Communiques Archives - SEC³ Compliance

Regulatory Roundup for December 2024

December 31, 2024 No Comments

Welcome to our December 2024 Regulatory Roundup, where we provide practical advice on the latest regulatory headlines. We start this issue with the SEC’s 2024 enforcement results, which fell somewhat short after its 2023 banner year. We also say goodbye to SEC Chair Gary Gensler, who tendered his resignation after Donald J. Trump won his presidential bid. Given the president-elect’s views on government, I expect the next chair to have a less aggressive regulatory agenda. For firms following the ongoing drama in the Fifth Circuit Court of Appeals about the Corporate Transparency Act, the current answer as of December 26 is that the requirements to report Beneficial Ownership are stayed. But stay tuned since that answer may change once again. Finally, I included a few enforcement cases, one on the misappropriation of client funds and two on cherry-picking. I want to highlight that in two cases, the firm was sanctioned for failure to discover and detect the nefarious activity. In the third (the cherry-picking complaint), the individual responsible, not the firm, was charged. This appears to be due, at least in part, to the efforts of the Chief Compliance Officer. The SEC highlighted the CCO’s training and messaging that emphasized the need to follow the firm’s aggregation and allocation procedures. Compliance officers should take notice.

Tips for Updating Your Compliance Program in 2025

December 12, 2024 No Comments

In addition to basic blocking and tackling, compliance officers often have the thankless job of performing the annual review of their compliance program required by Advisers Act Rule 206(4)-7. As discussed in our blog post, Write the Best Annual Compliance Program Review Ever!, that review should consider changes to the Advisers Act and applicable regulations, legal proceedings and guidance from regulators, including risk alerts and interpretations. To simplify the task of collecting all of this information, I’ve identified the top regulatory hot buttons to help advisory firms update their compliance programs for 2025. This is not an exhaustive list; instead, it is the highlight reel of SEC focus areas.

Advisers’ Year-End Checklist for 2024

December 3, 2024 No Comments

Compliance officers love checklists, so we’ve put together some “to dos” to consider completing before the end of the year. Enjoy! Get out Your Checkbook

Regulatory Roundup for October and November 2024

November 22, 2024 No Comments

Things have perked up this month, with EXAMS’ release of its 2025 priorities and publication of a new FAQ on Form PF’s compliance deadlines. The SEC also settled with two advisers on “greenwashing” charges, presumably resulting from EXAMS promise in its 2020 Exam Priorities to review “the accuracy and adequacy of disclosures provided by RIAs offering clients new types or emerging investment strategies, such as strategies focused on sustainable and responsible investing, which incorporate environmental, social, and governance (ESG) criteria.” I also could not resist including two cases from September. The first case includes a textbook example of the issues raised when cross-trading illiquid fixed-income securities. The second case provides a rare example of the SEC pursuing a firm for failing to register because of operational overlap.

September Surprise: SEC Finds Gaps in MNPI Controls for CLO Manager

October 21, 2024 No Comments

In the SEC’s burst of settlements at the end of its fiscal year, one case about the potential misuse of material nonpublic inside information (“MNPI”)

Regulatory Roundup for September 2024

September 30, 2024 No Comments

FinCEN added to advisers’ compliance burden this month by imposing new anti-money laundering policies and procedures for January 1, 2026. The SEC also ended its fiscal year with more heart attack-inducing fines against 11 broker-dealers, investment advisers and a dual registrant for “widespread and longstanding failures” for using unapproved electronic communications methods, known as “off-channel communications.” In a surprise move, the Commission announced the first settlement where an adviser received no penalty for its record-keeping failures, presumably because of its self-reporting and selflessness by helping the SEC build a case against another firm. The SEC also continued its “broken windows” regulatory approach by announcing settlements with 11 investment managers for failing to file Form 13F and 13H with civil penalties exceeding $3.4 million. We wrap up with a case showing that the SEC has not given up on its assault on private funds, charging a firm with fraud for singling out some of its investors for preferential treatment.

Nine More Advisers Face $1.24 Million Fallout from SEC’s Marketing Rule Sweep

September 16, 2024 No Comments

September 30 is the SEC’s fiscal year-end, so it’s no surprise to see an uptick in enforcement cases this month. The latest slew of settlements

Regulatory Roundup for August 2024

September 3, 2024 No Comments

This month’s big news from the SEC was more piggy-bank breaking fines against 26 broker-dealers, investment advisers and dual registrants for “widespread and longstanding failures” for using unapproved electronic communications methods, known as “off-channel communications.” The SEC’s Marketing Rule (Advisers Act 206(4)-1) enforcement continued with a settlement involving an investment adviser for using hypothetical performance on its public website. Next, in a case undoubtedly meant to serve as a warning for advisers after Minnesota Governor Tim Walz was added to the Democratic presidential ticket, the SEC fined an adviser $95,000 for a $7,150 campaign contribution made in violation of the “look back” provision under the Pay-to-Play Rule (Advisers Act Rule 206(4)-5). New rule making activity was less dramatic as the SEC adopted a final rule increasing the dollar threshold for defining a “qualifying venture capital fund” under the Investment Company Act of 1940 from $10 million to $12 million.

How Much Testing Is Enough?

August 21, 2024 No Comments

Most compliance officers struggle to determine whether they are conducting enough testing to satisfy their obligations under the Advisers Act. In its release adopting Advisers

Regulatory Roundup for July 2024

July 31, 2024 No Comments

Welcome to our July Regulatory Roundup, where we provide a quick look at the latest regulatory developments. In this edition, we discuss the implications of the Supreme Court’s decision in SEC v. Jarkesy that limits the Commission’s use of in-house judges, two Texas federal district court judges issued stays blocking the implementation DOL’s Retirement Security Act and PTE 2020-02, and the SEC’s latest schedule for issuing various final Advisers Act rules. Enjoy!

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