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Communiques

The latest compliance news from SEC3 and CCO3.

US Supreme Court - Marc Gabelli and Bruce Alpert vs SEC

January 25, 2013

In a rare acceptance of a case collaterally involving the U.S. Securities Laws, the U.S. Supreme Court accepted an appeal by Marc Gabelli and Bruce Alpert (the “petitioners’) from a U.S. Court of Appeals’ decision that reversed the U.S. District Court. The case stems from a 2008 case brought by the SEC against the petitioners for allegedly allowing a market timer to time one of their funds to the exclusion of any other market timers.

Read more: US Supreme Court - Marc Gabelli and Bruce Alpert vs SEC

 

SEC Enforcement Focus Areas for Private Equity Fund Managers

January 25, 2013

In a speech before the Private Equity International Conference yesterday, Bruce Karpati, the chief of the Asset Management Unit of the SEC Enforcement Division reiterated the focus of the Division on private equity and other fund managers. This speech is a sequel to the one delivered by Mr. Karpati last month before the Regulatory Compliance Association which we discussed in our previous communiqué. After reiterating the Division’s increased attention on fund managers and the fact that Enforcement Staff is participating in exams along with OCIE, Mr. Karpati explained the unique characteristics of private equity funds that make them more susceptible to fraud.

Read more: SEC Enforcement Focus Areas for Private Equity Fund Managers

 

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

 

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Communiques

Pre-Dating & Back-Dating are Equally Risky

The SEC today suspended three accountants formerly of BDO USA LLP for improper professional conduct during its 2013 audit of AmTrust Financial Services Inc., an exchange-listed insurance company. According to the... read more »

Fiduciary Duty

On Friday, September 28, 2018 the SEC charged LendingClub Asset Management (LCA) and its former president Renaud Laplanche with fraud for improperly using fund money to benefit LendingClub Corporation (LendingClub),... read more »

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

The Office of Compliance Inspections and Examinations (OCIE) issued a risk alert July 11 targeting investment advisers’ most common deficiencies with regard to their best execution obligations under the Investment... read more »

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 »

Events

Chief Compliance Officer Roundtable: Breakfast Briefing - November 8, 2018

When: November 8, 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...

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...