From xkcd: https://xkcd.com/2398/ Meanwhile on Wednesday, the Securities and Exchange Commission is scheduled to vote on a new advertising rule for registered investment advisers. From the Sunshine Act notice for the meeting; 2. The Commission will consider whether to adopt amendments under the Investment Advisers Act of 1940 to update rules that govern investment adviser … Read more »
Author: Doug Cornelius
You can find out more about Doug on the About Doug page
The SEC Says Your Algorithm Is Not Good Enough
BlueCrest Capital was wildly successful as a hedge fund for many years. Its principals were wealthy enough that they could start a new fund with their own money and dedicate traders to running that new proprietary fund. That’s okay, even if the trading strategies between the new proprietary fund the existing hedge fund overlap. Compliance … Read more »
Compliance Outreach and OCIE Observations
The SEC’s Office of Compliance Inspections and Examination launched a lot info last week. It livestreamed a National Investment Adviser/Investment Company Compliance Outreach and published a Risk Alert on notable compliance issues identified by OCIE related to Rule 206(4)-7. Peter Driscoll, Director of OCIE, started off the program highlighting three words that should be applicable … Read more »
Exchange-Traded Products Initiative
The Securities and Exchange Commission announced a new initiative focused on complex products: The Exchange-Traded Products Initiative. It’s led by the Division of Enforcement’s Complex Financial Instruments Unit. It was developed by Armita Cohen and data analytics specialists Daniel Koster and Jonathan Vogan and has been coordinated by Ms. Cohen. The first inkling of this initiative … Read more »
What’s Wrong at Branch Offices?
The SEC’s Office of Compliance Inspections and Examinations ran a sweep it called the Multi-Branch Initiative. It published a risk alert on November 9 with its findings. The Risk Alert is mostly a collection of typical compliance problems: Custody of client assets Fees and expenses Oversight and supervision of supervised persons Advertising Code of ethics … Read more »
Combined Financial Statements and the Custody Rule
Advisers to private funds, usually rely on the audited financial statement method to satisfy the Custody Rule. The Chief Accountant’s Office of the Division of Investment Management released a “Dear CFO Letter” last week that raises issues about using combined financial statements to satisfy the custody rule. You may have missed this possibly important compliance change … Read more »
Van Halen and Compliance
With the passing of Eddie Van Halen, I thought it appropriate to re-publish this great story about Van Halen and Compliance that I first wrote in 2009. [Spoiler alert] Those brown M&M’s served a real purpose. You may have heard the story about Van Halen’s banning of brown M&M’s from its dressing room. I chalked … Read more »
Do What You Said You Would, Or You’re No Longer a CCO
Rule one following a regulatory examination is to implement the changes you told the regulators you said you would. GGHC failed to do so and it was the CCO’s fault. Then the CCO did the worst thing in compliance. GGHC was duly registered as a broker-dealer and an investment adviser. It used both transaction based … Read more »
Buy Assets From a Foreign Bank Without Violating the FCPA
A quirky feature of the Foreign Corrupt Practices Act is that you can ask the Department of Justice to opine on whether your proposed action would violate the FCPA. Generally, one or two of these FCPA opinions pop up each year. It’s been a six-year drought since the last one. Some of the FCPA opinions … Read more »
Due Diligence for Politically Exposed Persons
Anti-money laundering 101 is to lookout for for terrorists, drug kingpins and oligarchs. You don’t want to do business with these people because they are on the government enforcement lists. AML 102 is to look out for “politically exposed persons.” The international Financial Action Task Force defines a “politically exposed person as: “an individual who … Read more »