Communiques
The latest compliance news from SEC3 and CCO3.
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
Annual ADV Registration Fee Deadline
November 12, 2014
Registered investment advisers with state filings are required to annually renew their state ADV registration or their state notice filings of their federal ADV. They are also required to annually renew the state registrations of their investment adviser representatives.
Custody Rule Violations - Deliberate and Inadvertent
November 04, 2014
On October 29, 2014, the SEC charged a registered investment adviser, its two principals and the chief compliance officer with repeated violations of the Custody Rule (Rule 206(4)-2 under the Advisers Act). The advisory firm managed a number of pooled investment vehicles and failed to distribute audited financial statements to investors within the 120-day window from fiscal-year end as mandated by the Custody Rule.
Read more: Custody Rule Violations - Deliberate and Inadvertent
SEC Announces Record Number of Enforcement Cases in 2014
October 22, 2014
The SEC announced that for its fiscal year that ended in September, it filed a record 755 enforcement actions covering a wide range of misconduct, and obtained orders totaling $4.16 billion in disgorgement and penalties. By contrast, in FY 2013, the SEC filed 686 enforcement actions and obtained orders totaling $3.4 billion in disgorgement and penalties. In FY 2012, the SEC filed 734 enforcement actions and obtained orders totaling $3.1 billion in disgorgement and penalties.
Read more: SEC Announces Record Number of Enforcement Cases in 2014
New SEC Guidance for Investment Advisers’ Obligations Regarding Proxy Voting
July 22, 2014
The SEC’s Divisions of Investment Management and Corporation Finance recently provided guidance (the “Guidance”) to investment advisers regarding their obligations in voting client proxies and retaining proxy advisory firms. The Guidance also covered proxy advisory firms directly regarding their reliance on popular exemptions from the federal proxy rules. In doing so, the regulators addressed the interplay between advisers’ fiduciary obligations and the Proxy Voting Rule. They also clarified that proxy advisory firms, when creating voting guidelines for advisers and institutional investors and acting to apply those guidelines in voting proxies, might jeopardize their ability to rely on exemptions from federal proxy rules.
Read more: New SEC Guidance for Investment Advisers’ Obligations Regarding Proxy Voting
Steps Directors Can take to Avoid SEC Enforcement
July 08, 2014
SEC Chair Mary Jo White recently shared steps directors can take to meet various SEC expectations. At the annual Stanford Directors’ College, Chair White highlighted the important role directors play in the eyes of the SEC and set out her planned agenda to discuss:
Read more: Steps Directors Can take to Avoid SEC Enforcement
Understanding SEC Enforcement
May 22, 2014
One of the main goals of any registered firm is to avoid an enforcement action. The more you know about trends with regard to enforcement cases, the better equipped you are to succeed in that endeavor. The good news is that the SEC is being more transparent with the industry than ever before with regard to goals, focus areas and its approach to enforcement.
SEC Risk Alert - Cyber Security
April 18, 2014
As if April 15th wasn't bad enough? In addition to it being Tax Day, the U. S. Securities Exchange Commission's ("SEC") Office of Compliance Inspections and Examinations ("OCIE") issued a Risk Alert discussing the planned sweep exams that will assess registrant cyber-security readiness and to gather information related to recent experiences with cyber threats.
If You Have Never Been Examined by the SEC, Get Ready
February 24, 2014
The Securities and Exchange Commission announced on Thursday, February 20th that its Office of Compliance Inspections and Examinations (OCIE) is launching an initiative directed at investment advisers that have never been examined, focusing on those that have been registered with the SEC for three or more years.
Read more: If You Have Never Been Examined by the SEC, Get Ready
SEC National Exam Program 2014 Exam Priorities
January 10, 2014
The Securities and Exchange Commission’s National Examination Program (“NEP”) has released 2014 examination priorities which can be found here. Much of what has been announced is a reiteration of prior focus areas. NEP-wide initiatives (not specific necessarily to the particular type of registrant) include fraud detection and prevention; corporate governance; conflicts of interest; enterprise risk management; technology; dual registrants; new laws and regulations, including general solicitation of private funds under Rule 506(c) under the Securities Act of 1933; and retirement vehicles.
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