Category: Compliance Programs

Lots of advisers track the FINRA gift limit of $100. Some specifically because they have dual registration. More use that limit because it became a de facto industry standard because it was the only one out there. The current gift limit of $100 has been in place since 1992. That was way too low. FINRA…

Why go through the hassle of filing a Form ADV and registering as an investment adviser if you are not a real firm? That was the question I was asking myself a few months ago when the Securities and Exchange Commission filed cases against a half-dozen firms for false ADV filings. Last week the SEC…

Every parent wants their kid to succeed. If the kid wants to be a soccer superstar, you help your kid. Maybe a high-end sports camp will take your kid’s talent to the next level, so you send them to IMG Academy, one of the world’s leading sports training schools. (It even has a wikipedia page…

Financial Industry Regulatory Authority Rule 2210 generally prohibits the use of “predictions and projections” in written communications with the public. FINRA has proposed to dramatically curtail that prohibition. The proposed amendment to Rule 2110 tries to align with the Investment Advisor Marketing Rule’s treatment of “hypothetical performance.” The FINRA proposal is intentionally more narrow. It…

Goodwin Procter put together an informative summary of the California’s Fair Investment Practices by Venture Capital Companies. The compliance date is March 1, 2026 for venture capital fund sponsors. Unlike some of California’s other diversity initiatives, this law does not mandate operational changes. It requires disclosure on demographics of the founders of portfolio companies. The…

The Securities and Exchange Commission labels language purporting to limit an adviser’s liability in an advisory agreement as a “hedge clause.” In 2019, the SEC published the Commission Interpretation Regarding Standard of Conduct for Investment Advisers summarizing its position on an advisor’s fiduciary obligations. That statement stated: “there are few (if any) circumstances in which…

Investment advisory relationships are not assignable. Section 205(a)(2) of the Advisers Act provides that investment advisers can’t enter into an advisory contract that: “(2) fails to provide, in substance, that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract”. So a registered…

I think everyone agrees that members of Congress should not engage in trading based on information they encounter. That is, everyone except members of Congress. There have been several attempts to limit congressional trading. None have made it to the floor for a vote. The current efforts are the Ban Congressional Stock Trading Act sponsored…

One theme of the SEC’s Marketing Rule for investment advisers when it was released in 2020 was for advertised performance to reflect the client’s actual returns. It’s a compliance mantra, you have to shown a net return with equal prominence to any gross return you are showing. The uncertainty in the area that took some…

These are some compliance-related stories that recently caught my attention. Part 2: How Law Schools Can Champion Compliance Careers by Paul E. McGreal Law schools find themselves at a critical juncture. Many students no longer want the traditional path from law school to BigLaw, and instead, seek careers that blend legal expertise with business acumen, preventive…