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Category Archives: Hedge Fund Commentary

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 […]

Private Equity Firms Charged with Disclosure Failures

October 7, 2015 Dear Friends, Today, the SEC announced that three private equity advisers agreed to pay nearly $39 million to settle charges they failed to make adequate disclosures to investors. According to the SEC, the advisers failed to adequately disclose the acceleration of monitoring fees paid by fund-owned portfolio companies, prior to the companies’ sale or initial public offering. […]

Supreme Court Denies Request to Hear Newman Case

October 5, 2015 Dear Friends, Today, the U.S. Supreme Court officially refused to hear the United States v. Newman insider trading decision. By way of background: In December 2012, Todd Newman and Anthony Chiasson were convicted of securities fraud and sentenced to prison after their trades in certain stocks, allegedly based on a chain of material non-public information, resulted in […]

SEC Charges Attorneys and Accountant with Insider Trading

September 29, 2015 Dear Friends, The SEC alleges that two lawyers and an accountant illegally traded on confidential information, misappropriated during a meeting with a mutual client to discuss personal matters, as outlined below. During a meeting to discuss personal end-of-year tax and estate planning matters, a board member of a pharmaceutical company (and a mutual client of the attorneys […]