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Article
Publication date: 19 July 2018

Janet M. Angstadt, David Dickstein, Mark Goldstein and Richard Marshall

To analyze SEC Staff’s announced 2018 OCIE Examination priorities to provide insight to investment advisers and other regulated entities regarding areas of focus during SEC…

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Abstract

Purpose

To analyze SEC Staff’s announced 2018 OCIE Examination priorities to provide insight to investment advisers and other regulated entities regarding areas of focus during SEC examinations.

Design/methodology/approach

This article discusses the US Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) published its examination priorities for 2018 (the “2018 Priorities Report”).

Findings

Given that OCIE’s examination priorities for 2017 were published before the beginning of the Trump administration, differences between the 2017 and the 2018 priorities provide important insights into the focus of examinations under SEC Chair Clayton. Investment advisers and other regulated entities should allocate resources towards their preparedness for the areas of focus identified in the 2018 Priorities Report.

Originality/value

This article contains valuable insight regarding the SEC’s 2018 OCIE examination priorities and practical guidance from industry experts.

Article
Publication date: 28 June 2013

Brian L. Rubin, Carmen L. Brun, Jaliya Stewart Faulkner, Michael K. Freedman, Kurt Lentz and Jae C. Yoon

The purpose of this paper us to summarize the remarks of the Commissioners and participants in several panel sessions and workshops during the 2013 annual “SEC Speaks” conference…

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Abstract

Purpose

The purpose of this paper us to summarize the remarks of the Commissioners and participants in several panel sessions and workshops during the 2013 annual “SEC Speaks” conference held by the Practising Law Institute in cooperation with the US Securities and Exchange Commission, discussing the SEC's accomplishments in 2012 and its agenda for 2013.

Design/methodology/approach

The paper summarizes remarks by Chairman Walter and Commissioners Aguilar, Paredes, and Gallagher; provides highlights from panel sessions and workshops concerning the Division of Corporation Finance, the Division of Trading and Markets, the Division of Enforcement, the Division of Investment Management, the Office of Compliance Inspections and Examinations as well as highlights from the panel sessions relating to Accounting, Risk, Strategy and Financial Innovation. Judicial and Legislative Developments, and Ethics.

Findings

The summaries provide an overview of the SEC's most important current rulemaking, projects and policy priorities.

Originality/value

The paper presents current SEC issues and developments addressed by experienced SEC lawyers.

Article
Publication date: 1 January 2001

BRIAN CARROLL

The author, both an attorney and CPA, explores the complex and perhaps out‐of‐date Advisors Act Rule 206(4)‐2, the Custody Rule. He explores the rule and the obligations and…

Abstract

The author, both an attorney and CPA, explores the complex and perhaps out‐of‐date Advisors Act Rule 206(4)‐2, the Custody Rule. He explores the rule and the obligations and concerns that arise when an investment advisor is deemed to have custody.

Details

Journal of Investment Compliance, vol. 1 no. 4
Type: Research Article
ISSN: 1528-5812

Article
Publication date: 1 March 1997

Marybeth Sorady

For the foreign investment adviser wishing to do business in the USA, the regulatory climate has never been more propitious. This paper describes the recently restructured…

Abstract

For the foreign investment adviser wishing to do business in the USA, the regulatory climate has never been more propitious. This paper describes the recently restructured framework of federal and state law and regulation applicable to non‐US advisers that provide investment advisory services to US clients, whether from abroad or through a US subsidiary or affiliate. For those advisers that will register either themselves or subsidiaries or affiliates as investment advisers in the US, the paper first describes the requirements of the Investment Advisers Act of 1940 (Advisers Act), rules thereunder and significant interpretations and discusses the SEC's recent enforcement priorities. It then discusses the scope of and limitations imposed under recent interpretations permitting non‐US advisers that register in the USA to comply with US restrictions only in connection with their US clients. Finally, the paper discusses other legal and regulatory provisions that apply if the adviser offers interests in a pooled investment vehicle (ie an investment company) in the USA.

