Category: Compliance Programs

At the end of March, FinCEN published an interim final rule that removes the beneficial ownership reporting requirements for U.S. companies and limits it to only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction. Comments are flowing in … Read more »

I’ve now seen the best sales pitch for investors in a Ponzi scheme “Yo Homie! the MCAs are crankin!” delivered to an “investor” on Skype. This message came from Patch Baker. The MCAs are Merchant Cash Advances. That Skype chat is printed in paragraph 111 in the complaint against Mr. Baker and Joel J. Natario … Read more »

The Securities and Exchange Commission obtained final judgments against Safeguard Metals and its principal, Jeffrey Ikahn. The SEC charged Safeguard and Ikahn with acting as unregistered investment advisers by persuading investors to sell their existing securities, transfer the proceeds into self-directed Individual Retirement Accounts, and invest the proceeds into gold and silver coins provided by … Read more »

One legal question that has renewed interest over the past few years is “what is a security?” Crypto lovers will tell you that their stuff is not securities. It all goes back to the definition of “security” and the less conventional term within that definition of “investment contract.” The Howey test focuses on that term … Read more »

When the Securities and Exchange Commission brings charges against a real estate company, it catches my eye. The SEC accused Joshua Schuster and Schuster Enterprises LLC (d/b/a Silverback) of misleading investors and misappropriating some of that invested capital. Of course, this is just the SEC’s side of the case and Mr. Schuster has not had … Read more »

Back in 2019 (before the pandemic) the Securities and Exchange Commission, brought a case against Commonwealth Equity Services, LLC (d/b/a Commonwealth Financial Network), a registered investment adviser and broker-dealer, with failing to disclose material conflicts of interest related to revenue sharing Commonwealth received for certain client investments. The SEC prevailed in federal court, with an … Read more »

On March 19, the Division of Investment Management published an updated FAQ on the Marketing Rule addressing extracted performance. The January 2023 Marketing Rule FAQ on extracted performance has been substantially revised. The old FAQ had required the calculation of new return for the performance shown in a case study for a private fund. I … Read more »

One of the main pillars of compliance with investment advisers and investment funds is to stay within the guardrails. If you’ve told your investors you’re doing a particular type of investing, do that type. If you’ve told your investors that you won’t do something, don’t do it. Obviously, if you’ve told your fund investors that … Read more »

Maybe? On Sunday the Treasury Department announced that there would be no future enforcement of the Corporate Transparency Act against US companies. The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under … Read more »

Switching clients from different business models can be good for the clients. Of course, it can also be very lucrative to switch models for the adviser and bad for the clients. Unfortunately, for the clients for Michael DeRosa when he joined One Oak it was bad for his clients. According to the SEC order, Mr. … Read more »