The SEC recently entered into four consent orders (collectively, the “Orders” and each, an “Order”) with registered investment advisers (“RIAs” and each, an “RIA”) that sanctioned the RIAs for failures to provide full and fair disclosure regarding conflicts of interest. Notably, the Orders highlight the RIAs’ various efforts to correct disclosure issues, and the SEC’s ultimate position that each additional disclosure was still inadequate. These Orders again demonstrate the SEC’s continuing focus on ensuring firms provide full and fair disclosure of conflicts of interest, and the difficulty for practitioners in pegging what the SEC will deem a complete and accurate disclosure.
Category Archives: Enforcement
Indiana Jones and Raiders of the Lost Enforcement Actions: SEC and FINRA Enforcement from June 2021
From Brian Rubin and Sarah Sallis in this month’s column for NSCP Currents:
Forty years ago, in Raiders of the Lost Ark, the world was introduced to Indiana Jones, who hunted for the Lost Ark of the Covenant, while chasing and being chased by Nazis. While Raiders and the other Indy movies were not about investments (as that word is used in common parlance), the first movie did involve extremely valuable gold in its opening sequence, in the form of the fictitious Golden Idol. In addition to treasures, the Indiana Jones movies also concerned good v. bad, fighting, adventure, snakes, and some humor. In other words, in many respects, they are similar to enforcement actions (other than the snakes) (although we do know some people who might be considered snakes).
SEC’s Division of Enforcement is Not Taking a Summer Break, FINRA Speaks on Best Execution, Margin Requirements and Private Placements, New Definition of Qualified Client Takes Effect and More
August Regulatory Updates from Cari Hopsfenperger at Hardin Compliance Consulting LLC.
Topics include:
- Trading Restrictions Impacting Chinese Military Companies Persist but Modified Under New Executive Order
- Colorado Becomes the Third U.S. State to Pass Comprehensive Data Privacy Act
- SEC Adopts Inflation-Adjusted Threshold for Qualified Clients
- Amended CPO Form-PQR Filing Requirements are Effective
- Keeping Current with Best Execution and Payment for Order Flow
- Changes to Interpretations of FINRA’s Margin Rule
- Private Placement Filing Requirements Updated to Include Retail Communications
- And the Award for Largest Financial Penalty Ever Issued by FINRA Goes to…
- Auditors Charged with Widespread Private Fund Audit Failures
- TIAA CREF Learns Greed is Not So Good, Paying $97 Million Fine for Disclosure Failures
- SEC Continues to Hammer Advisors on Disclosure Failures in Revenue Sharing Cases
- Does Your Compliance Manual Violate Whistleblower Rules?
Inconceivable: The Princess Bride Fences with SEC and FINRA Enforcement Matters from May 2021
From Brian Rubin and Jessica Rodgers in this month’s column for NSCP Currents:
This year marks the 35th Anniversary of the classic movie, The Princess Bride. According to the movie, the story is about:
Fencing. Fighting. Torture. Revenge. Giants. Monsters. Chases. Escapes. True love. Miracles.
In other words, many of the elements we regularly see in enforcement actions. “Inconceivable” as it may sound, we can make a case for all of them, with the possible exception of “True love.” (Although, let’s be honest, who among us doesn’t love a cleverly drafted legal argument or a well-written Form ADV?)
Read more here. As you wish. . . .
SEC Sanctions Firm for Policies that (Theoretically Could Have) Curtailed Whistleblowers
On June 23, 2021, the U.S. Securities and Exchange Commission (the “Commission”) entered an administrative order (the “Order”) that, among other things, fined a broker-dealer (“BD”) $208,912 for alleged violations of Rule 21F-17(a), which relates to individuals reporting possible securities laws violations to the Commission (a.k.a., whistleblowers).
Practice Tip: While the Order was entered against a broker-dealer, Rule 21F-17(a) applies to all entities subject to the Commission’s jurisdiction (e.g., public companies, broker-dealers, and investment managers). Indeed, the Commission has previously sanctioned public companies and investment advisers for violations of Rule 21F-17(a).
Read more here for both a summary of the Order’s findings, and take-aways for legal and compliance practitioners who support firms that are subject to the Commission’s jurisdiction.