Category: Compliance Bricks and Mortar

Here are some of the compliance-related stories that recently caught my attention.

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Standardizing IRR Calculations and Related Disclosures – The SEC Continues to Focus on Private Equity Practice by Vivek Pingili, Esq.

In recent years the SEC has closely examined private equity fund performance and reporting during routine exams. The importance of this topic came to the forefront in December 2016 when the SEC subpoenaed Apollo Global Management, LLC (“Apollo”) for additional information on Apollo’s IRR calculation methodologies.[1] This SEC enquiry has caused a number of private equity firms to review their IRR calculations and disclosures. [More…]

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SEC’s Reg Flex Agenda: Where Did Those Dodd-Frank Rules Go? by Broc Romanek in The CorporateCounsel.net

Normally – as I have blogged many times (here’s one) – the SEC’s Reg Flex Agendas tend to be “aspirational.” But perhaps this time is different.

As part of a federal agency-wide reveal of the new Administration’s plans for rulemaking, the SEC posted the latest version of its Reg Flex Agenda last week. This agency coordination is the Administration’s “unified agency regulatory agenda.”

This Reg Flex Agenda is notable for what it omits – get a load of what’s not on the list: …. [More…]

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Cheating the Algorithm: The New “Pump and Dump” Fraud by John C. Coffee, Jr. in the CLS Blue Sky Blog

Today, an analogous new technological development is inviting new forms of fraud. The new development is algorithmic trading (which by some estimates now accounts for 30 percent of stock trading[1]). Computers are programmed to trade in a micro-second once they detect certain triggering quantitative data. Obviously, this is how high frequency traders have come to dominate the market.

But can the computer be duped? The answer is: definitely and sometimes easily. A pending SEC litigation shows how the contemporary financial world in its hunt for quantitative “Big Data” exposes itself to fraudsters. In SEC. v. Lidingo Holdings, LLC,[2] a pending action in the Southern District of New York, the defendant described itself as a “social media consultant,” but the SEC characterized it instead as a “stock promotion firm” that received high fees for commissioning and posting articles (and even tweets) about its clients written by a variety of ghost writers whom the firm commissioned and paid.  [More…]

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Are We in a Compliance Arms Race? by Azish Filabi in Compliance & Enforcement

Over the past few decades, while companies have invested in building and expanding their compliance programs, researchers, practitioners and employees in some companies attest to a lack of corresponding reduction in misbehavior.[1]   Some even believe that the compliance programs may be a cause of increasing misbehavior.  This begs the question: Are we in a compliance arms race?  Mind Gym, Inc., a behavioral science oriented training firm has coined this term to refer to the cycle of increasing investment in compliance programs, which increases the demand for competent professionals, and the cost of doing business, while the levels of misbehavior remain unchanged, thus spurring calls for additional internal compliance controls.[2] [More…]

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On Pan-Mass Challenge weekend, August 4 – 6, I will saddle up to ride with 6,200 other cyclists to raise money for life-saving cancer research and treatment at Dana-Farber Cancer Institute. 100% of your donation will go to cancer research and treatment at Dana-Farber Cancer Institute through its Jimmy Fund. I have made a personal commitment to raise $8000.00. I hope, that as a reader of Compliance Building, you will support my fundraising effort. You can donate through any of the following links:

Thank you,
Doug

• Donate $1,000
• Donate $500
• Donate $250
• Donate $100
• Donate $50
• Donate $25
• Donate any amount

These are some of the compliance-related stories that recently caught my attention.

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Developments in the Asset Management Industry by Itzhak Ben-David in the HLS Forum on Corporate Governance and Financial Regulation

The rising concentration in the asset management industry and the rise of ETFs not only change the way investors invest, but also affect the character of the securities market. Large asset managers induce non-fundamental volatility through large trades, and ETFs propagate liquidity shocks originated by investors. Furthermore, arbitrageurs, and specifically hedge funds, may not always absorb and correct these shocks and may even contribute to the noise in prices. [More…]

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Treasury fines Exxon Mobil $2 million for violating Russia sanctions while Secretary of State Tillerson was CEO

OF AC considered the following to be aggravating factors: (1) ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN; (2) ExxonMobil’s senior-most executives knew of Sechin’ s status as an SDN when they dealt in the blocked services of Sechin; (3) ExxonMobil caused significant harm to the Ukraine-related sanctions program objectives by engaging the services of an SDN designated on the basis that he is an official of the Government of the Russian Federation contributing to the crisis in Ukraine; and (4) ExxonMobil is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S economic sanctions and U.S. export controls. [More..]

