Communiques
The latest compliance news from SEC3 and CCO3.
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.
The Volcker Rule adopted after a 3-year wait
December 12, 2013
The Volcker rule was adopted on Tuesday, December 10, 2013 by five regulatory agencies including the Securities and Exchange Commission (the “SEC”). The original proposal was drafted in 2010 and received more that 19,000 comment letters from industry participants. The final rule was adopted by the SEC with a narrow 3 to 2 vote. It is interesting to read the strong dissenting opinions by Commissioners Gallagher and Piwowar who thought that the rule was so substantially different than the proposal that it should have been re-submitted for comment and not presented to the SEC for adoption in the rushed manner that it was presented at year-end. Commissioner Gallagher mentioned that the SEC received the final draft on December 5 which left little time for careful consideration.
The Importance of Effective Compliance Programs in Preventing Enforcement Actions
December 03, 2013
Stephen L. Cohen, the Securities and Exchange Commission’s (“SEC”) Associate Director of Enforcement, spoke recently at the Society of Corporate Compliance and Ethics’ Annual Conference. In his remarks he noted what he considers characteristics of effective and ineffective compliance programs and how having a strong compliance program can impact the SEC staff’s decision on whether or not to bring an enforcement case against a firm as well as the extent of penalties and sanctions pursued. Mr. Cohen said: “When evaluating a company’s misconduct, we typically give credit when a company can demonstrate a strong compliance culture”.
Read more: The Importance of Effective Compliance Programs in Preventing Enforcement Actions
Hot Topics in National Futures Association Audits
November 13, 2013
As a result of the rescission of Rule 4.13(a)(4) for commodity pool operators (CPOs) advising funds offered to qualified eligible persons and the narrowing of the exclusion under Rule 4.5 available to registered investment companies, almost 600 new CPOs registered with the Commodity Futures Trading Commission (CFTC) and became members of the National Futures Association (NFA). The number of registered CPOs increased from 1,200 to 1,800. Currently-registered CPOs manage over 6,000 commodity pools. Before the advent of the new registrants, the first audit was generally expected within the first year of registration.
Read more: Hot Topics in National Futures Association Audits
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