Most advisory firms and fund managers end their fiscal year on December 31. Under the SEC Advisers Act Rule 0-4, you have 90 days to file your Form ADV update after the end of your fiscal year. Last year that put the filing deadline on March 30 because it was a leap year. The next [...]
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Valuation Failures with a Fund of Funds
A Securities and Exchange Commission investigation found that two funds sponsored by Oppenheimer were involved in fraudulent valuations. Oppenheimer sent out misleading quarterly reports and marketing materials stating that the fund’s holdings of other private equity funds were valued “based on the underlying managers’ estimated values.” But that was not always true. The portfolio manager [...]
Beverly Hillbillies Ciphering for Assets Under Management
It was a case of math failure. Where exactly should that decimal place go? The Barthelemy Group of New York and New Jersey calculated assets under management as $26.28 million. But it looks like the decimal point was in the wrong place and the firm actually had $2.628 million under management. Evens Barthelemy, the founder, [...]
Another Danger of Overstating Assets
The Securities Division of the Massachusetts’ Secretary of State’s office filed an administrative complaint against CCR Wealth Management. The complaint seeks to deny CCR Wealth Management registration as an investment adviser. The secretary of state’s office said inspectors became suspicious when they noticed that CCR had reported static denominations over a period of time, even [...]
House Hearing on Investment Adviser Oversight Act
On Wednesday, the House Financial Services Committee held a hearing on the Investment Adviser Oversight Act. This bill would create a new self-regulatory organization for investment advisers. Chairman Bachus opened up by offering to revise the list of exemptions. This worries me, since private funds are currently exempted. My Congressman, Barney Frank, the ranking minority [...]
The Danger of Overstating Assets Under Management
Form ADV requires a registered investment adviser to state the firm’s assets under management. The new form changed the calculation and the term to “regulated assets under management”. At the same time, the threshold between state and federal registration has been increased from $25 million to $100 million. I thought it would be useful to [...]
Is it a Security?
In my ongoing quest to distinguish what’s a security and what’s not a security, a new case came down from Missouri on the topic. Disgruntled purchasers of condominiums at the Branson Landing Hilton Promenade Boutique Hotel felt they got a bad deal and sued the seller/issuer to get their money back: Obester v. Boutique Hotel [...]
Bill Backs SRO for RIAs
Financial Services Committee Chairman Spencer Bachus and Rep. Carolyn McCarthy, a member of the Committee, introduced legislation that would create a Self Regulatory Organization for retail investment advisers. The legislation would amend the Investment Advisers Act of 1940 to provide for the creation of National Investment Adviser Associations (NIAAs), registered with and overseen by the [...]
Advisory Contracts – Transition for Newly Registered Advisers
The SEC’s Division of Investment Management supplemented its Investment Management Staff Issues of Interest posting on the SEC website to include no-action relief for a newly registering adviser under Section 205(a)(2) and (3). Those include requirements that (1) an investment advisory contract not be assigned without consent and (2) that if the advisor is a [...]
Scalping as a Fraud
Today, it’s fairly well establish that an investment adviser should not be buying positions on their own behalf shortly before recommending that position to its clients. Fifty years ago, there was some question as whether the Securities and Exchange Commission could take steps to prevent this or require disclosure. The test case came against Capital [...]
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