News & Analysis as of

The SEC’s Increasing Use of Data Analysis

The Commission has increasingly focused on data analysis as an aid to its enforcement program. Two recent cases brought against investment advisers for cherry picking illustrate different facets of the approach....more

A Unique SEC Offering Fraud Action

In recent years the SEC has brought a series of investment and offering fraud actions. Typically those actions center on schemes which promise to-good-to-be-true returns in which investors lose substantial sums. In what may...more

Fund Founder, Chief Legal Officer and Controller Sanctioned by SEC

The founder of a venture capital fund, assisted by its chief legal officer and controller, took more money from the fund as “advanced fees” than was actually due and owing. The money was used for other entities in the...more

Financial Services Quarterly Report - First Quarter 2016: Lessons for PE Managers from the SEC’s Ongoing Scrutiny of Private...

A large number of private equity managers were required to register for the first time with the U.S. Securities and Exchange Commission (SEC) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Act)....more

Understanding The SEC’s Proposal on Funds’ Use of Derivatives and Other Financial Transactions

On December 11, 2015, the US Securities and Exchange Commission (SEC) voted 3–1 in favor of proposing a new rule—Rule 18f-4 (Proposed Rule) under the Investment Company Act of 1940 (1940 Act). If adopted, the rule will have a...more

SEC Settles Charges Tied to Conflicts with AIG Affiliates

The SEC’s examination staff has, in recent years, become very aggressive. Some claim it is the front edge of enforcement. Regardless of your view, it is typically beneficial to follow their suggestions. ...more

Top 10 Financial Institution Considerations for 2016: #2 – Bank Secrecy Act/Anti-Money Laundering and OFAC Compliance

In our initial article announcing our top 10 considerations for financial institutions in 2016, our second consideration was Bank Secrecy Act/anti-money laundering (BSA/AML) and OFAC compliance in 2016. Compliance with the...more

AML Requirements Proposed for Investment Advisers

After more than a decade of delay, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed new regulations that would extend mandatory anti-money laundering (AML) requirements to all investment...more

SEC Proposes New Exemptive Rule to Regulate Funds’ Use of Derivatives

At an open meeting of the U.S. Securities and Exchange Commission (SEC) today, the SEC by a three-to-one vote approved the proposal (Proposal) of new Rule 18f-4 under the Investment Company Act of 1940 (1940 Act) and...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - A Source of Concern for the SEC — The Outsourcing by Investment Advisers and Funds of Compliance Activities - In a recent National Exam Program Risk Alert (dated November 9, 2015) the U.S....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

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

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

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

SEC Enforcement Actions Against Investment Advisers

According to the SEC’s most recent financial report, as of August 2014, SEC-registered investment advisers managed $62.3 trillion in assets. Not surprisingly, investment advisers attract a great deal of attention from the...more

SEC Continues to Scrutinize the Adequacy and Transparency of Private Equity Fees and Conflicts of Interest

The Securities and Exchange Commission (“SEC”) has continued to scrutinize the fees and expenses charged by private equity funds to investors, as evidenced by the recent enforcement action against three private equity funds...more

This Week In Securities Litigation

The SEC prevailed on two summary judgment motions. One centered on a manipulation action. The other was against an attorney who facilitated a prime bank fraud. The Commission also filed: An action against UBS tied to its...more

Investment Management Update - October 2015

Below is a summary of recent investment management developments that affect registered investment companies, private equity funds, hedge funds, investment advisers, and others in the investment management industry. Schwab...more

Are You My Fiduciary? The DOL Takes Aim At A Fiduciary Standard For All Giving Retirement Investment Advice

The Department of Labor is pressing forward in its efforts to impose a fiduciary standard on anyone giving retirement investment advice. A fiduciary standard would require every retirement investment adviser to put the...more

Investment Adviser Settles SEC Cybersecurity Enforcement Action; SEC Issues Investor Alert

On September 22, the U.S. Securities and Exchange Commission (“SEC”) and R.T. Jones Capital Equities Management, Inc. (“R.T. Jones”), a St. Louis-based investment adviser, settled charges that R.T. Jones failed to adopt...more

New Jersey Resident Charged with Securities and Wire Fraud

On October 1, the U.S. Attorney for the Southern District of New York filed a complaint against New Jersey fund manager William J. Wells charging him with running a “Ponzi” scheme which raised over $1.5 million from...more

SEC Commissioners Making a “Noisy Exit”

Securities and Exchange Commission members Daniel M. Gallagher and Luis A. Aguilar will soon leave the SEC, but neither is keeping quiet about the SEC’s treatment of chief compliance officers (CCOs). Gallagher recently...more

Proposed FinCen Anti-Money Laundering Rules: Implications for Life Settlement Investment Fund Managers

On August 25, 2015, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, issued for public comment proposed rules requiring investment advisers registered with the Securities and...more

SEC Sanctions Investment Adviser For Materially False Advertisements

The SEC recently instituted proceedings against a registered investment adviser and its founder, CEO and majority shareholder for allegedly making material misstatements and omissions regarding the amount of assets...more

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