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Category Archives: Hedge Fund Commentary

FINRA Cybersecurity Report

February 12, 2015 Dear Friends, FINRA released a report on cybersecurity practices, outlining the results from its 2014 cybersecurity sweep targeting high-frequency traders, independent dealers, large investment banks, clearing firms, and online brokerages. The report identifies principles and effective practices that all firms should consider, including the importance of: Sound Cybersecurity Governance, with Strong Leadership; Cybersecurity Risk Assessments; Development, Implementation, […]

SEC to Conduct IT Related Exams

February 9, 2015 Dear Friends, Vincente Martinez, Chief of the SEC’s Office of Market Intelligence, stated that the SEC will conduct another round of exams, specific to IT controls, targeting a smaller group of investment advisers and broker-dealers. As the SEC stated in its Exam Priorities for 2015, cybersecurity governance will be an area of focus for the exam staff […]

SEC Releases Risk Alert on Cybersecurity

February 3, 2015 Dear Friends, Today, the SEC released a Risk Alert outlining its findings resulting from examinations of over 100 investment advisers and broker-dealers, specific to cybersecurity governance. The majority of the firms examined: Have adopted written information security policies; Conduct periodic risk assessments on a firm-wide basis to identify cybersecurity threats; Have been the subject of a cyber-related […]

SEC Exam Focus – Alternative Investment Companies

Dear Friends, As the SEC stated in its Examination Priorities for 2015, the OCIE will focus on alternative investment companies and never before examined investment companies, covering, but not limited to, the following areas: Leverage, Liquidity and Valuation Policies and Practices; Internal Controls: Compliance Personnel, Staffing, Funding, and Empowerment of Boards; and Marketing Funds to Investors. In response, we are […]

SEC Exam Priorities 2015

January 13, 2015 Dear Friends, The SEC released its examination priorities for 2015, as outlined below. Cybersecurity: The SEC will continue its initiative to examine investment advisers’ and broker-dealers’ cybersecurity compliance controls and will also examine transfer agents. Alternative Investment Companies: The SEC will focus on mutual funds with alternative investments, specifically with respect to valuation, internal controls, and marketing […]

FINRA 2015 Exam Priorities

January 7, 2015 Dear Friends, FINRA released its examination priorities for 2015. Please find a subset of FINRA’s areas of focus below.   Supervision Rules   Private Placements   Adequate Due Diligence and Suitability of Analysis   Timeliness and Sufficiency of Private Placement Filings   Compliance with FINRA’s Communication Rules   Anti-Money Laundering (AML)   Focus on Cash Management Accounts […]

SEC Charges Equity Research Firm Owner

December 16, 2014 Dear Friends, Today, the SEC  announced charges against an equity research firm owner for engaging in wash trades – creating the misleading appearance of consistent active trading in an otherwise thinly traded stock. Additionally, the SEC alleges that the owner and his employees acted as unregistered brokers by raising over $2.5 million from investors, on behalf of […]

SEC Chair Announces New Initiatives

December 12, 2014 Dear Friends, SEC Chair Mary Jo White announced that the SEC staff are developing recommendations for a set of “proactive initiatives” covering three core areas:       Data Reporting Standardized Reporting for Derivatives Enhanced Data Collection on Separately Managed Accounts Reporting of Securities Lending by Funds       Transition Planning and Stress Testing Requirement for Investment Advisers to Develop […]

Court Overturns PM’s Insider Trading Convictions

December 10, 2014 Dear Friends, The U.S. Second Circuit Court of Appeals overturned insider trading convictions of two former Diamondback and Level Global portfolio managers, vacating their prison sentences. The Government failed to prove that the portfolio managers knew they were trading on inside information, or that the insiders received any benefit in exchange for their disclosures. Please click here […]

SEC’s Goals for 2015

November 21, 2014 Dear Friends, The SEC outlined its objectives for 2015 in its Financial Report for Fiscal Year 2014, including the following regulatory initiatives: Implementation of Comprehensive Regulatory Framework for OTC Derivatives; Acceleration of the Implementation of Executive Compensation Disclosure Requirements; Consider Uniform Fiduciary Standard of Conduct for Investment Advisers and Broker-Dealers; Review of the Accredited Investor Definition; Establishment […]