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Related Party Mistakes with Private Funds

Related party transactions are rife with problems in all areas of the financial services industry. It’s hard to know if someone is looking out for your best interest, if they have interests on the other side of a transaction. Most private equity funds have some structure set up in the organizational documents to deal with […]

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Backtesting Performance Failure

One area of performance advertising that the Securities and Exchange Commission has given great scrutiny, but not banned, is using backtested performance. Since, backtesting only shows theoretical past trades, it does not involve market risk. That means it’s inherently suspect. You can just keep fine-tuning the model to maximize results, with no ability to carry […]

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Stealing From Investors Through Fraudulent Expenses

The Securities and Exchange Commission charged a hedge fund manager, his investment advisory firm, and an employee with stealing from investors in two hedge funds. The theft was carried out by charging more than $1 million for fraudulent research expenses and fees. According to the SEC complaint, Steven R. Markusen, the owner of Archer Advisors […]

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SEC Issues Second Exemptive Relief from Pay-to-Play

It’s been about a year since the Securities and Exchange Commission granted its first exemptive order Rule 206(4)-5 when an adviser accidentally violated the pay-to-play rule. The SEC has now issued its second relief order. Ares Real Estate Management Holdings filed for exemptive relief after a senior partner wrote a $1,100 check to Colorado Governor […]

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Cheating Your Way to Marathon Victory

Tabitha Manning ran the Chickamauga Battlefield Marathon setting a personal best record time of 2:54:21. But it looks like she pulled a Rosie Ruiz. For those of you not familiar with the history of the Boston Marathon, Rosie Ruiz was declared the winner of the 1980 Boston Marathon with a time of 2:31:56. At that […]

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Compliance Bricks and Mortar for October 24

These are some of the compliance-related stories that recently caught my attention. SEC Charges Athena Capital in First HFT Case in the Corporate Crime Reporter The Securities and Exchange Commission (SEC) has sanctioned a New York City-based high frequency trading firm for placing a large number of aggressive, rapid-fire trades in the final two seconds […]

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Association for Corporate Growth’s Compliance & Regulatory Survey

The Association for Corporate Growth released a report identifying the top compliance and regulatory concerns impacting small and midsize private equity firms. The results are unsurprising, but reinforce concerns. The top five regulatory issues were found to be: SEC Examinations (75%) Investment Adviser Act Compliance (66%) Valuation Issues (58%) General Solicitation rules (54%) Legislation (tax […]

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Don’t Forge Documents You Give to SEC Investigators

You’re bound to make a mistake. Don’t make the mistake even worse by faking a document you submit to the Securities and Exchange Commission in order to cover your original mistake. Back in 2012, the SEC brought charges against Waldyr Da Silva Prado Neto, a citizen of Brazil who was working for Wells Fargo in […]

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Weekend Reading: Issues Related to State Voter Identification Laws

The claim by advocates of voter identification laws is that the requirement is put in place to prevent voter fraud. The question is whether it is too burdensome to mandate a state-issued photo ID. The underlying subtext is that Republican controlled state legislatures are putting the voter ID laws in place because it will disproportionately […]

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Compliance Bricks and Mortar for October 10

These are some of the compliance-related stories that recently caught my attention. Yet Another Study Debunks ‘Revolving Door’ Worries by Bruce Carton in Compliance Week Although I have followed the revolving door issue closely for many years, I have never seen any actual evidence that the “SEC lawyers will go easy on firms to get […]

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