From my family to yours. I hope your year ends with joy and that 2020 is even better. Read more »
Category: Compliance Programs
Form CRS for Private Fund Managers
As part of Regulation BI package of regulatory changes, the Securities and Exchange Commission created a new Form CRS that needs to be delivered to “retail investors.” Of course there are questions from the industry. The SEC’s Division of Investment Management and Division of Trading and Markets created a website that answers Frequently Asked Questions … Read more »
Boards Must Rigourously Exercise Their Oversight Function
“[T]o satisfy their duty of loyalty, directors must make a good faith effort to implement an oversight system and then monitor it.” Marchand v. Barnhill, 212 A.3d 805 (Del. 2019) Clovis Oncology’s stock dropped sharply in 2015 when it disclosed poor clinical trial results for Rociletinib a promising experimental drug for the treatment of lung … Read more »
SEC Is Not Happy With How Firms Are Handling Principal Trading and Agency Cross Trading
The SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert describing failures by investment advisers to comply with regulatory requirements when engaging in principal and agency-cross transactions. OCIE found that many advisers did not even recognize that they were engaging in (1) a principal transaction by buying or selling to a client or (2) … Read more »
Blame It On the Junior Compliance Associate
“The compliance associate had no trading experience and no formal training to conduct the review required by the rule, such as training related to the analysis of financial statements and other information.” Rule 15c2-11 of the Exchange Act requires broker-dealers to obtain, review and maintain information about the issuer before initiating or resuming the publication … Read more »
The Stop Wall Street Looting Act of 2019
United States Senators Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wisc.), and Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking Committee, along with Representatives Mark Pocan (D-Wisc.), and Pramila Jayapal (D-Wash.) unveiled the Stop Wall Street Looting Act last week. I don’t think there is any chance it will become law. But it will create talking … Read more »
Looking Ahead to Regulatory Changes
The Securities and Exchange Commission published its Reg Flex Agenda for the Spring of 2019. This gives us some insight to what regulatory changes are in the works. Three items caught my eye as likely to apply to private funds. Harmonization of Exempt Offerings. Chairman Clayton had previously noted that the regulations around exempt offerings … Read more »
Failed Algorithms
Isaac Asimov’s Three Laws of Robotics, designed to prevent robots from harming humans: A robot may not injure a human being or, through inaction, allow a human being to come to harm. A robot must obey the orders given it by human beings except where such orders would conflict with the First Law. A robot … Read more »
DOJ’s New Evaluation of Corporate Compliance Programs
The Justice Department released a refreshed set of guidelines on how prosecutors should evaluate corporate compliance programs. The Principles of Federal Prosecution of Business Organizations in the United States Attorney’s Manual describe factors that prosecutors should consider in conducting an investigation of a corporate entity, determining whether to bring charges, and negotiating plea or other … Read more »
Cross Platform Sale Leads to Trouble
It is generally bad to have one client trade with another client. Rule 206(3)-2 imposes some very specific requirements and leaves you with a final twist: This rule shall not be construed as relieving in any way the investment adviser or another person relying on this rule from acting in the best interests of the … Read more »