Doug Cornelius on compliance for private equity real estate
I’m not a big fan of these SEC cases involving compliance officers. But if the compliance officer is conducting misdeeds, he or she is going to be subject to discipline. It’s not like the compliance officer was doing compliance and missed something. Last week I had the two cases of compliance officers who faked paperwork…
Two days in a row of compliance officers making the mistake of faking compliance documents. Yesterday it was a compliance officer who faked compliance reviews. Today, its a compliance officer who faked employee securities transaction approvals. According to the SEC Order, Suzanne Ballek was the Chief Compliance Officer of Inland Investment Advisors, part of the…
Enforcement cases against a Chief Compliance Officer always catch my attention. The latest to catch my eye is against A.G. Morgan Financial Advisors, LLC (“AGM”) of Massapequa, New York, AGM’s owner Vincent J. Camarda, and AGM’s former Chief Compliance Officer James McArthur. The SEC Commissioners and senior Division of Examination staff have usually stated three…
FINRA released regulatory notice 22-10 that said it generally considers the role of compliance chief an advisory position rather than a supervisory one. Rule 3110 (Supervision) imposes specific supervisory obligations on member firms. The responsibility to meet these obligations rests with a firm’s business management, not its compliance officials. The CCO’s role, in and of…
According to SEC’s complaint against Strong Investment Management and its owner, Joseph Bronson, for more than four years, Bronson traded securities in Strong’s omnibus account but delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the day. This allowed Bronson to harvest substantial profits at his…
Cases against Chief Compliance Officers catch my attention. Jack Cook is the Chief Compliance Officer of Princeton Alternative Funding. He is in the crosshairs of the Securities and Exchange Commission. The SEC Commissioners and senior OCIE staff have usually stated three circumstances that lead to CCO liability: when the CCO is affirmatively involved in misconduct;…
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…
Cases imposing liability against compliance offices catch my attention. An Illinois court just imposed a fine on the former chief compliance officer of The Nutmeg Group, a registered investment adviser and fund manager. David Goulding had previously agreed to be barred from association with any investment adviser. David Goulding must have thought things would go…
The New York City Bar is looking out for compliance officers. It published a comprehensive report on liability for financial firm compliance officers and ways the regulators can do a better job relating to compliance officers. “Financial firm compliance officers serve as essential gatekeepers to prevent, detect, and remediate violations of laws, regulations, and internal…
Gregory M. Prusa was the Chief Compliance Officer of the Salus, LP, a hedge fund. Among other problems, Mr. Prusa made false or misleading statements in the Form ADV filing for Salus. Now he is barred from the securities industry. The general rule is the the CCO should only be subject to an action if…