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The Case Of The Wholly Owned, But Not Totally Held, Subsidiary That May Or May Not Be 100% Owned by Keith Paul Bishop in California Corporate & Securities Law

When someone says that a subsidiary is “wholly owned”, I believe that the common understanding is that the parent company owns all of the issued and outstanding equity of the subsidiary. What if the statement is that the subsidiary is “totally” or “100%” owned? I suspect that most people would not intuit a different understanding. The Securities and Exchange Commission, however, assigns different meanings to each of these terms at least so far as financial statements are concerned. Here are the three definitions:… [More…]

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LEI: more than a number

Corporates trading across many asset classes in Europe using derivatives should take note that from 3rd January 2018, any firm subject to MiFID II transaction reporting obligations will not be able to execute a trade for a client who is eligible for a Legal Entity Identifier (LEI) and does not have one. [More…]

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Fed Nominee Randal Quarles in His Own Words by Ryan Tracy in the Wall Street Journal

“In some ways Dodd-Frank was not ambitious enough, and in other ways it was overly ambitious and I think there are lots of ways to refine Dodd-Frank and other forms of regulatory policy in ways that would be beneficial to the economy.” [More…]

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On Pan-Mass Challenge weekend, August 4 – 6, I will saddle up to ride with 6,200 other cyclists to raise money for life-saving cancer research and treatment at Dana-Farber Cancer Institute. 100% of your donation will go to cancer research and treatment at Dana-Farber Cancer Institute through its Jimmy Fund. I have made a personal commitment to raise $8000.00. I hope, that as a reader of Compliance Building, you will support my fundraising effort. You can donate through any of the following links:

Thank you,
Doug

• Donate $1,000
• Donate $500
• Donate $250
• Donate $100
• Donate $50
• Donate $25
• Donate any amount

When this post gets published, I will have hopefully finished a 130 mile training ride across Massachusetts in preparation for the Pan Mass Challenge. I’m leaving my house in the middle of the night to be in Becket, MA by noon for parents’ weekend at my son’s summer camp. There is still time to support my Pan-Mass Challenge ride to fight cancer. 100% of your donation goes to the Dana Farber Cancer Institute.

These are some of the compliance-related stories that recently caught my attention.

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Tone at Top Gone Wrong: The Christie Example by Matt Kelly in Radical Compliance

Nothing says “America!” these days like righteous indignation at a fellow American doing something we don’t like. So as we return from our Fourth of July holiday, let’s all give thanks to one American who cultivates that spirit and gives chief compliance officers a great example to cite next time you’re talking with the CEO about tone at the top.

Chris Christie, governor of New Jersey and beachgoer extraordinaire, thank you. Compliance officers owe you a debt of gratitude for your shameless, ridiculous, preposterous tone at the top. [More..]

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Justice Department ethics watchdog quits because Trump made her feel like a hypocrite by Francine McKenna in Marketwatch

Hui Chen, the first-ever compliance counsel to the U.S. Department of Justice criminal division’s fraud section, is mad as hell and has decided she is not going to take it any more.

