Mutual Fund and Institutional Issues

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Reminder that the New Form ADV Rules Took Effect on October 1, 2017

Reminder that the New Form ADV Rules Took Effect on October 1, 2017 WHAT HAPPENED? On October 1, 2017, the amendments to Part 1A of Form ADV and the Investment Advisers Act of 1940 (the “Advisers Act”) took effect.  The amendments, which are described in a previous Flash Report, [...]

SEC Creates Cyber Unit and Retail Strategy Task Force

SEC Creates Cyber Unit and Retail Strategy Task Force WHAT HAPPENED? On September 25, 2017, the SEC announced the creation of the Enforcement Division’s Cyber Unit and Retail Strategy Task Force.  These new initiatives will support the SEC in identifying cyber-related misconduct and risks directly impacting retail investors, respectively. [...]

Amendments to the Books and Records Rule, Effective October 1st

Amendments to the Books and Records Rule, Effective October 1st WHAT HAPPENED? Effective October 1st, advisers will be required to comply with the revised Books and Records Rule. Under the new rule, advisers must maintain additional records supporting the calculation and distribution of performance information. The amendments were made [...]

SEC Announces Intrusion to EDGAR System

SEC Announces Intrusion to EDGAR System WHAT HAPPENED? On September 20, 2017, SEC Chairman Jay Clayton issued a statement announcing a 2016 intrusion to the EDGAR test filling system. The intrusion was first detected in 2016 and the Commission learned in August 2017 that the incident may have been [...]

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 [...]

OCIE Announces Most Frequent Advertising Rule Risks Identified in Examinations

OCIE Announces Most Frequent Advertising Rule Risks Identified in Examinations WHAT HAPPENED? On September 14, 2017, the Office of Compliance Inspections and Examinations (“OCIE”) announced the most frequent compliance issues with the Advertising Rule that were identified in their recent deficiency letters and examinations.  The Advertising Rule states that [...]

Shortened Settlement Cycle for Securities Transactions

Shortened Settlement Cycle for Securities Transactions WHAT HAPPENED? On September 5, 2017, the securities industry changed the business day standard settlement cycle of securities transactions covered by the T+3 settlement cycle to a T+2 settlement cycle.  The amended rule began covering securities that were traded on September 5, 2017, [...]

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 [...]

Preparing Compliant Advertising (Including GIPS)

Preparing Compliant Advertising (Including GIPS) THE AD RULE Advertising is often a key focus of the SEC’s examinations, making it imperative for investment advisers to remain up to date on the requirements of marketing-related regulations.  All written communication provided to more than one person and any notice that solicits investment advisory [...]