees in the China subsidiary of the firm designed and adopted a bribery scheme to circumvent the compliance procedures the company had installed as a result of an earlier...more

Additional Regulatory Hurdles for Private Equity Advisers

by McCarter & English, LLP on

The private equity industry should carefully consider the implications of a recent Securities and Exchange Commission ("SEC") enforcement action. In it, the SEC, for the first time, sanctioned an SEC-registered private equity...more

SEC Files Two Proceedings Against Investment Advisers

by Dorsey & Whitney LLP on

The Commission filed two proceedings centered on investment advisers. One is based on improper fee and trading practices. The second is based on the misappropriation of funds from pooled investment vehicles by the adviser....more

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Cybersecurity

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