Tag Archives: Compliance


SEC Sanctions 19 Firms for Short Selling Violations

September 16, 2014 Dear Friends, The SEC charged 19 firms and one individual trader with short selling violations, resulting in a $9 million settlement. Rule 105 of Regulation M (Reg M) prohibits purchasing securities in follow-on and secondary offerings when the purchaser has effected short sales in the securities within a specified period, prior to the pricing of an offering […]

SEC Charges Hedge Fund With Whistleblower Retaliation

Dear Friends, For the first time the SEC filed a case under its new authority to bring anti-retaliation enforcement actions. The SEC charged a hedge fund with engaging in prohibited principal transactions and retaliating against the whistleblower. The firm agreed to pay $2.2 million and to hire an independent compliance consultant. The CIO conducted transactions between the hedge fund and […]

CFTC Guidance on CPO Delegation Process

Dear Friends, On May 12, 2014, the CFTC announced a streamlined approach for considering requests for no-action relief with respect to CPOs who delegate certain activities to a registered CPO (e.g. GPs of limited partnerships who delegate CPO authority to a registered investment manager). Each delegating CPO must submit a letter certifying it meets certain criteria outlined in the release. […]

SEC Provides Guidance on Testimonials and Social Media

Dear Friends, On March 31, 2014, the SEC issued Guidance regarding Rule 206(4)-1(a)(1) of the Investment Advisers Act (“the testimonial rule”) and social media. The SEC generally prohibits client testimonials. However in its guidance, the SEC said client testimonials on independent social media sites are permissible, in certain circumstances, with the following important considerations: An investment adviser (“IA”) or investment […]

SEC Charges Men with Insider Trading on Information From Wives

Dear Friends, On March 31, 2014, the SEC announced the following charges against two men that traded on confidential information from their wives: Tyrone Hawk overheard his wife’s work calls indicating that her company, Oracle Corp., was planning to acquire Acme Packet Inc.  Hawk violated a duty of trust when he purchased Acme Packet shares prior to the acquisition and […]

FINRA Bonus Disclosure Rule to SEC

Dear Friends, On March 10, 2014, FINRA filed a proposal with the SEC requiring brokers who receive more than $100,000 in incentive compensation to switch firms, to disclose to clients how much they are paid. Brokers would disclose a compensation range in $500,000 to $1,000,000 bands. The proposed rule was approved by FINRA in September 2013, in an effort to […]

No-Action Letter – Guidance on “Knowledgeable Employees”

  Dear Friends, The SEC has released a No-Action letter providing guidance on individuals who qualify as “knowledgeable employees” under Rule 3c-5 of the Investment Company Act of 1940. The Rule defines knowledgeable employee as any natural person who is an “executive officer, director, trustee, general partner, advisory board member, or person serving in a similar capacity” of a private […]