Enforcement

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Adviser Charged with Defrauding Clients

Adviser Charged with Defrauding Clients WHAT HAPPENED? On December 11, 2017, the SEC charged a dually registered investment adviser and broker-dealer, and its principal (collectively, the “Defendant”), with defrauding its clients and receiving $780,000 in ill-gotten gains.  Over the course of several years, Defendant repeatedly purchased securities from underwriters [...]

Division of Enforcement Releases Annual Report

Division of Enforcement Releases Annual Report WHAT HAPPENED? On November 15, 2017, the SEC’s Division of Enforcement released its annual report for Fiscal Year 2017 (“FY 2017”).  The report explains how the Division of Enforcement’s decision making throughout FY 2017 was guided by the following five principles: Focus on [...]

SEC Charges Unregistered Fund Manager

SEC Charges Unregistered Fund Manager WHAT HAPPENED? On October 26, 2017, the SEC charged an unregistered investment adviser and its principals (“collectively, the “Respondents”) with engaging a private fund it managed (the “Fund”) in conflicted transactions without providing disclosure to the investors. The conflicted transactions that Respondents performed includes [...]

SEC Grants Relief to Broker-Dealers and Investment Advisers

SEC Grants Relief to Broker-Dealers and Investment Advisers WHAT HAPPENED? On October 26, 2017, the SEC released three no-action letters that will provide 30 months relief under the Investment Advisers Act of 1940 for US broker-dealers under the second Markets in Financial Instruments Directive (“MiFID II”).  MiFID II is [...]

PE Firm Charged with Improper Allocation of Broken Deal Expenses

PE Firm Charged with Improper Allocation of Broken Deal Expenses WHAT HAPPENED? On September 21, 2017, the SEC charged a registered investment adviser with improperly allocating broken deal expenses between three private equity funds it manages (collectively, the “Private Equity Funds”) and separate co-investment vehicles (the “Co-Investors”).  From 2004 [...]

SEC Charges SunTrust With Improperly Recommending Costlier Mutual Funds

SEC Charges SunTrust With Improperly Recommending Costlier Mutual Funds WHAT HAPPENED? On September 14, 2017, the SEC charged SunTrust Investment Services with receiving more than $1.1 million in client fees by improperly recommending costlier share classes of mutual funds when cheaper shares were available.  The SEC alleged that SunTrust [...]

PE Firm Charged for Improperly Allocating Overhead and Portfolio Expenses to Funds

PE Firm Charged for Improperly Allocating Overhead and Portfolio Expenses to Funds WHAT HAPPENED? On September 11, 2017, the SEC charged a registered investment adviser (“the RIA”) and its principal (collectively, “Respondents”) with improperly allocating fees and expenses to two private equity funds (collectively, “the Funds”) managed by Respondents.  [...]

SEC Charges Investment Adviser with Defrauding Clients and Prospective Clients

SEC Charges Investment Adviser with Defrauding Clients and Prospective Clients WHAT HAPPENED? On August 31, 2017, the SEC charged an investment adviser and its principal (collectively, the “Defendant”) with misleading clients and prospective clients about the performance track record of an investment strategy they offered.  The SEC explained that the [...]

Action Advisers Should Take Prior to January 30, 2018, to Comply with the Custody Rule

Action Advisers Should Take Prior to January 30, 2018, to Comply with the Custody Rule THE CUSTODY RULE As summarized in a previous Flash, the SEC published a ‘no-action’ letter in February 2017, stating that custody requirements can be triggered under certain circumstances when an adviser participates in first-party and [...]