Hedge Fund Blogs From HedgeCo.Net

10 Tech Holiday Travel Tips to Keep You and Your Data Safe

Traveling with electronic devices puts personal and critical business information at risk. As we embark on the busy holiday travel season, we decided to share some useful tips to help prevent your data and devices from falling into the wrong hands. Here are Eze Castle Integration’s top 10: Back up Your Data Before You Leave: Prior to traveling, back up […]

SEC Charges Political Intelligence Firm

November 25, 2015 Dear Friends, The SEC announced charges against a political intelligence firm for failure to establish, maintain and enforce written policies and procedures, reasonably designed to prevent the misuse of material non-public information (MNPI), resulting in a $375,000 penalty. The political intelligence firm, which has an affiliated state-registered investment adviser and registered broker-dealer, provided regulatory and policy updates […]

SEC Sanctions Investment Adviser for Improper Allocation of Expenses

November 23, 2015 Dear Friends, Today, the SEC issued an order against an investment adviser for improper allocation of expenses to its fund client (the “Fund”) and failure to adopt compliance policies and procedures, specific to Fund expense allocation, resulting in a $250,000 settlement. The SEC found that the firm negligently charged compliance, legal and operating expenses to the Fund. […]

Don’t Overlook These 3 Hedge Fund Technology Priorities

The following article is part of Eze Castle Integration’s Hedge Fund Insiders Article Series, which featured articles on a range of important topics. Today we look at technology (one of our favorite topics!). Technology was historically an afterthought for many hedge funds and a “check-the-box” item at that. Many firms took the approach that they could get away with the bare minimum […]

Firm Agrees to Pay $1 Million Settlement for Custody Rule Violations

November 19, 2015 Dear Friends, Today the SEC announced that an investment adviser and its former CCO have agreed to settle charges that it repeatedly violated the custody rule. The Firm agreed to pay a $1 million penalty, to be suspended for one year from raising any capital, and to have a compliance monitor for three years. The former CCO […]

SEC Proposes Rules to Enhance Oversight of Dark Pools

November 19, 2015 Dear Friends, The SEC has voted to propose new rules to enhance transparency and regulatory oversight of dark pools. Pursuant to the new rules, alternative trading systems (ATS) that trade stocks listed on a national securities exchange (NMS stocks), including dark pools, would be required to publicly disclose detailed information via the new form ATS-N, including: Information […]

SEC Charges Affiliated Advisers with Improper Allocation of Expenses

November 10, 2015 Dear Friends, The SEC charged two affiliated private equity advisers with the improper allocation of over $450,000 of consulting, legal and compliance-related expenses, to client funds (the “Funds”), resulting in penalties of $100,000. The SEC found that the advisers breached their fiduciary duties to the Funds, because even though the limited partnership agreements disclosed that the Funds would be […]

SEC Issues Risk Alert on Outsourced CCOs

November 10, 2015 Dear Friends, Yesterday, the SEC issued a Risk Alert outlining observations regarding examinations of SEC registered investment advisers and investment companies that outsource their Chief Compliance Officer (“CCO”) role to unaffiliated third parties. Specifically the SEC found: Communication: Frequent and in-person communication with employees (as opposed to impersonal emails only and/or pre-defined checklists) resulted in fewer inconsistencies between […]

SEC Charges Private Equity Firm and Executives With Failure to Disclose Conflicts of Interest

November 3, 2015 Dear Friends, Today the SEC announced that a private equity firm and four of its executives agreed to pay over $10 million to settle charges that they failed to disclose conflicts of interest to a fund client and investors. The SEC found that the firm failed to disclose that portfolio company assets were used for payments to […]

SEC Enforcement Results for FY 2015

October 22, 2015 Dear Friends, Today the SEC released a summary of its enforcement actions for fiscal year 2015, touting the increase in total actions, from 676 in 2013, to 807 actions in 2015 and over $700 million more in disgorgement and penalties, over that same time period. “Vigorous and comprehensive enforcement protects investors and reassures them that our financial […]

SEC Chief of Staff on CCO Liability

October 16, 2015 Dear Friends, SEC Chief of Staff Andrew J. Donohue in a recent speech, stated that the SEC is not targeting compliance personnel. Mr. Donohue outlined three instances in which the staff will typically recommend the SEC bring an enforcement action – when Chief Compliance Officers (CCOs) have: (1) affirmatively participated in the misconduct; (2) helped mislead regulators; […]

SEC Charges Six Firms with Reg M Violations

October 14, 2015 Dear Friends, Today the SEC announced enforcement actions against six firms for short selling violations, including more than $2.5 million in sanctions, and it barred one firm from participating in stock offerings for one year. Rule 105 of Regulation M (Reg M) prohibits purchasing securities in follow-on and secondary offerings when the purchaser has effected short sales […]

SEC Curtails Use of In-House Judges

October 12, 2015 Dear Friends, According to a Wall Street Journal (WSJ) study, the SEC has significantly cut back on its controversial use of in-house administrative law judges (ALJ). The WSJ reviewed 160 cases and found that in the three months through September 2015, the SEC sent only 11% of its contested cases to ALJs, down from 40% in the […]

FINRA Requires BrokerCheck Links for Broker-Dealers

  October 9, 2015 Dear Friends, The SEC approved a FINRA rule that will require certain registered broker-dealers include a link to FINRA’s BrokerCheck system on their websites. The rule does not apply to FINRA members that do not provide products or services to retail investors. Pursuant to the new rule FINRA members must include a readily apparent reference and […]

SEC Charges Affiliates with Failure to Maintain MNPI Policies

Dear Friends, Yesterday the SEC charged an affiliated investment adviser and broker-dealer (“Affiliates”) with failure to maintain and enforce policies and procedures to prevent the misuse of material non-public information. According to the SEC: The Affiliates repeatedly shared information in violation of their policies and procedures. Despite information barriers between the Affiliates, traders from the Affiliates met to discuss trading positions […]