SEC settles administrative proceedings against adviser and top executive over undocumented block trade allocation practices
Abstract
Purpose
The purpose of this paper is to provide a summary of the terms of a settled Securities and Exchange Commission administrative proceeding that illustrates the views of the SEC examination and enforcement staff regarding appropriate practices for investment advisers registered under the Investment Advisers Act of 1940 (the “Advisers Act”) to follow when engaging in block trades for client accounts.
Design/methodology/approach
The paper summarizes the SEC's findings regarding the adviser's block trade allocation practices, resulting violations, and the adviser's remedial efforts, and provides the sanctions agreed to.
Findings
The SEC's findings related primarily to the adviser's practices regarding the allocation of block trades when participating client accounts had insufficient funds to purchase their allocation.
Practical implications
This settlement provides an important reminder for registered investment advisers of the focus by SEC examination and enforcement staff on trade allocation practices and related record keeping and compliance program documentation.
Originality/value
The paper provides a practical explanation by experienced financial services lawyers.
Keywords
Acknowledgements
This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. © 2013 Goodwin Procter LLP
Citation
Galloway, J. and Catano, J. (2013), "SEC settles administrative proceedings against adviser and top executive over undocumented block trade allocation practices", Journal of Investment Compliance, Vol. 14 No. 3, pp. 28-31. https://doi.org/10.1108/JOIC-09-2013-0026
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Authors