Sorry for the lack of posts this week. I was attending and speaking at the Boston Investment Adviser Compliance Symposium. I needed to earn some continuing education credits for the my IACCP designation.
While I was sitting it conferences, here are some of the compliance-related stories that caught my attention.
Accredited Investors vs. Qualified Clients vs. Qualified Purchasers: Understanding Investor Qualifications by Alexander Davie in Strictly Business
The three most common types of investors referenced in these laws and the regulations adopted by the Securities and Exchange Commission (SEC) are 1) accredited investors, 2) qualified clients, and 3) qualified purchasers. While the terms may sound familiar, there are crucial distinctions between each category that have a significant impact on issues like whether a fund qualifies for the private placement exemption, whether a fund’s manager will be entitled to receive performance-based compensation, and whether the fund will be required to register as an investment company. [More…]
Dentist, Claiming Tip Was a Rumor, Wins Insider Trading Case by T. Gorman in SEC Actions
The defense claimed that Mr. Roberts relied on his research but not a rumor of a transaction he received from his brother-in-law, according to a report by Law 360 (Aug. 15, 2017). While Mr. Roberts chose not to testify, his version of the trading transactions was put in evidence by the FBI to whom he had given statements.
Mr. Robert’s claim about rumors regarding the transaction appears to draw support from the other insider trading cases that swirled around the Shaw transaction. For example, SEC v. Trahan, Civil Action No. 17-cv-731 (W.D. LA. Filed June 6, 2017), is another action based on the deal. It named as defendants Michael Trahan, the owner of engineering consulting company Petra Consultants, Inc. Mr. Trahan was a consultant to Shaw. During his engagement, and before the July 30, 2012 announcement date, an employee of the firm told him about the merger. Mr. Trahan purchased 5,600 shares of Shaw common stock which he sold after the deal announcement for a profit of $69,735.00. The complaint alleged violations of Exchange Act Section 10(b). To resolve the case Mr. Trahan consented to the entry of a permanent injunction prohibiting future violations of Section 10(b). In addition, he agreed to pay disgorgement of $69,735.00, prejudgment interest and a penalty equal to his trading profits.
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Selfie Time: What Could Go Wrong? by By Margaret Scavotto, Director of Compliance Services at Management Performance Associates
A nurse aide, lab tech, medical assistant – or any other healthcare employee – is new on the job. They are excited about their new position and decide to take a selfie to memorialize the occasion, then send it off to Facebook, Instagram, Twitter and Snapchat, with the click of a button, in under 20 seconds. What could go wrong? [More…]
Federal Spoofing Conviction by Lewis J. Liman, Jonathan S. Kolodner and Matthew Solomon in the CLS Blue Sky Blog
Coscia was the first trader to be convicted under the anti-spoofing provision of the Commodity Exchange Act (“CEA”), 7 U.S.C. § 6c(a)(5). The Seventh Circuit’s decision upholding Coscia’s conviction marks the first time a federal appellate court has provided guidance on the scope of the anti-spoofing prohibition, and the Circuit’s comprehensive rejection of Coscia’s constitutional challenge fortifies the government’s ability to conduct additional investigations and prosecutions in an environment of increasingly aggressive regulation of the listed futures and derivatives markets. [More…]