Compliance Bits and Pieces for November 19

Here are some recent compliance related stories I found interesting.

SEC Charges Two Longtime Madoff Employees with Fraud

The Securities and Exchange Commission today charged a pair of longtime employees at Bernard L. Madoff Investment Securities LLC (BMIS) with playing key roles in the Madoff Ponzi scheme. One employee produced phony account statements for investors and feathered her own accounts for personal gain, while the other conspired to cash out Madoff’s friends and family as the fraud collapsed in addition to creating phony account statements and tracking the Ponzi scheme bank account.

SEC Charges Steven Rattner in Pay-to-Play Scheme Involving New York State Pension Fund

The SEC alleges that Rattner secured investments for Quadrangle from the New York State Common Retirement Fund after he arranged for a firm affiliate to distribute the DVD of a low-budget film produced by the Retirement Fund’s chief investment officer and his brothers. Rattner then caused Quadrangle to retain Henry Morris – the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi – as a “placement agent” and pay him more than $1 million in sham fees even though Rattner was already dealing directly with then-New York State Deputy Comptroller David Loglisci and did not need an introduction to the Retirement Fund.

To Crack Down on Insider Trading, UK to Require Recording Calls in the’s Law Blog

On Thursday, the U.K.’s Financial Services Authority said that starting in November next year, firms will have to record the cell phone conversations of some employees as part of its push to detect insider dealings.

Webinar Replay: The New Pay-to-Play Rules from Compliance Avenue

Earlier this year, the SEC adopted anti-fraud rule 206(4)-5 (the “Pay to Play Rule”) which serves to limit political contributions and “pay to play” activities. Prior to the effective date of this rule, all investment advisers should ensure that they build out comprehensive political contribution reporting and pre-clearance policies.

Mortgage Lending Practice after the Dodd-Frank Act by Bradley K. Sabel in the Harvard Law School Forum on Corporate Governance and Financial Regulation

On July 21, 2010, the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), enacting numerous provisions intended to reform the mortgage lending industry with an eye towards consumer protection. Many of these provisions are contained within Title XIV of the Dodd-Frank Act, the Mortgage Reform and Anti-Predatory Lending Act (the “Mortgage Act” or the “Act”)

Implications of Dodd-Frank for UK and EU fund managers and advisers

Many UK and EU investment managers and advisers (including those in the private equity, hedge
fund and real estate sectors) may be required to register with the US Securities and Exchange Commission (the “SEC”) with effect from 21 July 2011, even if they are already authorised by the UK Financial Services Authority or another EU regulator. Firms that register must comply with a number of US federal legal and regulatory requirements, many of which overlap with UK FSA rules. Some firms exempt from registration will still need to comply with certain record-keeping and reporting requirements. Whilst many of the detailed provisions of implementing legislation are yet to be finalised by the SEC, and there is considerable uncertainty about the scope of certain exemptions, firms should begin to consider the impact of the changes and plan for compliance.

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