Broker-Dealer Customer Protection Rule versus Investment Adviser Custody

A recent enforcement case highlighted the stark difference between the custody requirements of a broker-dealer and an investment adviser. Merrill Lynch was smacked with over $400 million in disgorgement and penalties for putting customer assets at risk. Private fund managers and investment advisers are well aware of the limits on the custody. The purpose is […]

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Compliance Bricks and Mortar for the Brexit

These are some of the compliance-related stories that caught my attention while waiting for the results from the Brexit vote. BEST PRACTICES FOR TODAY’S CCO by Julie DiMauro in the FCPA Blog In addition to knowing their regulatory-reporting obligations, compliance officers should understand what their managers do, what products and services their company offers and the systems […]

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SEC Charges Fund Administrator as a Failed Gatekeeper

The Securities and Exchange Commission charged Steven Zoernack and his firm EquityStar Capital Management with fraud for stealing investor money and hiding his criminal past. The SEC brought fraud charges against ClearPath Wealth Management and its principal, Patrick Evans Churchville, for operating a fraudulent scheme that resulted in at least $11 million in losses to […]

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Compliance Bricks and Mortar for June 17

These are some of the compliance related questions that recently caught my attention. Power plants are no longer America’s biggest climate problem. Transportation is. by Brad Plumer in Vox Here’s an important energy milestone: For the first time since 1979, America’s cars, trucks, and airplanes emit more carbon dioxide than its power plants do. … But […]

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Compliance Lawyers and Legal Education

I had an interesting discussion on the possible role of law schools in helping train law students for jobs in the compliance field. Compliance does not require a law degree, but there seems to be a demand for compliance professionals with legal degrees in the mid and higher levels, particularly in highly regulated industries. Part […]

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Fraud Torn Paper Concept

Investment Fraud and Online Dating

Most good financial advisers will tell you that referrals are their best source of business. The same is true for fraudsters. Affinity fraud is just using a network to funnel new “investors” into a fraud. The Boston office of the Securities and Exchange Commission brought charges against an alleged fraudster using an unusual network. The […]

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Weekend Reading: The Fever of 1721

We are all familiar with the Founding Fathers and the events that lead to the American Revolution. Stephen Coss points to events in 1721 as the seeds of that revolution two generations later in his new book: The Fever of 1721. The Boston of 1721 was already full of conflicts between American colonists and the British […]

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Compliance Bricks and Mortar for June 10

These are some of the compliance related stories that recently caught my attention. U.S. Offers Rare Account of Why It Didn’t Pursue Bribery Charges by Samuel Rubenfeld in’s Risk & Compliance Journal As the Securities and Exchange Commission announced it reached non-prosecution agreements in two unrelated foreign-bribery cases, the U.S. Justice Department took the […]

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Cash in the grass with room for your type.

Charging Fund Investors For In-House Legal Staff

In house lawyers fall into two sections of typical fund documents. On one had, fund documents usually state that the fund pays for legal expenses. Another section states that the general partner is responsible for employee expenses. Can you charge in-house legal staff as a fund expense? It depends. This was mentioned by Marc Wyatt, Deputy […]

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Fraud, But Is It Securities Fraud?

Although the Securities and Exchange Commission gets blamed for not bringing enough fraud claims, it’s jurisdiction is limited to securities fraud. When I see a real estate case filed by the SEC I pay attention. The case against Richard W. Davis, Jr. brought the “What is a Security?” questions out. The SEC alleges that Richard […]

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