The United States Supreme Court adopted a strict interpretation of the five-year period in which the Securities and Exchange Commission may seek to impose a civil penalty on a registered investment adviser. In Gabelli v. SEC the Supreme Court ruled that when the government acts in an enforcement capacity seeking civil penalties, it cannot benefit … Read more »
Don’t Secretly Change Your Fund Structure
New Stream Capital took the unusual step or restructuring its fund structure in secret. The restructuring put its biggest investor into a preferred position, to the disadvantage of its other investors. At least according to the complaint filed by the Securities and Exchange Commission. The SEC alleges that New Stream’s co-owners David Bryson and Bart … Read more »
Investment Adviser Certified Compliance Professional
Just tooting my own horn today. I finally fulfilled the requirement to become an Investment Adviser Certified Compliance Professional®. With the SEC’s registration requirement for private fund managers, I took a closer look at what the SEC requires for compliance professionals. Rule 206(4)-7 imposes no particular requirements on a chief compliance officer. The SEC release … Read more »
2013 SEC Examination Priorities
The Securities Exchange Commission published its examination priorities for 2013. They cover a wide range of issues at financial institutions, including broker-dealers, clearing agencies, exchanges and self-regulatory organizations, investment companies, hedge funds and private equity funds, and transfer agents. The scope of an IA examination is “generally limited to the issues and business practices of … Read more »
A History and Analysis of Con Artists and Victims: The Ponzi Scheme Puzzle
Professor Tamar Frankel of Boston University School of Law tackles investment fraudsters and their victims in her book, The Ponzi Scheme Puzzle. As a scholar of investment fraud, Frankel has studied cases for years to find common themes and patterns. The books offers descriptions of the offers and red flags the ways in which fraudsters … Read more »
A Little Extra Ketchup on It
Warren buffet loves ketchup, and with his $23 billion acquisition of Heinz, he may love it even more. Apparently someone found out about the flow of ketchup before the deal was announced and profited handsomely on that knowledge. The Securities and Exchange Commission brought an emergency case when they discovered an astonishingly accurate trade that … Read more »
Compliance Bricks and Mortar – Russian Meteor Edition
Overnight a huge meteor streaked across the skies of Chelyabinsk, Russia. What does this have to do with compliance? Apparently, Russian drivers regularly use these cameras to fight corruption. BREAKING: Huge Meteor Blazes Across Sky Over Russia; Sonic Boom Shatters Windows by Phil Plait in Bad Astronomy Apparently, at about 09:30 local time, a very … Read more »
Do You Fit In?
Sometimes you have to feel like compliance does not fit into the overall strategy of the business. It’s not that a business should operate out of compliance. It’s just that compliance can feel like a misaligned part of the business. The vast majority of employees want to operate within the normal boundaries of the law … Read more »
Cherry Picking Trades
A recent SEC action shows you exactly how to NOT allocate trades. The SEC brought charges against Howard Berger for not allocating trades until the end of the trading day. Berger would routinely allocate the profitable trades to his wife’s account and the unprofitable trades to his private investment fund account. Since Berger would usually … Read more »
The Obnoxious LIBOR Emails
It seems clear that the LIBOR figures were subject to manipulation. Many banks are under investigation. The Royal Bank of Scotland agreed to pay $610 million in fines to UK and U.S. regulators for its role in the Libor rate-rigging scandal. As part of that settlement, the U.K.’s Financial Services Authority released emails and other … Read more »