Courtesy of XKCD. https://xkcd.com/2416/ Read more »
Author: Doug Cornelius
You can find out more about Doug on the About Doug page
Performance Advertising and the Funds That Weren’t There
Eric Malley decided that buying buy hundreds of luxury Manhattan residences on the cheap and leasing them to corporate tenants would be a great way to make money. He would let others in on his plan as investors. He created MG Capital Management Residential Fund III and raised $23 million from about 60 investors. It … Read more »
Division of Examination
Goodbye Office of Compliance Inspections and Examinations. Hello Division of Examination. The Securities and Exchange Commission decided that OCIE, with 23% of the SEC employees, is probably more than an office and elevated it to the level of “Division” by naming it the Division of of Examinations. That puts it on equal name status with … Read more »
Corporate Transparency Act
I’m not sure what Anti-Money Laundering has to do with the United States military, but Congress included big changes to anti-money laundering law in the National Defense Authorization Act for 2021. After a veto by President Trump and an override by Congress, NDAA has become the law, including Section 6401-6403, the Corporate Transparency Act. It’s … Read more »
Doubling Down on Disgorgement
Back in 2017, the Supreme Court in Kokesh v. Securities and Exchange Commission pointed out that the disgorgement claims made by the Securities and Exchange Commission are penalties and therefore subject to the five-year statute of limitations. The Kokesh decision left some question about whether the SEC could pursue disgorgement at all. The Supreme Court did not … Read more »
Massachusetts Fires an Arrow at Robinhood
The Secretary of the Commonwealth filed its first enforcement action under the Massachusetts Fiduciary Rule. Robinhood and its gamification of investing are in its bullseye. The Massachusetts Securities Division adopted amendments to 950 Mass. Code Regs. 12.200 earlier this year as they relate to the standard of conduct applicable to broker-dealers and agents. The amendments apply a fiduciary … Read more »
Vaccine Tracker
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 »
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 »