SEC complaints usually contain great stories about what you should not to do. A recent case involving PEF Advisors caught my eye. The SEC claimed that hedge fund managers Paul Mannion, and Andrew Reckles, and their investment advisory company PEF Advisors misappropriated investor cash and securities by using the “side pockets” in 2005. When used … Read more »
Category: SEC News
The Family Office Exemption under the Investment Advisers Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act wiped out the exemption enjoyed by most private funds. I’m still waiting to see how the SEC will define a “venture capital fund manager.” In the meantime, the SEC has published its proposed rule defining a “family office” and its exemption from registration under the Investment … Read more »
The SEC’s Busy Rule-Making Agenda
In many instances, the Dodd-Frank Wall Street Reform and Consumer Protection Act merely set a framework for financial reform and left much of the heavy lifting to the financial regulatory agencies. The SEC published their agenda for the implementation of Dodd-Frank. It is a long list. Compliance leaders are going to very busy keeping track … Read more »
How About Working for SEC Enforcement?
The Dodd-Frank Act has created some new positions and some long occupied seats have opened up at the Securities and Exchange Commission. Maybe you have the skills to help the SEC? Yes, the SEC dropped in the rankings of best federal workplace, slipping from 3rd in 2007 to 24th in 2010. I suspect that reflects … Read more »
Credit Rating Agency Investigated for Fraud
The SEC brought an action against LACE Financial for issues with its independence. We also learned that the SEC had investigated whether rating agency Moody’s Investors Service, Inc. violated the registration provisions or the antifraud provisions of the federal securities laws. Moody’s was working on a rating for some new European securities. They ended up … Read more »
Credit Rating Agencies and Conflicts of Interest
Personally, I place a big chunk of blame on the Credit Rating Agencies for the Great Panic of 2008. They were throwing AAA ratings at piles of garbage. There is an inherent conflict in the rater being paid by the security issuer instead of the security purchaser. They are beholden to the customer and the … Read more »
SEC versus New Jersey
Fuggedaboutit! New Jersey became the first state ever charged by the SEC for violations of the federal securities laws. They gave up without a fight and agreed to settle the case, without admitting or denying the SEC’s findings. This matter involves the sale of over $26 billion in municipal bonds from August 2001 through April … Read more »
Changes to the Qualified Client Standard
In addition to the changing standard for an accredited investor, the standard for a “qualified client” under the Investment Advisers Act is also changing. Section 418 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to increase the standard. SEC. 418. QUALIFIED CLIENT STANDARD. Section 205(e) of the Investment Advisers Act … Read more »
What Do You Get For Cooperation with the SEC?
More likely to get sanctioned. Reduction of $30.3 million in penalties when you initiate your own investigation. Reduction of $609,000 in company penalties for each week earlier the statement is announced the public. Reduction of $112,000 in personal penalties for each week earlier the statement is announced the public. We in the compliance field have … Read more »
SEC is Changing Form ADV
The SEC is trying to improve Form ADV. I wonder if it takes into account the new registration standards under the Dodd-Frank Act or whether they will need to make another to recognize the new law. From the SEC press Release SEC Approves Disclosure Form Changes to Provide Investors Greater Information About Their Investment Advisers: … Read more »