The basic premise of the Custody Rule is that registered investment advisers who have custody ofclient assets must implement specific safekeeping requirements to prevent loss, misuse, or misappropriation of those assets. (Rule 206(4)-2) For non-fund managers, there is a surprise exam requirement. For fund managers, the usual route is through audited financial statements. The Custody … Read more »
Compliance Bricks and Mortar for May 13
These are some compliance stories that recently caught my attention. Coinbase earnings were bad. Worse still, the crypto exchange is now warning that bankruptcy could wipe out user fundsBy Nicholas Gordon Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange … Read more »
Dam, That’s Securities Fraud
The collapse of the Bumadinho Dam in Brazil in 2019 was a disaster. The structure was holding back iron ore waste before it collapsed, sending million of tons of toxic waste into the village of Córrego do Feijão. It killed 270 people. The dam was controlled by the Brazilian mining company: Vale S.A. Clearly a … Read more »
Compliance Bricks and Mortar for May 6
These are some compliance-related stories that recently caught my attention. A Best Lawyers List Is Suing Another Best Lawyers ListBy Jacob Gershman [The New Jersey Supreme Court-appointed committee on attorney advertising] cautioned New Jersey attorneys against touting dubious distinctions. While lawyers in the state may promote their inclusion in lawyer directories like “Super Lawyers” or … Read more »
The One that Fools the Motley Fool
I’ve followed The Motley Fool from the early days of the internet. (Or at least my early days on the internet.) From a compliance perspective, I’ve always been fascinated with how their marketing gets passed by the compliance department. Whether you like them or not, their stock picks can move prices. The Motley Fool picks … Read more »
MNPI Compliance Issues
For my fellow nerds, “May the Fourth” be with you. For my fellow compliance nerds, hopefully you didn’t miss the new risk alert from the Securities and Exchange Commission’s Division of Examination on Material Non-Public Information. Section 204A of the Investment Advisers Act requires all investment advisers, registered and unregistered, to have written policies and … Read more »
Compliance Bricks and Mortar for April 29
Postings have been few and far between. Work remains busy. Compliance requirements only increase. My non-work activities have kept me from writing. Of course I’ve been doing a lot of bicycle riding, mostly in preparation for the Pan Mass Challenge. I’m serving on my city’s Historical Commission. I joined the board of directors of MassBike, … Read more »
Two New Commissioners on Tap for the SEC
With one current vacancy and a second upcoming vacancy, the Securities and Exchange Commission needs some new blood. President Biden nominated two new commissioners to help the agency regain its full population. Jaime Lizárraga has been nominated to fill a Democratic seat currently occupied by commissioner Allison Lee. She has stated that she is resigning, … Read more »
The One with the Usual 2 and 20
Alumni Ventures Group is New Hampshire-based venture capital fund manager. It raised dozens of funds to pool capital and invest it in small companies. From 2016 through 2020, in marketing the funds the manager said its management fee was the “industry standard ‘2 and 20’.” The funds had a 10-year life. Most of us realize … Read more »
FINRA and CCO Supervisory Liability
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 … Read more »