These are some of the compliance-related stories that recently caught my attention.
Majority of RIAs should move under state regulation: Study by Mark Schoeff Jr. in InvestmentNews
Shifting oversight of more registered investment advisers from the Securities and Exchange Commission to states would increase exam coverage at less cost than establishing third-party reviewers, a new report asserts. A study by the compliance firm RIA in a Box calls for advisers with less than $500 million in assets under management to transition to state regulation, a move that would involve about 7,250 of the approximately 11,400 investment advisers currently registered with the SEC.
D&O Insurance: No Coverage for Enforcement Action Because Claim First Made When SEC Subpoena Served Before Policy Inception b in The D&O Diary
A recurring D&O insurance coverage issue involves the question of whether or not a subpoena constitutes a claim, as I have noted on prior posts (for example, here). When this issue comes up, the dispute is usually over whether or not there is coverage under the policy for the costs of responding to the subpoena and ensuing costs. But there are other implications if a subpoena is a claim, as was demonstrated in a January 6, 2015 decision (here) by District of Massachusetts Judge Rya Zobel.
SEC Use of Administrative Proceedings Challenged Again by Thomas O. Gorman in SEC Actions
Bebo v SEC, Case No. 15-cv-00003 (E.D. Wis. Filed Jan. 2, 2015) is another suit challenging the decision to bring an action as an administrative proceeding rather than in Federal District Court. The underlying administrative proceeding named as Respondents Laurie Bebo and John Buono, respectively, the CEO and CFO of Assisted Living Concepts, Inc. In the Matter of Laurie Bebo and John Buono, Adm. Proc. File No. 3-16293 (December 3, 2014). The firm is a publicly-traded assisting living and senior residence firm based in Wisconsin. The Order, which alleges violations of Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)B) and 13(b)-5, centers on claimed false disclosures in the SEC filings of the company. Those filings represented Assisted Living was in full compliance with a lease for certain properties when in fact the Respondents had falsified certain occupancy data to deceive the lessee into believing that the company was in compliance, according to the Order.
The Bebo complaint alleges due process and equal protection violations, a violation of the right to a jury trial and presents a separation of powers issue.
SEC Fights ‘Pre-taliation’ Against Dodd-Frank Whistleblowers by Bruce Carton in Compliance Week