Chen announced via LinkedIn last week that she was leaving her role consulting to the department’s prosecutors on cases involving corporate ethics and compliance crimes. In her post entitled “Mission Matters,” Chen said that she felt like a hypocrite as she sat with companies accused of ethics and compliance violations. [More…]

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Shkreli’s Ex-Compliance Officer Says He Quit Over Dodgy Deals by Patricia Hurtado in Bloomberg

Jackson Su worked for Shkreli from January 2012 until December of that year and told a jury at Shkreli’s fraud trial in Brooklyn, New York, that he got so fed up watching his boss execute questionable and unethical transactions that he quit and complained to the U.S. Securities and Exchange Commission. [More…]

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Conflicts and Capital Allocation by Benjamin Edwards in the CLS Blue Sky Blog

In the aggregate, retail investors allocate tremendous amounts of capital and often turn to financial advisers to help them pick the best investment opportunities. In a recently published article, I describe how financial adviser conflicts of interest now distort overall capital allocation by driving capital to investment opportunities that reward financial advisers—altering the flow of capital. [More…]

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Team Kinetic Karma with its Pedal Partner, Maya, and her family:

I want to clarify my Pay-to-Play and Yard Signs post from earlier this week. I think an early draft of the post was sent through the email system that was incorrect. A senior SEC official clearly stated that yard signs are not limited by the Pay-to-Play Rule and that the speaker who made the statement was 100% incorrect. (After the speaker’s statement I thought I could turn my compliance forensic testing into bike rides past all of my employees’s house to check for political signs. Oh well, back to the office.)

Below are some of the compliance-related stories that recently caught my attention.

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SEC identifies adviser cyber security flaws by Jason Wallace in Reuters

In the wake of the recent WannaCry ransomware attack, the Securities and Exchange Commission’s exam team is warning investment advisers that many are failing to perform steps critical to fighting cyber security attacks.

In specific, a relatively high percentage of advisers examined are failing to conduct continuous cyber-risk assessments, nor are they performing penetration or venerability tests. The shortcomings were far higher among investment advisers than among broker-dealers, and concerns raised by the WannaCry attack were particularly relevant to smaller firms. [More…]

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SEC DERA, We Love You! by Matt Kelly in Radical Compliance

DERA joined on March 20. As of this morning, the Division had posted 193 tweets. I haven’t done a thorough analysis of the humor-to-boring ratio, but I can safely say that DERA is far more witty than the general SEC News feed, and light years beyond the Enforcement Division’s feed, which is a total snoozer.

We also love the wry self-awareness that DERA has about economists. They get a bum rap as nerds even in the corporate compliance field—and really, who are we to throw stones here?—but DERA knows how to bring it. [More…]

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New ACC Survey Finds ‘Dramatic’ Gender Pay Gap for In-House Counsel by Sue Reisinger in Corporate Counsel

A new report from the Association of Corporate Counsel draws “a dramatic picture of gender pay disparity” for women in-house lawyers, while it shows their male colleagues may be sitting in denial.

The “Global Perspectives: ACC In-House Trends Report,” released Tuesday, indicates that a higher percentage of women than men occupy lower-level categories when it comes to in-house salaries. [More…]

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The Never Ending Story: Money Laundering by Monica Ramirez Chimal in SCCE’s Compliance & Ethics Blog

Did you know that one of the sources to finance terrorism and trigger for money laundering is counterfeit goods? Due to the actions of law enforcement, the criminal is making money laundering more complex; they are looking for those countries, industries, companies and persons which can help them to launder lots of money at a low cost in a very quick time. [More…]

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How Principles of Good Governance Can Improve Oversight of Financial Regulatory Institutions by Hadar Jabotinsky and Mathias Siems in the CLS Blue Sky Blog

Financial regulatory institutions are at the center of intense debates over how to supervise financial firms and markets. They are also the focus of an important and growing body of literature that is mainly concerned with the question, “Who should regulate the regulators.” Financial regulatory institutions are usually audited as part of the review of a particular country by international organizations such as the International Monetary Fund, the World Bank, or the OECD. In practice, this means that the structure of financial regulatory institutions and the conduct of financial regulators are not regularly and consistently monitored.

