anton4.jpg

Communiques

The latest compliance news from SEC3 and CCO3.

SEC Charges Advisor with Failing to Disclose Conflict of Interest to Clients and Fund Boards

April 21, 2015

The SEC has charged an advisor with failing to disclose a conflict of interest to their clients and fund boards. In this significant case, the SEC alleges that the firm violated Rule 38a-1 and breached its fiduciary duty by failing to either eliminate the conflict of interest created by the outside business activity of a top-performing portfolio manager, or to disclose the conflict to the relevant fund board or advisory clients.

Read more: SEC Charges Advisor with Failing to Disclose Conflict of Interest to Clients and Fund Boards

 

SEC Warns of Using Confidentiality Language to Stifle Whistleblowers

April 06, 2015

On April 1, 2015, the Securities and Exchange Commission announced its first ever enforcement action against a company for violating Dodd Frank’s whistle blower rules. In this case, the company was found to have required employees to sign a form confidentiality statement when the company conducted internal investigation interviews.

Read more: SEC Warns of Using Confidentiality Language to Stifle Whistleblowers

 

SEC Reminds Advisers of the Need for Gifts and Entertainment Policies

March 25, 2015

In February 2015, the SEC’s Division of Investment Management issued guidance to the public with respect to the conflict of interest that arises when individuals and firms doing business, or hoping to do business, with a fund or investment adviser provide gifts, entertainment, favors or other forms of consideration to employees of the fund or adviser.

Read more: SEC Reminds Advisers of the Need for Gifts and Entertainment Policies

 

SEC to Conduct Second Phase of Cybersecurity Sweep

March 16, 2015

After completing a sweep of 100 firms focusing on preparedness concerning cybersecurity in 2014 and subsequently releasing their summary findings in February 2015, the SEC is poised to begin a second phase of their cybersecurity initiative this summer. This is in line with the 2015 exam priorities that included a continued focus on cybersecurity.

Read more: SEC to Conduct Second Phase of Cybersecurity Sweep

 

Permanent Bars as an Effective Deterrent

March 05, 2015

At the SEC Speaks 2015 Program on February 20, 2015, two SEC Commissioners gave their personal remarks on the Commission seeking permanent bars on wrongdoers to prevent further misconduct by such persons, and to deter future misconduct by others. SEC Commissioner Luis A. Aguilar set forth his views that one of his goals for 2015 is “for the Commission to bring more enforcement cases that have real impact—and that send the strongest message of deterrence.” Commissioner Aguilar stated that he had been a strong supporter of the Division of Enforcement, and had advocated “focusing on individual accountability, effective sanctions that deter and punish egregious misconduct, and policies designed to eradicate recidivism.”

Read more: Permanent Bars as an Effective Deterrent

 

Adviser Sanctioned for Inadequate Compliance Policies and Procedures

February 26, 2015

In January 2015, the SEC settled an action against a registered investment adviser who agreed to several findings of violations of the Investment Adviser Act of 1940 including:

  • failure to create and implement an adequate compliance manual
  • failure to conduct an annual review of the compliance policies and procedures
  • failure to conduct “best execution” reviews
  • failure to provide adequate compliance training to firm employees
  • failure to monitor employee personal trading
  • failure to amend their ADV
  • failure to deliver Form ADV to clients
  • failures by the CCO to review marketing materials
  • failure by the CCO to carry out few, if any compliance responsibilities, and having inadequate training and knowledge of the Advisers Act

The SEC also found that despite two examinations, one in 2004 and one in 2007, the firm did not adequately remedy the issues they were alerted to by the Staff. All of these violations were taken seriously by the Commission and resulted in a cease and desist order and a $50,000 civil money penalty.

While this action illustrates numerous compliance failures by the firm and its CCO, we think certain elements of the order are worth highlighting as they are often common situations, particularly with smaller or emerging managers.

Read more: Adviser Sanctioned for Inadequate Compliance Policies and Procedures

 

SEC Highlights Importance of Risk Assessments

February 21, 2015

The SEC stated in their 2015 Examination Priorities that, as was the case in prior years’ priorities, the Commission will conduct “focused, risk-based examinations”. This guidance confirms that investment advisers should be engaged in identifying risk areas and working to correct any deficiencies prior to the SEC conducting an examination. We have also recently seen a number of our client firms being requested by prospective investors to show them their risk assessments.

Read more: SEC Highlights Importance of Risk Assessments

 

SEC Issues Risk Alert with Cybersecurity Sweep Examinations Summary

February 04, 2015

On February 3, 2015, the SEC released their long-awaited Risk Alert reviewing the results of OCIE's cybersecurity sweep examinations in 2014 that followed their April 2014 Risk Alert on cybersecurity issues. OCIE's sweep examinations covered 57 registered broker-dealers and 49 registered investment advisers with respect to cybersecurity practices at those firms.

The Staff performed these examinations to better understand how broker-dealers and advisers address the legal, regulatory, and compliance issues associated with cybersecurity and to assess the examined firms' vulnerability to cyber-attacks.

Read more: SEC Issues Risk Alert with Cybersecurity Sweep Examinations Summary

 

SEC Announces Examination Priorities for 2015 - And New Year’s Resolutions for CCOs

January 14, 2015

As the SEC has been doing at the start of each year in recent years, the SEC announced its examination priorities for the new year. For 2015, the SEC’s priorities focus on three general areas: (i) protecting retail investors and investors saving for retirement; (ii) assessing market-wide risks; and (iii) using enhanced data analytics to identify illegal activity.

