Compliance Bricks and Mortar for February 14


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

New SEC investor advocate says he has investor-protection genes by Mark Schoeff Jr. in Investment News

Mr. Fleming will head an office that is responsible for ensuring that the concerns of retail investors are elevated at the commission, as well as at self-regulatory organizations such as the Financial Industry Regulatory Authority Inc. He will identify problems investors are having with financial firms and products and make recommendations on how rules and regulations can better protect them.

Are you keeping track of your compliance costs? by Jeff Kaplan in Conflicts of Interest Blog

Compliance costs come in various forms. Among the most prominent are salaries and related expenses for in-house personnel doing C&E work on a full- or part time basis (i.e., not just C&E officers but, to some extent, personnel in HR, Legal and Audit). Another category of out-of-pocket C&E costs are those incurred for external products/services, such as computer-based training, hotline providers, case management or other GRC software or C&E program assessments . Out of pocket costs, of course, are fairly easy to calculate – and are, I believe, often taken into account by government officials in weighing the efficacy of C&E programs. – See more at:

On Beauty and Biking in Freakonomics

Sole author Erik Postma also asked the participants to rate the man’s masculinity and likeability, and asked whether the rater, if female, was on hormonal contraception. The results were clear. The most attractive men were also, unbeknownst to raters, the riders that performed best.

K&L Gates discusses Third Party Certification Procedure Designed to Comply with New SEC Rules Permitting General Solicitation in Reg D Private Offerings by Gary J. Kocher in CLS Blue Sky BLog

Consistent with this view, we have prepared the attached sample Status Certification Letter that is designed to allow an individual investor to approach one of his or her existing trusted advisors that is a Permitted Third Party Verifier (lawyer, CPA, etc.) to provide a certification of the underlying information on which the issuer may base its determination of the status of the investor. The form is designed so that a non-lawyer can easily check a box as to the level of income/net worth and type of information that has been reviewed within the scope of the rule. Because the certification can be made by an existing trusted advisor, the advisor may already be in possession of the information on which the certification is made, thereby reducing the burden on the investor. The form also clearly specifies that the Permitted Third Party Verifier assumes no liability for (i) the accuracy of the information provided by the investor or (ii) the ultimate determination as to whether the investor meets the requirements to be accredited.

Bad Apple: REITs fined $1.5 million for disclosure violations by Bruce Kelly in Investment News

The Apple REITs failed to value the REITs properly, disclose numerous related-party transactions and divulge executive compensation of four REITs, according to a SEC cease-and-desist order, which was a settlement between the SEC and the various respondents.