In our recent paper, we argue that the debate should include not just who should regulate the regulators, but also how they should be regulated. We examine how the principles of corporate governance address conflicts of interests between shareholders and other stakeholders in corporations, and apply those principles, with necessary adjustments, to financial regulatory institutions. We believe that this would solve many of the problems with monitoring financial regulatory institutions and holding them accountable.  [More…]

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Raising the Corporate Veil in Kleptocracy Initiative

For actors looking to take advantage of the U.S.’s transformation into a global offshore haven, there are few tools more popular than limited liability companies (LLCs). From states like Nevada and Wyoming to high-rises in Miami and New York, LLCs have become one of the most prominent features of the U.S.’s shell company industry. And due to the U.S.’s lack of a beneficial ownership registry, actors both foreign and domestic continue to use LLCs to mask their identity – and their wealth.[More…]

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What all urban planners should be asked: would you let your child cycle here? by Klaus Bondam

Connie Hedegaard, former Danish EU commissioner for climate action, puts it this way: “One might say that Europe faces a choice. Do we want to pursue an American-style approach where kids depend on their parents to take them to school for many years? Or do we want a Nordic-style approach in which mobility considerations are integrated into urban planning, and where the necessary infrastructure is provided so kids can bike to school by themselves? I know which I prefer.” [More…]

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It would have been my friend Jeff’s birthday this week, except cancer killed him. This week I’m matching PMC donations. If you enjoy Compliance Building, please join many of my other readers and donate to support my Pan-Mass Challenge bike ride to fight cancer. (Thank you to those who have already donated.) I’m pedaling from the New York border to Provincetown on August 4-6. 100% of your donation goes to the fight against cancer. You can read more and donate here: http://profile.pmc.org/DC0176

Politics aside, one of the key items I saw in the Comey testimony yesterday was the effect of perception on interactions between a boss and his employees. Mr. Comey said he did “take as a direction” the president’s words to mean he should drop the investigation. That may or may not have been the intention of President Trump. Mr. Comey likened the statement to one made by King Henry II, referring to the archbishop of Canterbury, Thomas Becket, “Will no one rid me of this meddlesome priest?” That resulted in the murder of Thomas Becket.

These are some of the compliance-related stories that recently caught my attention.

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DLA Piper’s 2017 Compliance & Risk Report: Compliance Grows Up

Chief Compliance Officers (CCOs) are less worried than they were a year ago about personal liability – likely a result of program improvements and increased independence and prominence of the compliance function, according to a new survey released by DLA Piper.

But DLA Piper’s 2017 Compliance & Risk Report still found that 67 percent of CCOs are at least somewhat concerned, and see significant areas for improvement – including in regard to compliance’s relationship with boards of directors. This year’s survey was expanded to query directors, who noted a higher level of concern than their CCO counterparts. [More…]

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How to Improve Corporate Compliance with the Law by Vincent DiLorenzo in the CLS Blue Sky Blog

Regulatory philosophy in the U.S. and U.K. long reflected an assumption of corporate commitment to law-abiding behavior. Mainstream corporations were viewed as embracing an ethical obligation to comply with legal mandates. The result was a light-touch approach to enforcement policy—a policy relying on agreements to cease violations and not emphasizing the imposition of civil penalties. When law-abiding behavior was absent and a breach of legal standards was substantial, recurrent, or systemic, then financial penalties were imposed. More recently, regulatory philosophy has been modified to embrace the view that corporate actors are rational decision makers, choosing to comply, evade, or violate legal obligations based on cost-benefit evaluations. This regulatory philosophy reflects a neoclassical economic view, which assumes that corporate actors will comply with legal requirements if all potential costs of noncompliance exceed their benefits. In this scenario it is assumed that corporate actors assess risk based on a full appreciation of all the short-term and long-term consequences of their actions. The related assumption is that corporate decisions are linear, so that increasing the size of fines, for example, will have a direct and proportional impact on future decisions concerning legal compliance. This is both a reductionist and a linear view of human decision-making. The 2008 financial crisis has revealed flaws in both of these viewpoints. [More…]

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The Limits of Gatekeeper Liability by Andrew F. Tuch in the HLS Forum on Corporate Governance and Financial Regulation

In The Limits of Gatekeeper Liability, I assess an original and provocative strategy intended to address many of the challenges facing gatekeeper liability. Proposed by Professor Stavros Gadinis and Mr. Colby Mangels in their paper Collaborative Gatekeepers, the strategy is inspired by rules that have proven effective in anti-money laundering regulation. [1] In my response, I examine some of the often overlooked subtleties involved in both justifying gatekeeper liability regimes for controlling corporate wrongdoing and in calibrating the deterrent force of these regimes. [More..]

