SEC Continues Focus on Conflicts Disclosures in Enforcement Actions Totaling $106 Million in Fines and Disgorgement

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.

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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).

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New Limits for Qualified Clients

The SEC adjusted the definition of “qualified clients,” becoming effective on August 16, 2021, pursuant to the  Dodd-Frank Act of 2010, requiring such an adjustment for inflation every five years.  Investment Advisers Act of 1940 Section 205(a)(1) prohibits an RIA from charging a client a performance-based fee unless the client is a qualified client having a particular new work.

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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:

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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. . . .