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On May 29, 2020, the SEC settled charges against an investment adviser for inadequate disclosure of its mutual fund share class selection practices. At times the adviser held for advisory clients mutual fund share classes that charged fees pursuant to Rule 12b-1 instead of lower-cost share classes of the same funds that were available to the … Read More

On April 7, 2020, the Office of Compliance Inspections and Examinations (OCIE)  issued two risk alerts: Examinations will focus on compliance with regulation Best Interest and examinations that focus on compliance with Form CRS.  https://www.sec.gov/news/press-release/2020-82 On April 17, 2020, an investment adviser settled charges that it advised its clients to purchase or hold mutual fund share classes that charged … Read More

SEC to perform examinations that focus on compliance with Form CRS: https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf Investment adviser made material misrepresentations and omissions of material fact necessary to make the statements made not misleading in order to induce prospective investors to invest in private funds. https://www.sec.gov/litigation/admin/2020/ia-5471.pdf OCIE remains fully operational nationwide. Examinations to be performed offsite. https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued SEC Coronavirus (COVID-19) Response.  Investment advisers business continuity … Read More

Portfolio manager and advisory firm misrepresented risk in mutual fund.  [https://www.sec.gov/news/press-release/2020-21] Office of Compliance Inspections and Examinations published its observations on cybersecurity and resiliency practices. [Note: https://www.sec.gov/news/press-release/2020-20] Husband and wife billion-dollar Ponzi scheme. [https://www.sec.gov/news/press-release/2020-18] CEO of Exempt Reporting Adviser charged with wire fraud, illegal monetary transactions, and making false statements to the SEC. [Note: https://www.sec.gov/litigation/admin/2020/ia-5439.pdf and https://www.justice.gov/usao-ct/us-v-barton-stuck and https://portal.ct.gov/DOB/Enforcement/Securities-Orders-2/Signal-Lake-Management-et-al—Findings-and-Order] Registered investment … Read More

SEC proposed amendments to modernize the rules under the Investment Advisers Act addressing investment adviser advertisements and payments to solicitors. The proposed amendments are intended to update these rules to reflect changes in technology, the expectations of investors seeking advisory services, and the evolution of industry practices. The proposed amendments to the advertising rule would … Read More

Full and fair disclosures of conflicts of interest particularly financial interest.  [https://www.sec.gov/investment/faq-disclosure-conflicts-investment-adviser-compensation] SEC examining foreign investment advisers.  [https://www.sec.gov/news/press-release/2019-223] Formation of its Asset Management Advisory Committee.  [https://www.sec.gov/news/press-release/2019-208] Undisclosed compensation arrangements.  [https://www.sec.gov/litigation/litreleases/2019/lr24633.htm] Insider trading of IT employee.  [https://www.sec.gov/litigation/litreleases/2019/lr24638.htm] Preferential redemptions/other disbursements out of a hedge fund.  [https://www.sec.gov/litigation/litreleases/2019/lr24640.htm] Breached its fiduciary duty and defrauded retail advisory clients by, … Read More

https://www.sec.gov/litigation/admin/2019/ia-5371.pdf [On September 26, 2019, Cetera Investment Advisers LLC settled an enforcement action with the SEC.  Since at least January 2007, Cetera has paid cash fees to approximately 350 banks to, among other things, solicit investment advisory clients on behalf of Cetera. As part of this process, Cetera did not require the banks to give clients … Read More

On July 2, 2019, the SEC charged Parrish Group, an investment adviser, and Davis, Parrish Group’s founder, with material misrepresentations. Specifically, Parrish Group and Davis repeatedly misled prospective clients about, among other things, Parrish Group’s assets under management, its clients, the number and identity of its employees, and its registration status with the SEC. Parrish … Read More

On July 1, 2019, the SEC charged Fieldstone Financial Management Group LLC and its principal Kristofor Behn with defrauding retail investment advisory clients by failing to disclose conflicts of interest related to their recommendations to invest in securities issued by affiliates of Oregon-based Aequitas Management LLC.  Behn also fraudulently misused approximately $500,000 of one investor’s … Read More

On June 27, 2019, the SEC charged State Street Bank and Trust Company with overcharging mutual funds and other registered investment company clients for expenses related to the firm’s custody of client assets. The overcharges included a secret markup that State Street tacked on to the cost of sending secured financial messages through the Society of … Read More