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SEC Names Stephanie Avakian and Steven Peikin as Co-Directors of Enforcement

Ms. Avakian was named Acting Director of the SEC’s Division of Enforcement in December 2016 after serving as Deputy Director of the Division since June 2014. Before being named Deputy Director, Ms. Avakian was a partner at Wilmer Cutler Pickering Hale and Dorr LLP, where she served as a vice chair of the firm’s securities practice and represented financial institutions, public companies, boards, and individuals in a broad range of investigations and other matters before the SEC and other agencies. . . .

Most recently, Mr. Peikin was Managing Partner of Sullivan & Cromwell’s Criminal Defense and Investigations Group. His practice focused on white-collar criminal defense, regulatory enforcement, and internal investigations. Mr. Peikin also is Adjunct Professor of Law at New York University Law School, where he teaches a class on the criminal enforcement of securities and commodities laws.

[More…]

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SEC Administrative Law Judges: The Sequel by Greg Morvillo in the NYU Law’s Compliance & Enforcement

Back in February, I wrote a blog piece on the state of the law as it relates to the litigation over SEC Administrative Law Judges.  As, I’m sure you know, all good sequels recap the previous incarnation without belaboring the point so here goes:  a circuit split is brewing.  In Lucia v SEC, the D.C. Circuit held that SEC ALJs are not inferior officers and do need not be constitutionally appointed. Thereafter, the Tenth Circuit, took the exact opposite position in Bandimere v. SEC.  ALJ’s are inferior officers under Article III and if not appointed by the head of a department, are unconstitutionally presiding over cases before them.  While it is not as exciting as seeing an old Luke Skywalker at the end of Star Wars: The Force Awakens, it is, in fact, where we left off in February. [More…]

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If you enjoy Compliance Building, please join many of my other readers and support my Pan-Mass Challenge ride to fight cancer. (Thank you to those who have already donated.) I’m pedaling from the New York border to Provincetown on August 5-6. 100% of your donation goes to the fight against cancer. You can read more and donate here: http://profile.pmc.org/DC0176

 

 

President Trump announced that the United States will withdraw from the Paris Climate Agreement. The U.S. is the world’s second-largest emitter of carbon, with China in the top spot. China affirmed its commitment to meeting its targets under the Paris Climate Agreement and recently canceled construction of 100 coal-fired power plants, with plans to invest billions in massive wind and solar projects. The Paris Climate Agreement is far from perfect and may hurt the US more than the other 195 countries given its massive carbon emissions.

Compliance with the agreement would be hard. It would take big investments in energy that does not come from fossil fuel. That’s especially hard when fossil fuel is so inexpensive.

Looking at the Constitutional process, the agreement was never ratified by the Senate, as is required for a treaty. Withdrawal from the agreement is no surprise. President Trump stated he would do so during his campaign.

Climate change is real. The hope was to avoid a tragedy of the commons. There is no other deal to be made on climate change.

Now what?

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In other news, these are some of the compliance-related stories that recently caught my attention.

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Potential Liability for PE Firms When Preferred Stock Is Redeemed by a Non-Independent Board—Hsu v. ODN by Gail Weinstein & Robert C. Schwenkel, Fried, Frank, Harris, Shriver & Jacobson LLP

The plaintiff contended that, over the two-year period prior to the exercise date of Oak Hill’s redemption right, rather than managing the Company to maximize its long-term value for the benefit of the common stockholders, the directors had operated the Company so that it would be in a position to redeem the maximum amount of Preferred Stock as quickly as possible after the redemption right was exercised.

