Compliance Bricks and Mortar for May 31

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These are some of the compliance-related stories that recently caught my attention.

Professional SEC Whistleblower Firm Seeks Investors to Finance Investigations by in Compliance Week

Now, it appears that the first generation of professional whistleblowers is upon us. The ABA Journal reports that Ted Siedle, a former SEC lawyer who is now an “industry watchdog,” is seeking to raise about $1.8 million from investors to create an “investment fund to cash in on the agency’s new whistleblower program.”

Examining Investment Advisers: The Challenge Continues by Elisse Walter in The CLS Blue Sky Blog

An excerpt of a speech that Commissioner Walter gave on April 16, 2013 at the 2013 NASAA Public Policy Conference in Washington, D.C.

As you are aware, the Dodd-Frank Act transferred oversight of mid-sized investment advisers from the SEC to the States. Investment advisers are an area of special concern to regulators because, among other reasons, advisers are fiduciaries charged with handling the investment assets for millions of middle-class Americans, including retirement funds, children’s college funds, and money for down payments on their homes — in a way, these assets are the vehicles to their dreams and hopes. Advisers are a critical part of the American economy, and are in a uniquely intimate position to do tremendous good — or tremendous damage — to clients and their families.

Whether my Aunt Millie trusts her assets to a small adviser with a shingle hung outside a red-brick Main Street office, or to an adviser to a large mutual fund headquartered in a steel and glass Wall Street high rise regulators need to be there. As Millie sits in an office, listening intently to her adviser and trying to understand, she’s relying on us.

But that’s been a challenge for regulators, and particularly for the SEC. The point of Dodd-Frank’s re-allocation of oversight, after all, was to increase examinations of investment advisers. The Commission just wasn’t able to do enough.

So, as it did in 1996 with NSMIA, Congress moved responsibility for many advisers to your agencies, which are now absorbing the additional responsibility. Believe me — I can empathize with the position that you are in. I’ll return to that a bit later, but for now I’d like to focus on how we’ve worked through the transition together.

Private Equity Endorses IPEV Valuation Guidelines

“The Private Equity Growth Capital Council (“PEGCC”) announced today that they have endorsed the International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines from December 2012. The IPEV Valuation Guidelines are used globally as the framework for valuing private equity investments for financial reporting purposes. “The IPEV Valuation Guidelines have been endorsed worldwide by both private equity and growth capital firms and their limited partner investors,” said Steve Judge, President and CEO, PEGCC. “They are the recognized standard for valuing private equity portfolio companies and provide guidelines for preparers and users of financial statements as well as their auditors and accountants.”

Liberty Reserve Founder Indicted on $6 Billion Money-Laundering Charges By Kim Zetter in’s Threat Level

The founder of digital currency system Liberty Reserve has been indicted in the United States along with six other people in a $6 billion money-laundering scheme, in what authorities are calling the largest international money-laundering case ever prosecuted, according to documents unsealed today. Dubbed the “financial hub of the cyber-crime world,” authorities say Liberty Reserve had more than 1 million users worldwide and processed more than 12 million transactions annually as the favored money-laundering service for carders, hackers and other cybercriminals in the digital underground who used it to transfer money around the world effortlessly and anonymously.

SEC Obtains Asset Freeze Against Front Running Equity Trader by Thomas O. Gorman in SEC Actions

The Commission’s revamped inspections program, which now utilizes a risk based approach and works more closely with the Enforcement Division,, continues to uncover wrongful conduct resulting in enforcement actions. This time the program discovered a front running trader who used his position for personal profit through secret trades in his wife’s account at the expense of the firm’s institutional clients. SEC v. Bergin, Civil Action No. 3:13 cv 1940 (N.D. Tx. Filed May 23, 2013).

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