Tag Archives: Compliance

SEC Charges IA with Cybersecurity Failures

September 23, 2015 Dear Friends, The SEC announced that an investment adviser agreed to settle charges that it failed to establish required cybersecurity policies and procedures, to ensure the security and confidentiality of personally identifiable information (PII). The firm stored PII of approximately 100,000 individuals on a third party hosted web server, which was hacked in 2013. Following the attack, […]

Suggestive Phrases = Red Flags for Regulators

Dear Friends, A Bloomberg article highlights how the use of certain suggestive phrases in electronic communications can be red flags for regulators. Phrases like TYOP (tell you on phone), TOL (talk off line), and LDL (let’s discuss live) are red flags. “Investigators for the SEC and Justice Department get so many e-mails they can’t possibly review them all without using Control-F….they […]

NFA Issues Cybersecurity Guidance

Dear Friends, The NFA issued an interpretive notice, subject to CFTC approval, outlining general requirements relating to members’ information systems security practices (“ISSP”). The NFA’s notice provides guidance regarding ISSPs that each member should develop and customize, including the following: Written Policies and Procedures Security and Risk Analysis Development of Protective Measures Against Threats and Vulnerabilities Response and Recovery Employee Training […]

FinCEN Proposes AML Rule for RIAs

Dear Friends, Yesterday FinCEN proposed a rule, enforceable by the SEC: Requiring certain registered investment advisers to establish anti-money laundering (AML) programs; and Including investment advisers within the general definition of a “financial institution” pursuant to the Bank Secrecy Act (BSA), subjecting them to BSA requirements, including compliance with: Filing Currency Transaction Reports and record keeping requirements relating to the transmittal […]

Hedge Funds Agree to $180 Million SEC Settlement

August 18, 2015 Dear Friends, The SEC announced that two asset managers agreed to pay $180 million to settle charges that they defrauded investors and failed to implement policies and procedures to prevent employees from making contradictory and false representations. According to the SEC, the hedge funds in question were highly leveraged, yet employees made misleading representations- assuring investors that […]

SEC Charges Firm with Operating Secret Trading Desk

August 12, 2015 Dear Friends, Today, the SEC announced that ITG Inc. (ITG) agreed to pay $20.3 million, to settle charges it operated a secret trading desk and misused confidential trading information of dark pool subscribers. ITG told the public it was an “agency-only” broker, but it operated an undisclosed proprietary trading desk, called “Project Omega,” which accessed live feeds […]

Judge Rules Against SEC

August 12, 2015 Dear Friends, U.S. District Judge Richard Berman ruled that the SEC’s method for appointing in-house administrative law judges, to preside over internal proceedings, is likely unconstitutional. Judge Berman agreed to temporarily halt an SEC action against a former Standard & Poor’s Ratings Services (S&P) executive. The SEC claims the executive aided, abetted, and caused S&P to change […]

SEC Commissioner Says Dodd-Frank has Backfired

Dear Friends, Yesterday, SEC Commissioner Daniel Gallagher said Dodd-Frank “has backfired, strangling our economy, increasing the fragility of the financial system, and politicizing our independent financial regulators.” Additionally, Commissioner Gallagher called on the Commission to be measured and thoughtful in exercising its enforcement authority, specific to CCO liability, stating: “Recent enforcement actions holding compliance officers to a standard of strict […]

Court Rules There’s No 180 Day Limit on SEC Investigations

July 31, 2015 Dear Friends, A Washington D.C. Court found in favor of the SEC, contrary to explicit Dodd-Frank language, that there is no 180 day limit on SEC investigations, to bring an enforcement action or terminate the investigation, following a Wells notice.  Dodd-Frank explicitly requires that the SEC “shall” file an action or notify the Division of Enforcement of […]

SEC Guidance on Monitoring of Managed Accounts

Dear Friends, The SEC provided guidance for registered investment advisers (RIAs) regarding the mandatory reporting of personal securities transactions reports for “Access Persons,” as provided under Rule 204A-1 of the Advisers Act. Accounts over which an Access Person had no direct influence or control are excluded from the reporting requirement. The SEC outlined that certain blind trusts may be excluded from […]