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Communiques

The latest compliance news from SEC3 and CCO3.

SEC Enforcement Examinations?

January 15, 2013

Securities and Exchange Commission (“SEC”) staff has suggested greater involvement and concern by Division of Enforcement staff with respect to examinations of registered investment advisers, including private fund and private equity managers. In a speech before the Regulatory Compliance Association on December 18, 2012, Bruce Karpati, Chief of the Enforcement Division’s Asset Management Unit, indicated that the SEC has established areas within the Division of Enforcement to “work with staff outside the Units on investigations and exams.”

Read more: SEC Enforcement Examinations?

 

Important November Regulatory Developments

November 26, 2012

There were a number of important regulatory developments in November, which we will cover in detail over the coming weeks. Here are the top three you need to know about.

Read more: Important November Regulatory Developments

 

Record Year of Enforcement Actions against Investment Advisers

November 16, 2012

Another Record Year of Enforcement Actions against Investment Advisers

The SEC has just released its most recent statistics on its enforcement program.  Numerous actions were filed against investment advisers in 2012.  Specifically, according to the release, the SEC filed 147 enforcement actions against investment advisers and investment companies, one more than the previous year’s record number.  Several of those actions resulted from the Enforcement Division’s investment adviser compliance initiative, which looks for registered investment advisers lacking effective compliance programs designed to prevent securities laws violations.

Read more: Record Year of Enforcement Actions against Investment Advisers

 

The SEC's Continuing Trend of Identifying Aberrational Performance

October 26, 2012

On October 17, the Securities and Exchange Commission (“SEC”) charged New Jersey-based Yorkville Advisors LLC (“Yorkville”), its founder Mark Angelo (“Angelo”), and its Chief Operating Officer and Chief Financial Officer, Edward Schinik, (“Schinik”) with intentionally overvaluing Yorkville’s assets under management and exaggerating Yorkville’s performance. The allegations state Angelo and Schinik made false statements to Yorkville’s investors and auditors concerning the value of certain investments in Yorkville’s funds; Yorkville’s valuation policies and use of third party valuation services; the value of the collateral underlying Yorkville’s investments, and the liquidity of Yorkville’s funds.1

Read more: The SEC's Continuing Trend of Identifying Aberrational Performance

 

Who Does Not Have to Take the Series 3?

October 11, 2012

After the Commodity Futures Trading Commission ("CFTC") rescinded certain exemptions, numerous advisers must now evaluate their registration requirements (please see our previous communique here on the rescission of Rule 4.13(a)(4) by the CFTC). For those that are required to register with the CFTC and become members of the National Futures Association ("NFA"), one of the most cumbersome elements of registration involves taking the Series 3 by the firm’s principals and associated persons.

Read more: Who Does Not Have to Take the Series 3?

 

SEC "Presence" Exams - Four Focus Areas

September 27, 2012

Andrew Bowden, Deputy Director of the Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) and in charge of OCIE’s national examination program recently provided some new details[1] regarding OCIE’s examination program with respect to the over 1,400 newly-registered advisers to private funds.[2]

Mr. Bowden described the three phases of the current program as it relates to the SEC's approach towards these newly-registered managers as follows:

Read more: SEC "Presence" Exams - Four Focus Areas

 

New NFA Rules Affecting "Swap Firms" and New CFTC Guidance on CPOs/CTAs Compliance Obligations

September 04, 2012

New NFA Rules effective September 1, 2012 mandate the registration of “Swaps Firms” and “Swaps APs” and provide an exemption from Series 3 for Swap APs

New rules adopted by the National Futures Association (“NFA”) became effective on September 1, 2012 after being submitted for approval to the Commodity Futures Trading Commission (“CFTC”). The rules require that CFTC-registered firms trading swaps become approved as “Swaps Firms” by the NFA.  All Associated Persons (“APs”) of such “Swaps Firms” must also be approved as “Swaps APs”. Swap Firms are required to have at least one of their principals registered as an AP and approved by the NFA as a Swaps AP.  Swap APs are not, however, required to take the Series 3 (see our previous communiqué on the registration of APs and the Series 3 requirement here).  This exemption from the Series 3 requirement available to Swaps APs also applies to Swaps APs of other firms that would meet the de minimis trading test under Rule 4.13(a)(3) but for the inclusion of swaps in the calculation of the applicable thresholds (for an explanation of the de minimis test, see our previous communiqué here - the test is also explained below).  The new NFA rules can be found here

Read more: New NFA Rules Affecting "Swap Firms" and New CFTC Guidance on CPOs/CTAs Compliance Obligations

 

Lifting the Ban on General Solicitation and Advertising for Private Funds

August 31, 2012

The Securities and Exchange Commission (“SEC”) has proposed amendments to Rule 506 of Regulation D to allow the use of general solicitation and advertising in connection with offerings made under the rule to purchasers who are accredited investors.  These amendments are in response to a mandate by Congress under the Jumpstart Our Business Startups Act (“JOBS Act”), which was enacted on April 5, 2012.  A link to the proposing rule release is here.  The SEC has allowed a 30-day comment period before it enacts the final rule.

Read more: Lifting the Ban on General Solicitation and Advertising for Private Funds

 

SEC's New Exam Format

August 01, 2012

The Private Investment Funds Subcommittee of the New York State Bar Association recently organized a meeting on the Securities and Exchange Commission’s (“SEC”) risk-based examination program.  The meeting was led by Andrew Bowden, the Head of the Investment Advisers National Examination Program of the SEC’s Office of Inspections and Examinations (“OCIE”) and was co-presented by Janaya Moscony, the President of SEC Compliance Consultants, Inc. (“SEC3”) and Barry Barbash, the head of the investment management group of Willkie Farr & Gallager and a former Director of the SEC’s Division of Investment Management.

Read more: SEC's New Exam Format

 

The Life of a CCO: Third in a series

July 19, 2012

How to Design an Appropriate Electronic Communications Review

A frequent question we receive from both established and newly registered advisers concerns the proper review of electronic communications. We understand that no one really wants to read someone else's private and sometimes very personal emails. But, it has to be done and your "supervised persons" should be well aware that there can be no expectation of privacy when using your business' electronic communication platforms (emails, instant messaging, text, etc).

Read more: The Life of a CCO: Third in a series

 

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Newsletter

Get the latest compliance news and insights - delivered weekly. The SEC3 Communique covers all compliance topics. CCO3 focuses on CCO topics.
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Communiques

Exciting Summer Project -- Dig Into Some Sand or Dig Into Your Firm's Best Ex Pr…

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SEC Adopts Fund Liquidity Reporting and Disclosure Changes

The final week of June was a busy one for SEC releases following the SEC’s June 28th open meeting. Among these was a revisit of Rule 22e-4 under the Investment... read more »

More SEC Settlements - This Time Form PF Filing Deficiencies

On June 1st, the SEC announced settlements with 13 RIAs who repeatedly failed to file Form PF reports. Most of these firms never filed over the review period (2012 through... read more »

Two Recent Enforcement Actions Against Private Fund Advisers

The industry should not misinterpret the SEC’s 2018 National Exam Program Priorities as a shift away from private fund advisers. As discussed during the SEC’s recent National Compliance Outreach Seminar... read more »

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 »

Events

Dorsey PF 2018 Symposium

When: September 26, 2018 (8:30 am - 6 pm Where: Dorsey & Whitney LLP | 51 W. 52nd Street | New York, NY 10019 Directions > SEC3’s President, Janaya Moscony will join...

Chief Compliance Officer Roundtable: Breakfast Briefing - June 14, 2018

When: June 14, 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...

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,...