SEC Grants Relief to Broker-Dealers and Investment Advisers WHAT HAPPENED? On October 26, 2017, the SEC released three no-action letters that will provide 30 months relief under the Investment Advisers Act of 1940 for US broker-dealers under the second Markets in Financial Instruments Directive (“MiFID II”). MiFID II is [...]
RIA Examinations Expected to Rise by 25% Over Next 2 Years WHAT HAPPENED? In a testimony to Congress, SEC Chairman Clayton stated that the SEC is on track to increase the number of registered investment adviser (“RIA”) examinations by 20 percent in fiscal year 2017 and by an additional [...]
PE Firm Charged with Improper Allocation of Broken Deal Expenses WHAT HAPPENED? On September 21, 2017, the SEC charged a registered investment adviser with improperly allocating broken deal expenses between three private equity funds it manages (collectively, the “Private Equity Funds”) and separate co-investment vehicles (the “Co-Investors”). From 2004 [...]
SEC Charges SunTrust With Improperly Recommending Costlier Mutual Funds WHAT HAPPENED? On September 14, 2017, the SEC charged SunTrust Investment Services with receiving more than $1.1 million in client fees by improperly recommending costlier share classes of mutual funds when cheaper shares were available. The SEC alleged that SunTrust [...]
PE Firm Charged for Improperly Allocating Overhead and Portfolio Expenses to Funds WHAT HAPPENED? On September 11, 2017, the SEC charged a registered investment adviser (“the RIA”) and its principal (collectively, “Respondents”) with improperly allocating fees and expenses to two private equity funds (collectively, “the Funds”) managed by Respondents. [...]
SEC Charges Investment Adviser with Defrauding Clients and Prospective Clients WHAT HAPPENED? On August 31, 2017, the SEC charged an investment adviser and its principal (collectively, the “Defendant”) with misleading clients and prospective clients about the performance track record of an investment strategy they offered. The SEC explained that the [...]
Action Advisers Should Take Prior to January 30, 2018, to Comply with the Custody Rule THE CUSTODY RULE As summarized in a previous Flash, the SEC published a ‘no-action’ letter in February 2017, stating that custody requirements can be triggered under certain circumstances when an adviser participates in first-party and [...]
SEC Charges Hedge Fund Adviser with Failure to Prevent Insider Trading WHAT HAPPENED? On August 21, 2017, the SEC charged a hedge fund advisory firm with failing to implement and enforce adequate policies and procedures designed to prevent insider trading. The adviser’s policies and procedures required only an initial review [...]
Hedge Fund Manager Charged with Misappropriating Investor Funds WHAT HAPPENED? On August 11, 2017, the SEC charged a hedge fund manager with misappropriating investor money between different funds he managed. These improper allocations were used to pay for legal and administrative expenses incurred by certain hedge funds during ongoing litigation [...]
Dual Registrant Fails to Disclose Conflict of Interest from Revenue Sharing WHAT HAPPENED? On July 19, 2017, the SEC charged a dually-registered investment adviser and broker dealer (“Respondent”) for failing to disclose compensation received from a third-party broker-dealer (“Broker”). Starting in 2002, Respondent waived transaction fees it and Broker would otherwise [...]