The SEC highlighted certain additional priorities, and of these we think the following are more noteworthy to our investment adviser and registered investment company clients:

Read more: SEC Announces Examination Priorities for 2015 - And New Year’s Resolutions for CCOs

 

Recent SEC Speech Highlights Continued Focus on Private Equity

December 05, 2014

In her recent keynote address at the Columbia Law School Conference on Current Issues in Securities Regulation (November 21, 2014), Commissioner Kara Stein stressed the importance of transparency in securities markets including private equity, a market in which, as she indicated, most of the investors are public and private pension funds, endowments, and foundations holding the money of teachers, policemen, firemen and public and private universities. Although these institutional investors are typically sophisticated, the degree of sophistication varies between investors representing small state plans as opposed to large university endowments. In addition, even institutional investors do not possess OCIE’s enhanced access to a registrant’s records, so they would all benefit from robust disclosure. Thus, transparency is an important investor protection tool. Commissioner Stein voiced her concern that disclosures in private equity lack rigor.

Read more: Recent SEC Speech Highlights Continued Focus on Private Equity

 

Page 4 of 10

«StartPrev12345678910NextEnd»

Newsletter

Get the latest compliance news and insights - delivered weekly. The SEC3 Communique covers all compliance topics. CCO3 focuses on CCO topics.
tip: check both to keep informed!

Communiques

2018 - Are you ready for your next SEC exam?

The pool of registered investment advisers that will be subject to an SEC exam in 2018 is at the highest level seen in years. The SEC projects it will examine... read more »

Navigating the Changes to Form ADV

On August 25, 2016, the U.S. Securities and Exchange Commission adopted numerous substantive and technical amendments to Form ADV. While the adopting release required advisers to begin complying with the... read more »

Overlooked Benefits of E&O/D&O

While asset managers should always be aware of the protections provided by their E&O/ D&O coverage, there are more reasons than ever to think about it now. The SEC continues to... read more »

SEC3 Newsletter

Commentary: How Compliance Officers & Firms Can Help Limit CCO Personal Liability This article originally appeared on the Thomson Reuters Regulatory Intelligence subscription service for compliance and risk professionals and is... read more »

Wishing One-and-All a Happy, Healthy and Prosperous New Year

We hope each of you found some peace and tranquility in the company of loved ones this holiday season and want to wish one-and-all a happy, healthy and prosperous New... read more »

Understanding How to Mitigate Liability and Navigate Insurance Options (Part II)

In June, we shared our thoughts around common insurance gaps and insurance riders that CCOs as well as managers should understand. One of the gaps we shared related to pre-claim... read more »

Events

Webinar: 2018 SEC Exam Priorities & Recent Exam Highlights

Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. Tobin S. Cochran, Managing Member/President of Focus 1 Associates, LLC and...

Chief Compliance Officer Roundtable: Breakfast Briefing - February 7, 2018

When: February 7, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Upcoming Events - September & October 2017

Upcoming Events Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. SEC3 is teaming up with industry experts in NYC to discuss...

May 23, 2017 - Webcast: WannaCry Ransomware: Were You Really Protected or Just L…

When: Tuesday, May 23rd, 2017 | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. We...

June 14, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Willkie Farr & Gallagher LLP | 600 Travis Street | Suite 2310 | Houston, TX Barry Barbash from Willkie Farr & Gallagher LLP,...

June 13, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Haynes and Boone, LLP | 2323 Victory Avenue | Suite 700 | Dallas, TX 75219 Validated parking is available in the garage attached...

May 31, 2017 - Chicago

9:00-9:30 a.m - Networking and Continental Breakfast 9:30-11:00 a.m - Program Location: Baker & McKenzie LLP | 300 East Randolph Drive | Suite 5000 | Chicago, IL 60601 Kristin Gonzalez and Jerome Tomas...

May 17, 2017 (NYC WIMF)

This event is by invitation only. Please email info@seccc.com to learn more.

May 15, 2017 (NYC Chief Compliance Officer Roundtable)

9:00-9:30am - Networking and Continental Breakfast 9:30-11:00am - Program Location: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone:...

Webcast: The Most Insidious Cybersecurity Threat Is Also The Least Understood

When: Tuesday, April 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. Ransomware, the...

CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO. Attendees will learn: What terms and conditions should Chief Compliance Officers be...

Webinar: CCO Liability (Part III): Managing Liability: Navigating Indemnities an…

When: Tuesday, February 21, 2017 Schedule: 11:00am ET / 10:00am CT / 9:00am MT / 8:00am PT / 7:00am AT Description of Webinar: The National Society of Compliance Professionals is pleased to host...

Webcast: SEC 2017 Examination Focus Area – Cybersecurity Testing

Penetration Testing & Vulnerability Assessments - Examining the SEC & FINRA Requirements When: Wednesday, January 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder,...

Chief Compliance Officer Roundtable: Breakfast Briefing

When: October 20, 2016 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Thomas Westle and Janaya...

Practicing Law Institute - Hedge Fund Management 2016

When: September 15, 2016 Where: New York & concurrent webcast | 1177 Avenue of the Americas | New York, NY 10036 Schedule: 9:00 am – 5:00 pm Janaya Moscony, President of SEC3 will...