The U.S. Securities and Exchange Commission (“SEC”) recently adopted Rule 13h-1 that would require “large traders” to file new Form 13H with the SEC through its Electronic Data Gathering, Analysis and Retrieval (EDGAR) System.
Category Archives: SEC
The Use of Social Media Sites Can Create Compliance Problems for Registered Investment Advisers
September 27, 2011
Social media sites such as Facebook, Twitter, and LinkedIn can be useful business tools for investment advisers. However, there are several compliance issues that social media sites present.
Bank of America Whistleblower Judgment Highlights the Need for Investment Advisers to Have Whistleblower Policies and Procedures in Place
September 22, 2011
The Department of Labor recently required Bank of America to rehire and pay $930,000 to an employee who was fired for whistleblowing. The employee had been leading an internal investigation looking into wire, mail and bank fraud at Countrywide Financial, which merged with Bank of America in 2008. Shortly after the two companies merged, the employee was fired. The employee then filed a Sarbanes-Oxley claim alleging she was fired due to the internal investigation.
SEC’s New Performance Fee Rule Effective Sept. 19, 2011
September 18, 2011
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the U.S. Securities and Exchange Commission (“SEC”) recently amended Rule 205-3 of the Investment Advisers Act of 1940, which exempts a “qualified client” from the general prohibition against an investment advisor charging a fee based upon the share of capital gains or capital appreciation (also known as a “performance fee”).
Examining the House Financial Services Committee’s Investment Adviser SRO Draft Bill
September 16, 2011
Prior to conducting Tuesday’s hearing on whether to form a self-regulatory organization (“SRO”) for investment advisers, the Chairman of the House Financial Services Committee, Rep. Spencer Bachus posted a draft bill on the Committee’s website. The draft bill would form a self-regulatory organization for investment advisers under what would be known as the “Investment Adviser Oversight Act of 2011.”
Congress Holds Hearing Concerning Investment Adviser SRO
September 13, 2011
Today, September 13, the House Committee on Financial Services conducted a hearing to discuss forming a self-regulatory organization (“SRO”) for investment advisers. There were three oversight options discussed, (1) having the U.S. Securities and Exchange Commission (“SEC”) charge a user fee to provide funds for more frequent regulatory examinations; (2) creating an independent SRO; and (3) giving FINRA the authority to serve as the investment adviser SRO. Eight individuals testified in front of the House Committee. The following chart shows which of the three approaches the individuals thought would be most effective.
The Benefits of Being Prepared for a Regulatory Examination
September 09, 2011
The best approach for an investment adviser firm to prepare for a regulatory examination begins with ongoing compliance training. A report released by the U.S. Securities and Exchange Commission (“SEC) on February 2011, stated “In most cases, the staff considers the quality of the [investment adviser’s] compliance systems and its internal control environment when determining the scope of the examination and the areas to be reviewed.” Investment advisers with a vigorous compliance program, including training and preparing for regulatory examinations, will find that regulatory audits are more likely to progress smoothly. Investment adviser firms that fail to demonstrate a solid understanding of their investment adviser’s compliance program will likely leave the securities regulator with concerns that the investment adviser is failing to protect the safety of its client’s assets. The examiners may deem it necessary to seek further information and request additional documentation from the investment adviser. Failure to provide requested documentation and a display of an inadequate compliance program will likely be the result of a deficiency letter, and/or remedial or enforcement action against your investment adviser firm. In the same report discussed above, the SEC has stated that unfortunately, “most examinations conclude with a deficiency letter.”
A lot of important information regarding the upcoming requirement for mid-sized advisors to switch from SEC to state registration was provided during the recent webinar, “The Switch is On Again for RIAs,” hosted by Advisor4Advisor and presented by Tammy Emsick of RIA Compliance Consultants. Therefore, we would like reiterate a few of the main points presented during this webinar.
Do You Understand the Responsibilities Related to Serving as an Investment Adviser’s Chief Compliance Officer?
August 09, 2011
Your investment adviser’s chief compliance officer (“CCO”) must be knowledgeable regarding the Investment Advisers Act of 1940, competent in regard to administering your compliance program and empowered to enforce compliance with your policies and procedures.
SEC Director Discusses the New Whistleblower Program and the Role Internal Investigations Will Play
August 09, 2011
In a recent speech, Robert Khuzami, the Director of the Division of Enforcement for the U.S. Securities and Exchange Commission (“SEC”), discussed the SEC’s new whistleblower program and the role internal investigations will play.
