Compliance Bricks and Mortar for May 30

These are some of the compliance-related stories that recently caught my attention:

Cybersecurity Crackdown in ThinkAdvisor

Think that your firm is too small or that your cyberdefenses are too strong to worry about digital attacks on your firm’s—and your clients’—data? The SEC and FINRA don’t think so. A reading of the regulators’ official announcements and the insights of those who know how they operate suggest that advisors run the risk not only of compromised data but of major fines as the regulators gear up to make examples of firms for cybersecurity shortcomings.

Lawyers as SEC Enforcement Targets, What a Fund Manager Needs to Know by Jay B. Gould in Pillsbury’s Investment Fund Law Blog

In a move that should place securities lawyers and their clients on notice, Commissioner Kara Stein of the Securities and Exchange Commission (“SEC”) recently indicated that lawyers may become targets of SEC enforcement actions when a registrant has been poorly advised by its attorney and the result of that advice ends up harming investors or violating regulatory standards.  The SEC has the ability to sanction, fine and bar attorneys and accountants from practicing before the SEC pursuant to SEC Rules of Practice 102(e).  As a practical matter, a bar pursuant to Rule102(e) precludes an attorney or an accountant from representing a regulated entity, such as an investment adviser or broker dealer, in any further dealings with the SEC or otherwise.

SEC judge bans money manager for misleading Morningstar, investors by Trevor Hunnicutt in InvestmentNews

The administrative law judge found that Max E. Zavanelli — a portfolio manager who has compared his success at investing to the legendary Fidelity Investments manager Peter Lynch — misrepresented and omitted important data in newspaper advertisements, its own newsletters and reports for Morningstar.

Godzilla versus Collateralized Debt Obligations by Erik Gerding in the Conglomerate