From FiSolve, the United States Department of Justice announced five individuals were charged in a 19-count indictment for their participation in a scheme to trade securities based on material nonpublic information about a merger between two pharmaceutical companies that resulted in profits of over $600,000. The defendants are charged with securities fraud, insider trading and conspiracy. If convicted, they could face sentences of 25 years in prison. Read more here.
All posts by Clifford E. Kirsch, Editor
In Congressional Testimony, SEC Chairman Atkins Seeks Flat Budget, Describes Reorganization and Promotes Regional Offices
In testimony before the United States Senate Appropriations Subcommittee on Financial Services and General Government, SEC Chairman Paul Atkins discussed a return to the SEC’s core three-part mission: protecting investors; facilitating capital formation; and maintaining fair, orderly, and efficient markets. The Chairman requested a budget level that is flat as compared to both the FY 2025 and FY 2024 enacted funding levels. The Chairman also described targeted, common-sense reorganizations to come at the SEC and spoke of the importance of regional offices for risk management and other purposes. Read more here at FiSolve.
SEC Charges State Registered Investment Adviser with Cherry-Picking
From our friends at FiSolve, the SEC charged a State of Minnesota-registered investment adviser, and its owner with cherry-picking by disproportionally allocating profitable trades to accounts belonging to the owner and his relatives, while allocating unprofitable trades to other advisory clients. The owner consented to an industry bar, and the firm and owner consented to certain remedial measures, including the payment of civil penalties and disgorgement. The adviser was also censured. Read more here.
Top Compliance Program Mistakes (and How to Avoid Them)
Chief Compliance Officers face the challenge of running a comprehensive yet efficient compliance program that nimbly adapts to changing regulatory requirements and business practices. To assist you, our friends at SEC3 have put together a three-part series to discuss common compliance program mistakes investment advisers make and how to avoid them.
SEC Delivers its Enforcement Report, Industry Says Goodbye to SEC Chair Gensler, and Lessons on Third-Party Transfers and Cherry-Picking
From our friends at SEC3, their December Regulatory Roundup, where they provide practical advice on the latest regulatory headlines. They start this issue with the SEC’s 2024 enforcement results, which fell somewhat short after its 2023 banner year. They also say goodbye to SEC Chair Gary Gensler, who tendered his resignation after Donald J. Trump won his presidential bid. Given the president-elect’s views on government, I expect the next chair to have a less aggressive regulatory agenda. For firms following the ongoing drama in the Fifth Circuit Court of Appeals about the Corporate Transparency Act, the current answer as of December 26 is that the requirements to report Beneficial Ownership are stayed. But stay tuned since that answer may change once again. Finally, they have included a few enforcement cases, one on the misappropriation of client funds and two on cherry-picking. Read more here.