The Delaware Court of Chancery, giving the benefit of all reasonable inferences to the plaintiff (as required at the pleading stage), declined to dismiss the plaintiff’s claims. [More…]

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Ex-Obama Officials Find There’s No Place Like Their Old Law Firms by Elizabeth Olson in the New York Times

The revolving door between government and law firms is decades old, as the newest political overseers arriving in Washington recruit their own legal hands for savvy counsel to prevent — or rescue them from — misdeeds or mistakes. And, as white-collar practices at major law firms have been booming in the wake of the regulatory overhauls that followed the economy’s 2008 crisis, that swinging door typically means a big payday for most lawyers. [More…]

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What are you doing about outside business disclosures by Joshua Horn in Securities Compliance Sentinel

The purpose of requiring outside business disclosures is for a firm to make sure that it and its clients know about any conflicts of interest that their brokers may have. For example, the firm would want to know if the broker had a real estate broker’s license because that business may compete with the time the broker can give to her securities investing clients. [More…]

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Are Hedge Funds Worth As Much As They Say They Are? by Pierre-Axel Gide in the CLS Blue Sky Blog

I tried to determine whether hedge funds provide investors with diversification benefits and deliver risk-adjusted returns above market returns. As a market benchmark, I used the S&P 500 Index and ran multiple regression analyses of monthly index returns. Doing so resulted in various alphas and betas corresponding to different hedge fund styles (also called tilts). [More…]

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Matching Business Models and Processes with Cybercrime Insurance Programs by David Bergenfeld in the D&O Diary

Time and again, insureds seek payment for cybercrime claims only to be denied by their insurers and the courts that review the subsequent lawsuits that are inevitably filed by insureds. As courts strictly interpret cybercrime policies, insureds need to ensure that their cybercrime policies provide adequate coverage for the known risks and perils of their businesses. Such coverage can only be achieved through a diligent review of business models and processes to match them with a proper insurance program. Recently, federal appellate and district courts denied insureds’ claims for cybercrime coverage where the insureds’ insurance program did not match their business models and processes. [More…]

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When ‘Political Intelligence’ Meets Insider Trading by Peter Henning in the New York Times’s DealBook

A case involving insider trading charges based on government information dispensed by a “political intelligence” operative raises interesting questions about how some of the tricky rules for proving the offense will be applied when information is leaked from a federal agency rather than a corporation. [More…]

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As we pause this weekend to remember those who have fallen while serving the armed forces, these are some of the compliance-related stories that caught my attention recently.

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No Movie Could Capture the Crazy Details of Bernie Madoff’s Story by GORDON MEHLER AND LARRY H. KRANTZ in The Atlantic

Bernie Madoff is back, nearly a decade after his arrest for the largest known financial fraud in history. An HBO movie, The Wizard of Lies, starring Robert De Niro, premieres on Saturday, and Madoff, an earlier ABC miniseries starring Richard Dreyfuss, have catapulted the preeminent Ponzi schemer into the limelight again, even as lawsuits to recover his investors’ losses continue to grind on in the courts. [More…]

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More Details on COSO ERM Framework by Matt Kelly

COSO is streamlining the framework’s principles, not gutting them. The draft ERM framework published last summer had five primary components, supported by 23 underlying principles. Public feedback on the draft said some of the 23 principles seemed overlapping or redundant, so could COSO consolidate them? That’s how the final framework came to 20 principles. [More…]

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The Supreme Court Meets Lehman Brothers by Frank Partnoy in the CLS Blue Sky Blog

The U.S. Supreme Court will soon decide an unusual, yet important, case brought by investors in bonds issued by Lehman Brothers, the infamous investment bank that collapsed in September 2008. The case, CalPERS v. ANZ Securities, Inc., is not about whether those investors were defrauded: It is widely known that Lehman concealed its exposure to subprime mortgage loans and complex derivatives, just as it used accounting gimmicks to hide risks. The investigation after Lehman’s bankruptcy showed incontrovertibly that its investors had been wronged.

Nor is the case about whether those investors could properly recover in class action litigation alleging that Lehman and others violated the federal securities laws. Various lawsuits filed by Lehman bond investors were consolidated in federal court in New York and then settled in 2011, three years after Lehman’s bankruptcy filing. That settlement has not been challenged. But the date of that settlement – and the three-year time period – are important. [More…]

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Appeals Court Questions Impact of SEC Forum Challenge in Bloomberg

If the D.C. Circuit rules in favor of the SEC, it probably won’t resolve the issue, as the circuit split would be “destined for decision by the Supreme Court, which has shown in the recent days a willingness to limit the reach of the SEC,” R. Daniel O’Connor of Ropes & Gray, Boston told Bloomberg BNA. [More…]

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Former SEC Officials Say Don’t Bank on Big Regulatory Disruption by B. Colby Hamilton

Be happy about the prospect of regulatory upheaval in Washington, D.C. Don’t worry.

