News & Analysis as of

Investment Adviser Challenges Constitutionality of SEC Administrative Proceedings

A registered investment adviser and its principal recently sued the Securities and Exchange Commission for declaratory and injunctive relief to stave off an imminent administrative enforcement action, alleging that the tenure...more

SEC Charges Private Equity Fund Manager with Misallocation of Portfolio Company Expenses

On September 22, 2014, the Securities and Exchange Commission ("SEC") charged Lincolnshire Management, Inc. ("Lincolnshire"), a New York-based private equity fund adviser, with breaching its fiduciary duty to two investment...more

"District Court Dismisses State Parties’ Challenge to SEC Rule 206(4)-5"

On September 30, 2014, Judge Beryl A. Howell of the U.S. District Court for the District of Columbia dismissed a challenge to the Securities and Exchange Commission's (SEC) Rule 206(4)-5 (Rule) for lack of subject matter...more

SEC Charges Private Equity Fund Adviser with Misallocating Expenses between Portfolio Companies

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on September 22, 2014 (Order) against private equity fund adviser Lincolnshire Management, Inc. (Lincolnshire). The Order alleged...more

Is A “Rule” An “Order” And Why Would Anyone Care?

Pay-to-Play Rule Challenged - Doug Cornelius recently wrote about the dismissal of a lawsuit challenging the Securities and Exchange Commission’s anti “pay-to-play” rule under the Investment Advisers Act of 1940. New...more

Lincolnshire Pays $2.3 Million to Settle SEC Charges of Misallocation of Portfolio Company Expenses

On September 22, 2014, New York-based private equity firm Lincolnshire Management, Inc. (Lincolnshire) agreed to pay $2.3 million to settle Securities and Exchange Commission (SEC) allegations that Lincolnshire misallocated...more

"Disclosure and Collateral Consequences of Enforcement Actions for Regulated Financial Services Firms"

Financial services firms facing enforcement proceedings at the hands of the U.S. Securities and Exchange Commission (SEC) or any other financial industry regulator must consider disclosure obligations in the context of the...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 Charges Investment Adviser for Misleading Performance Advertising

In a settled action, the SEC charged an investment adviser for false advertising and its chief compliance officer on related matters. The defendants did not admit or deny the charges....more

SEC Settles With Hedge Fund Adviser Over Trade Allocations and Disclosures Regarding Trading and Investment Strategies

The SEC settled administrative proceedings against Structured Portfolio Management, L.L.C., a hedge fund adviser (the “Adviser”), and two of its affiliated advisers, SPM Jr., L.L.C. (“Adviser A”) and SPM IV, L.L.C. (“Adviser...more

A Compilation of Enforcement and Non-Enforcement Actions

SEC Proposes Extension of Principal Trade Rule for Registered Advisers/Broker-Dealers - The SEC has proposed extending to December 31, 2016, the sunset date for the expiration of Rule 206(3)-3T (the “Rule”) under the...more

How EB-5 Regional Centers and Sponsors Can Evaluate Broker-Dealer, Investment Company and Investment Adviser Registration...

This article is the first in a series of articles on how EB-5 regional centers and sponsors can evaluate broker-dealer, investment company and investment adviser registration requirements under U.S. securities laws....more

SEC Settles with Dually Registered Adviser Over Best Execution, Disclosure and Principal Transactions

The SEC settled administrative proceedings against an investment adviser, Dominick & Dominick LLC, a firm registered with the SEC both as an investment adviser and a broker-dealer (the “Adviser” or “D&D”), and Robert X....more

Republican State Parties Challenge SEC’s Pay-to-Play Rule

On August 7, 2014, the New York Republican State Committee and Tennessee Republican Party (the “Plaintiffs”) filed a civil suit against the Securities and Exchange Commission (the “SEC”) seeking to overturn Rule 206(4)-5...more

SEC Brings First Whistleblower Anti-Retaliation Enforcement Action

On June 16, 2014, the U.S. Securities and Exchange Commission (SEC) resolved its first whistleblower retaliation enforcement action. The SEC’s order against Paradigm Capital Management, Inc. is the first-ever enforcement...more

SEC Commissioner Objects to Retroactive Application of Dodd-Frank Bars

Commissioner Gallagher recently filed this opinion dissenting in part with respect to In the Matter of John W. Lawton. The matter arose out of the alleged misconduct of respondent John W. Lawton, who purportedly committed...more

SEC Grants Exceptions to Family Office Rules

The SEC has previously adopted a rule to define “family offices” that are excluded from the Investment Advisers Act of 1940. “Family offices” are entities established by wealthy families to manage their wealth and provide...more

Fair Valuation and Mutual Fund Directors: The Great Valuation Divide and Its Implications

The 1940 Act’s requirements for valuing portfolio securities may be summarized as follows: the board of directors must determine, in good faith, the fair value of every portfolio security for which a market quotation is not...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

SEC Charges Hedge Fund Adviser with Engaging in Prohibited Principal Transactions and Retaliating Against Whistleblower

The U.S. Securities and Exchange Commission (SEC or Commission) issued a cease and desist order on June 16, 2014 (the Order) against Paradigm Capital Management, Inc. (Paradigm) and its founder, Director, President and Chief...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

SEC “Likes” Social Media for Investment Advisers

The SEC staff views social media as a useful tool that helps consumers conduct their own due diligence on investment advisers. In a recent Investment Management Guidance Update, the staff stated that, under certain...more

Top Ten Things You Need to Know About the Advisers Act

The Investment Advisers Act of 1940 (the Act) is the rulebook for SEC-registered investment advisers (RIAs). The Advisers Act, together with the related rules adopted by the SEC under it, lays down the groundwork as to...more

Investment Management Update

In July 2014, the SEC settled the previously reported proceeding involving Chariot Advisors, and its former owner, Elliott Shifman, concerning charges of violating and aiding and abetting the violation of Section 15(c) of the...more

DID YOU KNOW? SEC Allows Family Offices to Include Members of an Extended Family

Family offices have existed for over a century and have been formed to implement very important and complex objectives, including investment management, corporate succession, estate, gift and income tax planning, and...more

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