We get a bonus day this year with the once-every-four year appearance of February 29 tomorrow. That means an extra day to catch up on some compliance reading.
Exam Recap: What’s hot during OCIE Exams
by Carl Ayers
Private Funds CFO
Don’t expect the SEC to admit to conducting new sweep exams but sources are telling sister publication RCW that OCIE’s looking at compliance with the liquidity risk management rule and how advisor’s handle sweep accounts.
https://www.privatefundscfo.com/exam-recap-whats-hot-during-ocie-exams (subscription required)
The Supreme Court Takes on SEC Disgorgement
by Daniel Walfish
NYU Law’s Compliance & Enforcement
One of the Securities and Exchange Commission’s core enforcement powers may soon be overhauled or even scrapped entirely. For fifty years the SEC has sought “disgorgement” of the proceeds of unlawful activity as one of its main remedies in federal court, even though there is no explicit statutory authority for doing so. On March 3, 2020, the Supreme Court will hear oral argument in Charles C. Liu and Xin Wang v. SEC, No. 18-1501, in which the Justices have agreed to consider whether courts can order disgorgement as an “equitable remedy” for a violation of the securities laws. This post discusses the case’s legal backdrop, some of the ways the Court could decide it, and some of its potential consequences.
https://wp.nyu.edu/compliance_enforcement/2020/02/22/the-supreme-court-takes-on-sec-disgorgement/
10 TYPES OF PROHIBITED REVENUE SHARING
Cipperman Compliance Services
Although, in theory, sufficient disclosure should allow advisers to receive revenue sharing, in practice, the SEC attacks revenue sharing in all its forms regardless of the extent of the disclosure. Our conclusion is that the SEC has effectively banned revenue sharing. As support for our position, below are ten types of revenue sharing outlawed by the SEC (cases hyperlinked).
https://cipperman.com/2020/02/21/the-friday-list-10-types-of-prohibited-revenue-sharing/
Ethisphere Announces the 2020 World’s Most Ethical Companies
Ethisphere’s research supports the conclusion that ethics and financial performance go hand-in-hand. Our annual practice of tracking how the stock prices of publicly traded honorees compare to the Large Cap Index found that listed 2020 World’s Most Ethical Companies outperformed the large cap sector over five years by 13.5 percent. This “Ethics Premium” forms the basis upon which companies can correlate responsible behavior with shareholder value.
https://ethisphere.com/ethisphere-announces-the-2020-worlds-most-ethical-companies/
Why Financial Regulation Keeps Falling Short
By Dan Awrey and Kathryn Judge
The CLS Blue Sky Blog
Modern finance is fast moving, extremely complex, and contributes to pervasive unknowns. Yet the processes governing how finance is regulated are typically slow, highly deliberative, and often reflect deeply ingrained and incredibly optimistic assumptions about our ability to understand the financial system and the potential impact of regulatory intervention. In our new paper, “Why Financial Regulation Keeps Falling Short,” we identify the key drivers of this fundamental mismatch between finance and financial regulation, demonstrate how this mismatch contributes to undesirable policy outcomes, and lay the conceptual foundations for understanding how the processes governing the creation of financial regulations can be improved to help close this gap.
https://clsbluesky.law.columbia.edu/2020/02/25/why-financial-regulation-keeps-falling-short/
A Closer Look at Warren Buffett’s Annual Letter to Berkshire Shareholders
by Kevin M. LaCroix
The D&O Diary
Like many others, I look forward to Warren Buffett’s annual letter to Berkshire Hathaway shareholders, and like many others, I read his annual letter closely, looking for any investment insights I can glean as well for Buffett’s now-famous homespun brand of wisdom and humor. Although Buffett latest letter to Berkshire shareholders – which was published Saturday morning – does offer readers a little under each of these headings, I think many reading Buffet’s latest letter might have come away a little disappointed, as I discuss further below.
https://www.dandodiary.com/2020/02/articles/warren-buffett/a-closer-look-at-warren-buffetts-annual-letter-to-berkshire-shareholders/
Ponzi Schemes Surge In 2019 – Coincidence Or Cause For Concern?
PonziTracker
According to Ponzitracker’s research, 60 Ponzi schemes were allegedly uncovered in 2019 that involved a collective $3.245 billion in investor funds. The statistics mark an abrupt reversal to a multi-year downward trend that in 2018 saw the lowest number of alleged Ponzi scheme discoveries in ten years. In addition, the surge in alleged schemes – the largest percentage increase since 2009 – also comes on the heels of a blockbuster year for financial markets in 2019. While it remains to be seen whether the reversal is an anomaly or cause for concern, all of the data points suggest that 2019 was a banner year for Ponzi scheme discoveries and enforcement.
https://www.ponzitracker.com/home/ponzi-schemes-surge-in-2019-anomaly-or-cause-for-alarm