That was the sentiment shared by former U.S. Securities and Exchange Commission chairwoman Mary Jo White and JPMorgan Chase & Co. vice chairman Stephen Cutler—himself the former head of enforcement at the SEC—at a legal summit Wednesday.  [More…]

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If you enjoy Compliance Building, please join many of my other readers and support my Pan-Mass Challenge ride to fight cancer next week. (Thank you to those who have already donated.) I’m pedaling from the New York border to Provincetown on August 5-6. 100% of your donation goes to the fight against cancer. You can read more and donate here: http://profile.pmc.org/DC0176

These are some of the compliance-related stories that recently caught my attention.

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House Panel Approves Plan to Undo Parts of Dodd-Frank Financial Law by Rachel Witkowski

The House Financial Services Committee launched a Republican-supported rollback of Obama-era financial regulations, voting 34-26 along party lines Thursday for a plan to undo significant parts of the 2010 Dodd-Frank law.

The committee vote sent the Financial Choice Act to the full House, where it likely will be approved in the coming weeks. [More…]

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SEC Staff Reports On “Real Estate Funds”, But What Exactly Are They? by Keith Paul Bishop

The SEC gathers the data from Form PFs.  You are required to file a Form PF if, among other things, you manage a “private fund”.  The Form PF does require disclosures from “real estate funds” and it defines these as “any private fund that is not a hedge fund, that does not provide investors with redemption rights in the ordinary course and that invests primarily in real estate and real estate related assets.”  A “private fund” is defined as “Any issuer that would be an investment company as defined in section 3 of the Investment Company Act of 1940 but for section 3(c)(1) or 3(c)(7) of that Act.”  Notably missing from the definition of “private fund” is a fund that relies on the exclusion in section 3(c)(5) of the ICA but not either section 3(c)(1) or 3(c)(7).   [More…]

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SEC Probes Solar Companies Over Disclosure of Customer Cancellations by Kirsten Grind

The Securities and Exchange Commission is examining whether San Francisco-based Sunrun Inc. RUN -0.63% and Elon Musk’s San Mateo, Calif.-based SolarCity Corp. have adequately disclosed how many customers have canceled contracts after signing up for a home solar-energy system, the person said. Investors use that cancellation metric as one way to gauge the companies’ health. Companies typically give customers a few days after signing a contract, or even up until the time of installation, to back out of a deal. [More…]

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Trump Pick for SEC Chairman Assembling Top Agency Staff by Dave Michaels

Mr. Clayton has considered at least two well-known defense attorneys for enforcement director, typically the SEC’s highest-profile staff position. The lawyers include Steven Peikin, a former prosecutor who works with Mr. Clayton at Sullivan & Cromwell LLP. Mr. Peikin represented Goldman Sachs Group Inc. in its dealings with prosecutors and SEC lawyers over claims a former member of its board, Rajat Gupta, had leaked inside information to a hedge-fund manager. . . .Another candidate for the top enforcement job is Matthew Martens, a partner at Wilmer Cutler Pickering Hale and Dorr LLP, who was the SEC’s top trial attorney from 2010 to 2013. [More…]

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In S.E.C.’s Streamlined Court, Penalty Exerts a Lasting Grip by Gretchen Morgensen

A money manager settled his case with the S.E.C. thinking he could go back to work in a year. Nearly five years later, he is still waiting.

Mr. Wanger, who now calls himself the $2,200 Man on a website he has created, said his experience with the S.E.C.’s in-house court system did not feel like he was in America. “I’ve spent the last seven years fighting for the right to defend myself in a real court in front of a real judge,” he said. “Constitutional rights have no meaning unless you’re willing to extend them to people you don’t necessarily like. [More..]

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