Advisers

FYI: SEC Enforcement Report and Priorities

Posted on

FYI: Yesterday, the SEC’s Division of Enforcement issued a report summarizing its activity during FY 2017 (ended September 30, 2017) and the Division’s current priorities. Data show that SEC enforcement actions in 2017 were somewhat down from the number of enforcement actions brought in 2016. Total penalties ordered were also down. In 2017, cases against advisers/funds constituted about 18% of the total cases brought; cases against broker-dealers about 12%. According to the report, decision making in the Division is currently guided by 5 core principles: 1.  Focus on the Main Street investor.  This does not mean a shift away from policing […]

Advisers

FYI: New Direction of the SEC

Posted on

FYI: Three recent events indicate that the SEC is embarking in a new direction: 1) SEC Commissioner Michael Piwowar gave a speech recently indicating that the SEC is “charting a new course” so different from the past few years that he called it “SEC 180.” Passed are the days of the “Dodd-Frank Death March” (quoting him), the 78 months following the enactment of the Dodd-Frank Act during which the SEC’s policy agenda was dominated by the regulatory mandates in the Act, to the exclusion of other important policy initiatives. Also over, according to the Commissioner, is the so-called “broken windows” […]

Advisers

FYI: 28(e) Soft Dollar Relief

Posted on

FYI: In addition to the no-action letters issued by the SEC’s Division of Investment Management aimed at facilitating MiFID II reforms coming into effect in the EU in early 2018 (mentioned in my FYI post from yesterday), the SEC’s Division of Trading and Markets has also issued a no-action letter with a similar aim. In a letter issued to SIFMA’s Asset Management Group, the Division said in substance that a money manager may pay for research through the use of a MiFID II RPA (research payment account) in reliance on the Section 28(e) safe harbor, so long as all the […]

Advisers

FYI: No-Action Relief Regarding Research Payments

Posted on

FYI: The SEC Division of Investment Management has issued two no-action letters providing relief in light of certain MiFID II regulatory reforms coming into effect in the EU on January 3, 2018, impacting financial firms that are – or that have affiliates that are — subject to EU and US regulation. The first letter was issued to SIFMA and assures broker-dealers that they can continue to rely on the Section 202(a)(11)(C) exclusion from the definition of “investment adviser” in the Advisers Act (for services performed solely incidental to a broker-dealer business so long as no “special compensation” is received), even […]

Advisers

FYI: Most Frequent Adviser Advertising Compliance Issues

Posted on

FYI: OCIE issued a Risk Alert today containing the most frequently identified advertising compliance issues reflected in deficiency letters from over 1,000 adviser exams and observed as part of OCIE’s “Touting Initiative,” nearly 70 adviser exams conducted in 2016 that focused on advisers’ use of accolades in their marketing materials. While it is sometimes helpful when OCIE identifies “top” compliance issues found on exams, this Risk Alert reads more like a catalog of the most difficult issues that advisers face in the advertising arena, along with one or two citations to previously issued cases or guidance to illustrate each topic. […]

Advisers

FYI: 2017 Investment Management Compliance Survey

Posted on

FYI: The IAA has released its report on the 2017 Investment Management Compliance Survey. This year’s survey areas included: • Remote/Branch Office Supervision • Use of Automation • Fees and Expenses • Wrap Programs • Whistleblowing • Business Continuity and Transition Planning • Impending Regulations: Form ADV Part 1A and Liquidity Risk Management, and • International Regulation (MiFID II). Key findings included, among others: • Cybersecurity continues to be the hottest compliance topic in 2017 for the 4th year in a row. • Other hot topics included custody, regulatory reporting and disaster recovery planning. • Only about 21% of firms […]

Advisers

FYI: SEC Personnel Changes

Posted on

FYI: Dalia Blass has been named Director of the SEC’s Division of Investment Management. Although she is returning to the SEC from the private sector, she has more than a decade of prior experience in the Division of Investment Management, include serving as Assistant Chief Counsel. Blass announcement: https://www.sec.gov/news/press-release/2017-153 Nominations have also been made to fill the open seats on the Commission. Former congressional aide Hester Peirce has been nominated to fill the open Republican seat. Columbia University law professor Robert Jackson has been nominated to fill the open Democratic seat. If these nominees are confirmed by the Senate, the […]

Advisers

FYI: Information Update on Form ADV

Posted on

FYI: The SEC Division of Investment Management issued an IM Information Update addressing glitches that could occur with the significant ADV form amendments coming into effect on October 1, 2017. You may recall that, as a result of amendments adopted last year, extensive new information is required to be reported on Form ADV by all advisers filing ADV amendments on or after the compliance date of October 1. This new information includes, for example, information about an adviser’s separately managed accounts and related information correlated to the end of the adviser’s last fiscal year. However, if an adviser determines that […]

Advisers

FYI: OCIE Publishes Observations from More Cybersecurity Exams

Posted on

FYI: OCIE has published a Risk Alert summarizing observations from its second cybersecurity initiative, which looked at cybersecurity preparedness at 75 more SEC-registered broker-dealers and investment advisers/funds. This second initiative built on OCIE’s first cybersecurity initiative conducted in 2014-2015, but included more validation and testing of firm controls and procedures. In general, OCIE observed an increase in cybersecurity preparedness since 2014, although continued weaknesses were cited in various areas, including: • policies and procedures not being reasonably tailored to the firm; • policies and procedures not being enforced or not reflecting actual practice; • software security patches not being installed; […]

Advisers

FYI: Unregistered Adviser Integrated with Registered Adviser

Posted on

FYI: The SEC settled an administrative proceeding against an unregistered adviser to private funds that was found ineligible to rely on the exempt reporting adviser exemption because it and its affiliated SEC-registered investment adviser (an adviser to individuals) were under common control and operationally integrated. The SEC’s settlement order cited various factors for finding the two advisers integrated: they were both owned by the same owner, shared the same employees, operated in the same office, shared the same technology systems and failed to maintain policies and procedures addressing registration or exemption from registration as an investment adviser. Violations alleged included, […]