Details

Journal of Financial Regulation and Compliance, vol. 5 no. 3
Type: Research Article
ISSN: 1358-1988

Article
Publication date: 4 September 2017

Stephanie M. Monaco, Amy Ward Pershkow, Leslie S. Cruz, Peter M. McCamman, Andrew D. Getsinger and Adam Kanter

To explain a guidance update issued in February 2017 by the staff of the Division of Investment Management (Staff) at the US Securities and Exchange Commission (SEC) on how…

420

Abstract

Purpose

To explain a guidance update issued in February 2017 by the staff of the Division of Investment Management (Staff) at the US Securities and Exchange Commission (SEC) on how robo-advisers may meet their disclosure, suitability and compliance obligations under the Investment Advisers Act of 1940 (Advisers Act).

Design/methodology/approach

Examines the update’s guidance on three areas – the substance and presentation of disclosures, the provision of suitable investment advice, and the adoption and implementation of effective compliance programs – and then raises practical considerations for robo-advisers.

Findings

The update reflects the Staff’s increasing concern about the potential risks of the robo-adviser platform and provides a listing of key issues that the SEC’s Office of Compliance Inspections and Examinations (OCIE) – which recently added “electronic investment advice” as a new focus for its 2017 examinations – may zero in on when examining robo-advisory firms.

Practical implications

Robo-advisers should carefully review the Staff’s update to evaluate whether their firms’ operations address the guidance.

Originality/value

Practical advice from experienced securities regulatory lawyers.

Article
Publication date: 6 July 2015

Michael McGrath and Pablo J. Man

To explain that the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other…

Abstract

Purpose

To explain that the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other charges, failure to comply with the custody requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).

Design/methodology/approach

To explain that the Securities and Exchange Commission (“SEC”) brought and settled charges against an investment adviser to several alternative mutual funds alleging, among other charges, failure to comply with the custody requirements of the Investment Company Act of 1940, as amended (the “1940 Act”).

Findings

The enforcement action serves as an important reminder for the growing number of advisers of alternative mutual funds to be mindful of specific restrictions and obligations when managing registered funds that do not apply to private funds and separate accounts. This action shows that the SEC will bring charges even when the alleged violations do not result in harm to investors.

Practical implications

The 1940 Act, the rules thereunder, and SEC staff guidance relating to alternative investment strategies are complicated and not intuitive. These standards can constrain a registered fund’s ability to employ options, futures, swaps, prime brokerage, repurchase and reverse repurchase agreements, enhanced leverage through securities lending, and other facilities. As the SEC continues to examine alternative mutual funds, advisers to these funds should remain cognizant of the obligations arising under the 1940 Act and the implementation of fund policies and procedures.

Originality/value

Practical guidance from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 16 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 April 2004

David G. Tittsworth and Geoffrey I. Edelstein

The Securities and Exchange Commission (SEC) has defined “soft dollar” practices as arrangements under which products or services, other than execution of securities transactions…

124

Abstract

The Securities and Exchange Commission (SEC) has defined “soft dollar” practices as arrangements under which products or services, other than execution of securities transactions, are obtained by an investment adviser from or through a broker‐dealer in exchange for the direction by the adviser of client brokerage transactions to the broker‐dealer. In the wake of the mutual fund scandals of 2003, soft dollar practices have come under increased scrutiny by the SEC, the U.S. Congress, and others. This article is based on testimony presented by the Investment Counsel Association of America (ICAA) to the U.S. Senate Committee on Banking, Housing, and Urban Affairs at a hearing on soft dollars held on March 31, 2004. The article outlines the following positions: (1) the SEC should ensure that there is adequate disclosure about soft dollar practices, combined with appropriate inspection and enforcement of regulations governing such practices; (2) the consequences of abolishing soft dollars ‐ an outcome that would require Congressional action ‐ most likely would affect smaller investment advisory firms adversely, create entry barriers for new investment advisory firms, and diminish the quality and availability of proprietary and third‐party research; (3) investment advisers should be required to keep appropriate records relating to soft dollar arrangements and to develop and implement internal controls and procedures designed to ensure that soft dollar arrangements are supervised, controlled, and monitored; and (4) eliminating the use of soft dollars for third‐party research would harm investors, diminish the availability of quality research, provide a regulatory‐driven advantage for full‐service brokerage firms, disadvantage third‐party research providers, and result in less transparency to investors, regulators, and market participants.

