Don’t stray from your investment strategy. Don’t chase yields. Make sure your investment strategy follows your marketing materials. According to SEC charges, Charles Schwab failed to do this with its YieldPlus Fund in 2007. The fund was marketed as a Short Term Bond fund and described the Fund as a cash “alternative” that generated a [...]
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FINRA Guidance on Private Placements
The Financial Industry Regulatory Authority released Regulatory Notice 10-22 reminding registered firms about their obligations regarding suitability, disclosures and other requirements for selling private placements to customers. A Broker-Dealer that recommends a security is under a duty to conduct a reasonable investigation concerning that security and the issuer’s representations about it. This is true regardless [...]
Should You Invest in Ethical Companies?
Yesterday, I was excited to see that the World’s Most Ethical Companies for 2010 had outperformed the S&P 500. Ethisphere went back five years and charted the performance. They found a 53% return for the 2010 class of companies, compared to a 4% return in the S&P. The hindsight of looking back on the performance [...]
Accidental Securities Underwriter
So you made almost $1 million on selling penny stocks through the pink sheets on $75,000. Nice pay day. Then the SEC makes you give it all back. This is the sad tale of Rodney Schoemann, a professional stock market trader. Schoemann had previous purchased some restricted shares in Stinger Systems, Inc. that were marked [...]
The fi360 Fiduciary Score Methodology
The fi360 Fiduciary Score is a quantitative evaluation of how well a fund meets a minimum set of due diligence criteria. The score can quickly help identify a list of Mutual Funds and Exchange Traded Funds that are worth further research in your selection process. You can also use the score as part of your [...]
Credit Rating Agency Reform
Last week the Securities and Exchange Commission held a roundtable on the credit agencies to consider a range of ideas to get tougher on them. Securities and Exchange Commission Chairman Mary Schapiro lead the discussion and pointed out that “rating agency performance in the area of mortgage-backed securities backed by residential subprime loans, and the [...]
N.Y. Comptroller Bans Placement Agents for State Pension Fund
State Comptroller Thomas P. DiNapoli today announced he has banned the involvement of placement agents, paid intermediaries and registered lobbyists in investments with the New York State Common Retirement Fund (CRF). The ban includes entities “compensated on a flat fee, a contingent fee or any other basis.” See: N.Y. Comptroller Bans Placement Agents for State [...]
Guidance Concerning the National Security Review Conducted by the Committee on Foreign Investment in the United States
On December 8, the Committee on Committee on Foreign Investment in the United States published a notice in the Federal Register of that provides guidance to U.S. businesses and foreign persons that are parties to transactions that are covered by section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment [...]
Effective Date for FINSA and CFIUS Regulations
The final regulations were published in the Federal Register on November 21 and will become effective on December 22, 2008.
Implementation of Foreign Investment and National Security Act
Davis Polk & Wardwell attorneys Margaret M. Ayres and Jeanine P. McGuinness prepared a memorandum entitled FINSA Final Regulations (.pdf) discussing the final regulations issued by the U.S. Department of the Treasury to implement the Foreign Investment and National Security Act of 2007. That law amended the 1988 “Exon-Florio” statute and made significant changes to [...]
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