Author Archives: CounselWorks LLC

About CounselWorks LLC

CounselWorks is a strategic business and regulatory consulting firm, that provides project-based consulting and manages compliance and regulatory programs for hedge funds, private equity firms, investment companies, broker-dealers and investment banks.

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. […]

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 […]