Details

Journal of Investment Compliance, vol. 5 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 6 July 2015

Kenneth Berman, Michael P. Harrell and Gregory Larkin

To discuss and interpret the recently published summary of the select priorities of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) in connection with the…

Abstract

Purpose

To discuss and interpret the recently published summary of the select priorities of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) in connection with the National Exam Program for 2015.

Design/methodology/approach

This article highlights the broad OCIE focus areas and provides detail on the associated initiatives.

Findings

OCIE’s priorities appear to place particular emphasis on retail investors and investors saving for retirement and market-wide risks, including cybersecurity. The examination priorities also emphasize OCIE’s evolving ability to analyze data to identify and examine registrants that may be engaged in illegal activity. Of particular interest to private equity fund sponsors, the National Exam Program will continue to conduct examinations that focus on fees and expenses borne by investors in private equity funds.

Practical implications

In view of the OCIE’s priorities, recent public comments by OCIE officials (concerning, for example, presentation of performance data) and our experience representing private equity firms being examined by OCIE, private equity fund sponsors should continue to be prepared for rigorous examinations on these issues and the areas of focus highlighted by the SEC in the past three years.

Originality/value

The article summarizes the OCIE’s recently published examination priorities for 2015 that cover a broad range of market participants and target a variety of their products, practices and procedures, including a continued focus on private equity fund sponsors.

Article
Publication date: 27 February 2014

Robert P. Bramnik and Mauro M. Wolfe

– To draw attention to the US Securities and Exchange Commission's (SEC) disciplinary focus on the investment adviser community

Abstract

Purpose

To draw attention to the US Securities and Exchange Commission's (SEC) disciplinary focus on the investment adviser community

Design/methodology/approach

Describes six recent enforcement cases for disclosure, custody, supervisory, procedural, and other rule violations and compliance failures; explains changes in registered investment adviser (RIA) exemptions following enactment of the Dodd-Frank Act; discusses recent SEC announcements concerning inspections and examinations of RIAs.

Findings

The SEC's recent announcements and enforcement actions signal that all advisers (both registered investment advisers and exempt reporting advisers) may want to pay particular attention to their compliance programs and supervisory procedures.

Originality/value

Practical advice from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 2 May 2017

Daniel A. Nathan and Elizabeth Marshall

To summarize and interpret the examination priorities for 2017 published in early January by the Financial Industry Regulatory Authority (“FINRA”) and the Office of Compliance…

Abstract

Purpose

To summarize and interpret the examination priorities for 2017 published in early January by the Financial Industry Regulatory Authority (“FINRA”) and the Office of Compliance Inspections and Examinations (“OCIE”) of the Securities and Exchange Commission (“SEC”).

Design/methodology/approach

Summarizes some of the most important priorities raised by the OCIE and FINRA in the areas of senior investors, recidivist representatives, product suitability, complex investments and sales practices, cybersecurity, branch offices and anti-money laundering.

Findings

As in recent years, there is a significant overlap in priorities between the two regulators on issues of elderly investors, recidivist representatives, product suitability, and cybersecurity, among others.

Practical implications

Registered investment advisers and broker-dealers should note the key issues raised in both letters so that their compliance programs can address them in their policies, procedures, and controls before their next examination.

Originality/value

Practical guidance from lawyers whose practices focus on securities and broker-dealer enforcement defense.

1 – 10 of 986