ADVISOR FAILS 144A PROCEDURES, AGREED TO SEC ACTION

On July 16, 2020, First Western Capital Management Company (“FWCM”) settled an administrative proceeding where it agreed it purchased for advisory clients securities that were sold in reliance on Rule 144A under the Securities Act of 1933 (“Securities Act”) without having adequate compliance policies and procedures and without providing investment adviser representatives (“IARs”) training and supervision of … Read More

SEC PROPOSES UPDATE TO FORM 13F

On July 10, 2020, the SEC announced that it has proposed to amend Form 13F to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the Commission adopted Form 13F over 40 years ago.  The proposal would raise the reporting threshold to $3.5 billion from $100M. … Read More

BNB SETTLES PROCEEDINGS ON MUTUAL FUND SHARE CLASS SELECTION PRACTICES

On July 9, 2020, BNB Wealth Management, LLC settled a SEC administrative proceeding in connection with its mutual fund share class selection practices. BNB purchased, recommended, or held for certain 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

SEC SETTLES CHARGES AGAINST FRANKLIN ADVISERS

On July 2, 2020, the SEC announced settled charges against Franklin Advisers, Inc. for breaching its fiduciary duty to its client funds and failing to follow its own policies and procedures, and settled charges against Franklin Advisers and Franklin Templeton Investments Corp. for causing client funds to violate investment limitations.  According to the SEC’s order, both Franklin … Read More

June 2020 SEC Updates

On June 25, 2020, five federal regulatory agencies finalized a rule modifying the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds. The Volcker rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge … Read More

May 2020 SEC Updates

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

April SEC Updates

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

February & March SEC Updates

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

January 2020 SEC Updates

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 Updates

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