Advisers

FYI: SEC Brings Distribution-in-Guise Enforcement Action

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FYI: The SEC has settled an enforcement action against the adviser and affiliated distributor to a large mutual fund complex. This appears to be another “distribution-in-guise” case, where a mutual fund pays for services to effect distribution of its shares outside of a required 12b-1 plan, but discloses, reports or treats the payments as having been made for something else, such as sub-transfer agency services. According to the SEC’s order in this case, distribution payments were inaccurately reported to the funds’ Board as sub-TA payments, and the funds’ prospectus inaccurately stated that distribution payments made in excess of the 12b-1 […]

Advisers

FYI: Jay Clayton Sworn in as SEC Chairman

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FYI: Jay Clayton was sworn in today as the new Chairman of the SEC. Clayton has spent the last 20 years as a New York securities lawyer, advising public and private companies on securities offerings, M&A, corporate governance and regulatory and enforcement proceedings, among other things. He also has experience counseling on capital raising and trading matters in the U.S. and abroad, including while resident in Europe for five years. Notably absent from Clayton’s bio is any mention of experience handling regulatory matters relating to investment advisers, investment companies, broker-dealers or other entities in the financial services industry. Clayton (a […]

Brokers

FYI: 2017 BD Compliance Outreach Announced

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FYI: Today the SEC and FINRA announced that the 2017 National Compliance Outreach Program for Broker-Dealers will be held on July 27 at the SEC’s headquarters in Washington DC. Registration for in-person attendance is available on the SEC’s website, along with the agenda covering cyber, seniors and retirement accounts, conflicts, AML, recidivism, dual registrants and other hot topics. The event will be live webcast. SEC Announcement: https://www.sec.gov/news/press-release/2017-91. * * *

Advisers

FYI: Dallas Area Compliance Positions

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FYI: I have been asked to circulate information about an opening for the global CCO position at Carlson Capital, a hedge fund. The position will be based in Dallas. Carlson is also looking for a junior to mid-level compliance associate in Dallas. Anyone who may be interested should contact Troy D. Wuertz at Carlson Capital, LP, phone: 214.932.9638, fax: 214.932.9602, email: twuertz@carlsoncapital.com. *  *  *

Advisers

FYI: More Share Class/Best Execution Enforcement Cases

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FYI: The SEC has settled enforcement actions against Credit Suisse (CS, a BD/IA) and Katz (a registered BD/IA rep with CS) for breach of fiduciary duty (failure to seek best execution), inadequate disclosures and deficient policies and procedures resulting from the selection of mutual fund share classes that paid 12b-1 fees to CS (with a portion passed on to Katz) when less expensive share classes were available to clients invested in a CS wrap fee program. While enforcement actions along these lines have been brought on several occasions before, several interesting points were noted in these cases, including: • CS […]

Advisers

FYI: 2017 IA/IC Compliance Outreach Regional Seminars Announced

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FYI: Today the SEC announced the schedule for its 2017 IA/IC compliance outreach regional seminars, which will be held in Portland (May 17), NYC (June 7), Boston (June 13) and Chicago (June 13). Registration for in-person attendance is available on the SEC’s website, along with the agendas. Only the Chicago seminar will be webcast. SEC Announcement: https://www.sec.gov/news/press-release/2017-69. Webcast archives (where available) and seminar materials from prior IA/IC compliance outreach seminars can be accessed from links on this page: https://www.sec.gov/info/complianceoutreach_ia-funds.htm. * * *

Advisers

FYI: T+2 Adopted

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FYI: The SEC has adopted rule amendments to shorten the securities transaction settlement cycle to T+2 (two business days after the trade date) with the primary aim of enhancing efficiency and reducing risk posed by the current T+3 cycle. According to the SEC’s Fact Sheet, the new T+2 settlement cycle would apply to the same securities transactions currently covered by T+3, such as stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds and limited partnerships that trade on an exchange. The many mutual funds that already settle on a shorter T+1 cycle will not be impacted by the new T+2 […]

Advisers

FYI: Mutual Funds Not Covered by Recent Hyperlink Rules

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FYI: The full Adopting Release for the hyperlink rules adopted by the SEC last week has now been posted and, according to the release, the new requirement for exhibits to be hyperlinked into SEC filings will apply only to exhibits filed with those SEC forms listed in the release. Notably, that list does NOT include forms used by most registered investment companies, such as Form N-1A, which is used to register mutual fund shares. Although mutual funds will not be subject to the hyperlink rules adopted last week, Business Development Companies (a different type of investment company) WILL BE because, […]

Advisers

FYI: DOL Proposes to Delay Fiduciary Rule

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FYI: Today, the DOL issued a “proposed rule” to extend for 60 days – from April 10, 2017, to June 9, 2017 – the applicability date of its rule defining who is a “fiduciary” under ERISA and related Tax Code provisions, as well as the applicability date of related prohibited transaction exemptions including the Best Interest Contract Exemption. Comments will be accepted for 15 days on the proposed extension and for 45 days on other issues related to the rule that are referenced in the proposal. DOL Proposal: https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-04096.pdf *  *  *

Advisers

FYI: Hyperlink Rules Adopted / In-Line XBRL Rules Proposed

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FYI: At its meeting today, the SEC took two significant actions: — Amendments were ADOPTED requiring registration statements or reports subject to the exhibit requirements under Item 601 of Regulation S-K to include a hyperlink to each exhibit listed in the exhibit index of these filings. This will impact registration statements filed by registered investment companies (among others). The new rules will require that “active” hyperlinks be provided in exhibit lists, instead of the current practice of providing “dead” cross-references to exhibits incorporated by reference from prior filings. Hyperlinking is aimed at eliminating the time-consuming and often frustrating search required […]